I don’t mean, whether they sell bread or milk. But rather which company do they choose and how?
Does the company send a salesman to the supermarket and they say “hey we have this great new product!”?
Or do the supermarkets actively search for new products?
And how do they decide, yes we take X in our store but not Z?
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I think there are salespeople that go around as one way. However, I know my local store now carries some items because of me. I sometimes speak to the manager. But only to commend x employee or to request x item.
Most supermarket chains have huge expensive contracts with big food production companies that outline what products they carry and where they will be placed on a shelf. That makes it really hard for smaller or newer companies to get shelf space with major store chains.
Since I got roasted not long ago about chickens in supermarkets, I will preface my response by pointing out that I work in a smaller chain of supermarkets in Australia.
We get told what main brands to sell and how much shelf space to give them by head office. They are usually brands like Coke, Pepsi, Cadburys, pet food, big dairy or cleaning products who come in and shift things around and we can’t really intervene, especially when they are giving discounts to us to push an item and make it more prominent which means more sales for us. Our store can purchase from smaller brands, but their space is also negotiated with head office and try to do the same thing, but can’t overrule the big product producers when it comes to product placement.
Our shop does daily ordering depending on what has sold and how much is needed to fill the shelves. When we get specials, we don’t get much warning, but we are sent extra based on what head office expects us to sell. If that doesn’t sell, it becomes a special for the following week to move the stock.
But basically, we do a daily quick count (look at what is on the shelf) and a bit of knowledge of what sells on what day in what season – sandwich meats do well on Sundays because people are buying to make lunches for the week as an example, so we know when to buy for that. Salads and bbq meats do better in summer, that sort of thing. We also have some computer system that takes into account our sales history and that also advises on what to buy when, but it doesn’t work better than having someone go out and look at the shelves. Having a look to see what needs to be ordered for the day after tomorrow is faster than waiting for head office to get back to us with sales results.
First off, much of the decision making is done at the chain level or region level, not usually on a store level…
There are a few ways:
– A large percentage of new products are from companies they already have existing relationships with, whether it’s a new flavor of Oreos, an existing brand adding products in a new category, or a new brand from a bigger holding company.
– A sales rep meets with a grocery chain buyer and pitches the product… the benefits, the cost, taste test, etc. for store to decide whether to carry it or not.
– There are trade shows where producers of various foods display their products in hopes of getting picked up by grocery chains and the like
– A grocery chain might seek out products in a growing category. Say Thai cooking at home is getting more popular, they might seek out some Thai products to anticipate demand (or they head about a pick up in sales at Asian markets, etc)
– Customers ask for the product. Might be as local as a single store manager can place a one-off order for a customer, to a number of requests cause the chain to add the product across the board.
All stores decide what to sell based upon what what they think their customers want (at a particular pricepoint) and whether they can source it cheaply enough to make it worth the effort. So yes, this will involve shopkeepers actively searching out products and salesmen actively promoting products.
However, that process can be a lot of time and effort, and so a number of different ways to get it done with less cost and effort have become very common.
One way is to form a supermarket chain. That way, the company can have one person (or a small team) figure out what to buy from where, and then use that same blueprint across every store in the chain. It works well because you don’t have to hire one person per store to do all of this sourcing and comparing work; you can just hire one or two to work ‘at corporate’ and then spread that cost out over however-many stores are in the chain. (This also means that salesmen are more likely to go pitch to those teams ‘at corporate’ rather than try to convince a hundred individual store managers.)
Another way is for suppliers/distributors to “bundle” some of their products together when selling to the supermarkets. Remember how it’s not *just* important that the customers like an item, but also that the store can buy it cheap enough to still make a profit? Well, if two items/brands have similar quality and will sell for the same price to the customer, but one is much cheaper from the wholesale supplier/distributor, then the cheaper item will have a better profit margin for the shopkeeper (and so they’re more likely to choose that option). Knowing this, suppliers/distributors who sell multiple products might decide to make deals like “Hey, you’re buying our X-flavor chips and Y-flavor chips… How about our Z-flavor chips too? We’ll give you a deal!”. It works for shopkeepers because a lower cost helping the profit margin makes some choices easier to make, and it works for suppliers/distributors because A) they’re selling more product overall to make up for the discount, and B) they don’t have to work hard to find another customer for those Z-flavor chips, and C) they might save on shipping costs compared to needing another stop on their delivery route to offload those Z-chips. (This also means that the supplier/distributor doesn’t need to have as many salesmen out there trying to sell stores on some new product, as they can instead push product through different bundle deals.)
A combination of these methods (and others) means that it’s rarely going to be an individual supermarket manager fretting over each and every item to stock their shelves with, but instead a large institution cutting deals with other large institutions.
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