how do supermarkets decide which products they sell?

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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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5 Answers

Anonymous 0 Comments

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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