supermarkets

[mrpathetic]

i read an article by mj grey at philippine star regarding supermarket's other sources of income: they charge enlistment fees per store per new item and monthly marketing fees for their promos...

from what i heard: the enlistment fee and the marketing fees could sometimes be used as blackmail/extortion by the supermarket to force the supplier to cough up more money or to join whatever promo they are brewing...which makes me wonder: why do supermarkets do this practice? don't their marketing departments have funds?

[KuyaDanny]

Why do supermarkets do this?

They have an almost unlimited selection of goods they can sell, but limited store space. How many times have you seen empty shelves lately? For a new supplier to get space in a supermarket, he almost certainly has to take away space from someone else. So the supermarket owner needs to have mechanisms to allocate the limited space. These "other income sources" are examples of such mechanisms.

[roodypoo]

kuya danny, my friend is in a predicament: there are certain supermarkets who really twist their suppliers to get what they want. sometimes, ubos na talaga budget sa dami ng hinihingi nila 2x a month for the promos, enlistment fees, new store fees all of which are on top of the regular discounts pa. e hindi naman nila sinabi na they're opening new stores at the start of the year. if they don't or cannot anymore give, automatic sasabihin hindi sila cooperative and tatanggalin sa lahat ng stores. isn't this extortion?

[gumacanian]

isn't this extortion?

Welcome to the free market.

[KuyaDanny]

roodypoo,

All I can say is if your friend cannot make a profit because of all the added costs the supermarkets impose, he should find other channels to sell his goods.

[brian_d]

I used to work for one of the biggest supermarket in the country.This is standard industry practice. Enlistment fees, are collected if you are a new supplier. However for succeeding product intro, no fees are collected unless the product is included in the monthly promo or the like.

Supermarkets have to collect fees from participating companies, since they are doing the product extra mileage by highlighting them in more visible area in the supermarket. print ads and leaflets. Believe me, its a small price to pay compared to the increase in sale that will be brought back by thier "participation" fee.

You see, in retail space is everything. There is even such a thing as space management. Just as Kuya Danny mentioned, space is limited as such there is a premium in getting a premier location.
The truth is the battle ground for branded products is not in the airwaves, but in the storeshelves. Good advertising will do nobody any good if thier products can be hardly seen inside the stores. Which also explains why some products who seemingly doesn't advertise at all sell real well.

I suggest, if you cannot afford to introduce your product in a big supermarket----there are always alternative channels.

[Ladydredd]

question:

im thinking of putting up a small grocery store (with 2 small aisles maybe, a fresh meat section and a payment counter at the entrance of the store) in our village next year. does anybody here have an idea on how much would i need to put this up, and where would i get suppliers? baka kse pag dumerecho ako sa URC or nestle kaya, di kame pansinin kse small-time lang kame.

btw, space rental and utilities not included pa ha. start-up capital for goods to sell lang.

[KuyaDanny]

Your best bet for sourcing goods is to contact distributors or jobbers. There are quite a few firms in the business, many of which are owned by former employees of consumer goods companies.

[brian_d]

URC, has thier own company store wherein URC products are sold at a lower price compared to buying it at a conventional supermarket/warehouse store...

I don't know bout the Meat Section though, while it can be profitable, the shrinkage cost is also very high. Not to mention overhead for meat...

[TheDreamer]

Just to share something ... I currently work for a big supermarket chain and I do agree that SPACE IS EVERYTHING. Merchandisers or sales clerks battle it out when refacing is done on certain shelves. As in to the point may nag-aaway na mga clerks if they feel dehado yung product nila sa gondolas. Even big aisles have mass displays or "cut cases" as we call it, there's "tengas" and even post displays.

[mac_bolan00]

i don't believe supermarkets have that much 'poder' over large manufacturers and major suppliers. in my opinion, it's the other way round.

[brian_d]

Well that's your opinion mac_bolan00 but that is far from the truth. What "The Dreamer" said is true, sales ladies of competing products fight for space in the supermarket.

It is actually a mutual dependence type of relationship. Suppliers know that they have to get thier product on the shelves for it to sell, while supplier's are aware that they need to have the merchandise for people to actually come to the store.

But in general though, retailers have a upper hand since they get to decide if they will accept the product for display or not. On the other hand I haven't heard of a supplier to have refused selling his product in a particular supermarket.

[joycofi]

i supply food products for supermarkets owned by a big corporation. I deliver on a daily basis.

I'm having problems with my billing. I have a " one week term" payment which is directly paid thru my account at a bank owned by the corporation. Its hard and tedious to get the payment vouchers from the corporation since their procedures are "flawed"and inconvenient to us suppliers. Even if you were lucky enough to get the vouchers, It is usually kulang or missing some attachments. The deposits/ payments are being forwarded alright but its hard to say if the payment is right.

do you guys know of any instance where some of the goods delivered by the supplier actually never gets paid ? Are these things being done deliberately ?

tnx