uring my 40-plus years in the retail grocery business, I have experienced the changing dynamic of relationships between the buy-side and the supply-side of the industry. At a point during my tenure, it became essential to me to promote more of a collaborative relationship between the buyer and the seller. The natural power struggle remains, but a lot more can be accomplished if we acknowledge a few truths, address some fundamentals that we should all consider the norm, and promote a dialogue about the future of the business—instead of playing the game of the past. Here are a handful of axioms I have gathered, that I believe will drive us toward success and strategically position both sides of the produce transaction to thrive.
1There will always be a healthy tension, at best, in any negotiation…
Whether it is a business negotiation, one I have with my wife, or one you have with a friend, you can count on a healthy tension in any negotiation. What this means is that I am going to try and get the best deal for me, and you will try and get the best deal for you—which always creates a little push-pull or a healthy tension. At worst, it can go sideways and will become contentious, demanding, and even prickly. A healthy tension can create more space for opportunities, because it will require both sides to create better terms and more creative strategies. But, when one side refuses to relinquish any power, the relationship will always seek to fracture and will not be supported on all sides. For example, many companies have retained big consulting companies who have them “bidding” their purchases, which is the opposite of building relationships. They may feel they are getting a better price, but what about the quality, the freshness, the long-term cost when maybe all their manifests aren’t filled?
2"Surety of Supply" should be a key component of the buy-side strategy...
When I was at Kroger, I didn’t worry so much about cost as much as about whether I had the right product in supply at the right stores; so that when fifty-five million customers came through the doors every week, they got what they wanted. That is where supply contracts make sense, and both sides should acknowledge that. This helps the supply-side make sure the right crops and quantities are planted so that they aren’t just growing on speculation. And it commits the buy-side to being a partner. I think most big players are concerned with “surety of supply,” because the consumer doesn’t care whether a storm in Costa Rica is affecting banana supplies; they just want a banana when they visit your store.
3As consolidation continues, both buy-side and supply-side companies should have both a long-term strategy, along with their typical short-term, buy-sell tactics…
This one is for the buyers. What is your long-term strategy? Let’s say, just for example, there are five main growers in a commodity that you are buying. If the buyer rejects even a handful of those negotiations, or those suppliers, you run the risk of not having product or being in short supply.So, what is your strategy long-term, and what short-term buy-sell tactics will you implement to achieve that?
Stay tuned for the next editorial in this two part series, where I will address additional axioms to strategically build better relationships between the buy-side and the supply-side of the produce industry.
Reggie Griffin has over 40 years of experience in the retail grocery business, both in Merchandising and Operations with the last 10 years as the Corporate Vice President of Produce & Floral Merchandising and Procurement at Kroger. Kroger’s team was responsible for both produce and floral sales for one of the largest traditional supermarket chains in the U.S., with a floral operation that is still one of the largest in the world.
Reggie has been active in the produce industry, serving as the 2011-2012 Chairman of the United Fresh Produce Association (UFPA), past Board Member of Produce Marketing Association (PMA), and past Chairman of Produce for Better Health Foundation in addition to serving on several industry-advisory panels. He now owns Reggie Griffin Strategies LLC, a business committed to “Growing the Ultimate Customer” and working with clients both nationally and internationally. Reggie’s dedication and passion is to drive positive growth for his clients, coupled with long-term marketing insights.