This past month has been a bit of a whirlwind as it is not usual for this little granola company to be highlighted in all the major media streams. I don’t think I had ever been interviewed for TV before aside from mock ups in Uni however that was a long time ago and not much to pull of when thrown into a live interview at 7am on TVNZ. The topic was, and continues to be, a controversial one as the draft report from the Commerce Commission one year investigation of the NZ supermarket duopoly came to light. When Katherine Rich, CEO of the FMCG posted on LinkedIn about the suppliers who had told her about the unfair business tactics of the supermarkets, I was moved to tell our story as a small supplier. I didn’t bad mouth the supermarkets, I only told of our experience in the past year of unfair business tactics, being devalued as buyers and category managers try to get the lowest price to purchase our products, without passing on the savings (at normal buy in price or promotion) on to the customers. What I didn’t know at the time is no other suppliers had publicly come forward (and still haven’t). Foodstuffs NI have switched to a co-op model (a completely misleading term they should look up the definition of co-op again in the dictionary), which means we now have to pay a percentage of every sale, for them to implement a promotion schedule, as well as ‘the opportunity’ to have a display in stores. The latter is a kicker as the previous model allowed us to arrange displays with each stores, paying them direct, which enabled us to be more visible to shoppers while significantly increasing sales. We were told this model was no longer available so we had to join the new ‘co-op’ program, taking a percentage off every sale, that they deduct at the end of the month owed to us. What we have learned over the past year of them clipping the ticket in this additional way, is that because our sales are too low to be considered for these displays, we aren’t given the opportunity. Even if we had the capital to invest in them, they wouldn’t allow us because our sales were too low..because they wouldn’t give us displays (do you see the circular reference we are stuck in)? Do you think we should ask Foodstuffs North Island for a refund of these fees? At this point I am considering it although I’m sure they have written in their contract somewhere they are allowed to do this. Displays have always helped increase and grow our sales in store, and we used to have 10-12 per month for the north island alone. In comparison, this past year of their new co-op model, we were given one (!) display. For all stores. So that’s the catch..we aren’t given the opportunity to have displays with the new model however they don’t mind us paying for it in the meantime. Maybe we should ask them for a credit of the $3k/merchandising rep fees they also told us they needed…having us pay a third party to help look over our products on their shelves. (I love the contrast of this on the south island where south island stores actually do their job of properly stacking and merchandising their own shelves).
So, I made one comment on LinkedIn and it led to Jonathan Milne from Newsroom NZ contacting me which I quickly learned I was on the front page the next day and live on TVNZ. The follow up media this week has been the supermarkets finally responding to the ComCom report and the CEO of FSNI coming under fire for producing a lackluster response that takes no responsibility, offers no more transparency, and defends their extraordinary profits (4th highest in the world).
If you’ve made it this far, I commend you! What can you do? Vote with your dollar! What does that look like? If your favorite products that you buy all the time are available online, buy them direct from the producer! That 35% margin goes to their long, hard hours, not further padding a supermarket model that currently requires no accountability. Being an eternal optimist, I am hopeful my voice (which continues to be the only supplier to voice their opinion on the topic because everyone else is too afraid of getting deleted from the supermarkets) is a voice of change and that a new, mandatory code of conduct, similar to what is required in other countries, becomes the new norm here where consumers and small suppliers’ best interest is taken into the equation.