Grocery Update Volume 2, #9: Blood, Sweat And Math: Understanding Grocery Buyers.

Also: C&S Devours SpartanNash.

Discontents: 1. C&S Devours SpartanNash. 2. Blood, Sweat And Math: Understanding Grocery Buyers.

1. C&S Devours SpartanNash.

In the wake of the recent UNFI cyberattack-driven product outages that have impacted thousands of grocery stores, two of the largest grocery wholesalers are now becoming one. C&S, a privately-held distributor with over $23 billion in annual sales, is acquiring publicly-traded SpartanNash for $1.77 billion. The combined entity will manage over 60 warehouses, 200 grocery stores and service tens of thousands of independent and family owned grocery stores across the U.S.

“Being able to operate at a larger scale, supported by the combined innovative capabilities of the two companies, enables a more efficient supply chain as well as an ability to secure the best possible delivered cost of goods and promotional discounts, which are expected to translate to better pricing for community retailers and at the shelf for consumers,” the companies stated in a press release. C&S also admitted the acquisition was a competitive hedge to mass merchants such as Walmart’s growing marketshare in the grocery industry, and a seeming benefit to the many independent grocers serviced by C&S and SpartanNash.

C&S has plenty of cash on their balance sheet for the deal and had previously attempted to take over 600 stores as part of the failed Kroger-Albertsons merger. They recently acquired over 170 Southeastern Grocers stores via Aldi. Both chains have continued to increase their investment in retail and vertical integration throughout their supply chains. C&S also recently shut down a facility in Florida, laying off over 500 workers. The company has also been known to aggressively bust trade unions representing the employees of companies that it has acquired.

By taking on SpartanNash, C&S extends their reach into new markets across the midwest and west coast of the U.S. The merger makes the already consolidated grocery wholesale sector that much more concentrated, with just four companies, including C&S, McLane, UNFI and KeHe, controlling a huge share of the business between manufacturing and retail at national chains such as varied as Walmart, Whole Foods, Sprouts, Albertsons and regional, independent and family-owned grocers. The last big wholesale merger of this scale was in 2018, when UNFI was spurred on by investors to acquire SuperValu as a hedge against Amazon acquiring Whole Foods, UNFI’s largest customer. KeHe Distributors acquired DPI Specialty Foods in a smaller deal in 2023.

Wholesaling is an essential feature of the U.S. grocery industry and is typically invisible to consumers. While there are still family owned, scrappy, independent wholesalers servicing grocers in many cities, the grocery marketplace will now have fewer choices for brands to use as distributors to sell into retail, or for retailers to pull their vast assortments from.

Retailers play a huge part in consolidation, as they tend to have volume-dependent, contractual “cost-plus” relationships with wholesalers that incentivize them to funnel many suppliers into a “primary” wholesaler that manages a huge portion of their product assortment and inventory. The cost-plus mark-ups wholesalers give to key retailer partners are typically lower than the wholesalers’ gross margins, meaning they have to tap many “inside revenue” streams from suppliers to make up the difference and stay in the black. Their bottleneck in the supply chain further enables wholesalers to extract such rents from brands in the form of various fees, deductions, marketing programs, and promotional discounts, which brands pass onto consumers in the form of higher prices.

Wholesale consolidation also makes it more difficult for suppliers, especially cash-strapped emerging brands and small to midsized farms and manufacturers, to avoid this deluge of rent-seeking activities. Such practices make further CPG consolidation inevitable, as incumbent brands are best positioned to afford the huge cash outlays that wholesalers demand of brands. They also make the food industry more fragile, homogenous and boring, and less likely to adapt to changing consumer preferences and less responsive to climate and geopolitical instability. At the end of the day, shareholders are the biggest winners of wholesale consolidation.

The UNFI outages over the past few weeks were a stark reminder of the fragility of consolidation and centralization of grocery wholesale. One wave of cyberattacks crippled the $31 billion a year behemoth, impacting tens of thousands of stores and millions of customers, and sending retailers scrambling to food service distributors and smaller wholesale outlets for essential products. Whether it is another cyberattack, a new pandemic, new trade wars or geopolitical instability that is the fallout of Trump’s latest foreign policy folly, a consolidated whole sector is unlikely to be the best model to ensure that consumers have the freshest, best quality, and most affordable food on shelves at grocery stores.

2. Blood, Sweat and Math:

What Every Brand Should Know About Grocery Buyers.

Grocery buyers (or category managers, category leaders, merchandisers or other corporate-speak for purchasing and assortment decision makers) are the most important retail relationships for food brands. They are the decision makers and public facing power brokers for food retail organizations and their bureaucracies.

Here are a few insights into grocery buyers that all food brand founders and their retail-facing sales and marketing leaders should understand.

Don’t launch or try to grow a food brand without this understanding in your back pocket.

Grocery Buying Is Skilled Work.

Grocery buying at the store, corporate or other institutional level is challenging, skilled work. While buying continues to be encroached upon, assisted or replaced by AI, machine learning or algorithmic platforms, buyers have historically needed a range of skills and experiences to be successful. Buyers must be proficient at math, and sometimes really good at doing basic arithmetic and algebra in their heads. Just knowing how to calculate gross margins or retail markups on the fly, or estimating markdowns in a meeting with a brand, can be good job security. Buyers need to stay versed in economic, consumer and pop culture trends, even a bit of human behavior and geopolitics. They should have a sense of what people are buying and why, and slice and dice that by age, gender, ethnic and income demographics. They don’t need to understand marketing surveys or what consumers are saying in this or that McKinsey white paper, just what they are doing with their money. Buyers, at the end of the day, are materialists and they create, react and respond to economic forces.

As a regional and then national buyer, I always made it a habit to read voraciously, and still do. In my various buying roles, I would have a daily diet of 10-20 current events articles, primarily from the financial press, but also from food and ag publications, music/culture and even some science (especially if it was related to food production in some way). I also spent a lot of time in farmer’s markets, public markets, food courts, malls and other non-grocery settings to just keep a sense of what people were eating, buying and perusing. And I hate to say it, but social media apps are still also great for keeping up with the zeitgeist, as cringe-inducing and exhausting as they are. As a buyer, you are a pop-anthropologist, a grassroots economist and a steady observer of human behavior. It is no wonder buyers can be so salty and skeptical. They have more or less seen it all, so don’t try to impress them.

Respect The Buyers’ Schedules.

Usually buyers are managing a few different categories and they have a strict schedule they are following. This is important for brands to know. It isn’t about making life difficult for the founders and marketers. It is about making the job manageable for buyers and their teams. Grocery packaged food categories, unlike fresh produce or full service meat departments, have thousands of products. This isn’t a knock on perishables, those are challenging to: sell it or smell it, right? But grocery is its own things. The only exceptions to this rule are discounters with more limited selections, but they are less than 10% of the marketplace. And there are usually dozens of categories in any given store: bread, pasta, frozen fruit, milk, eggs, frozen sausages, ice cream, seasonings, each with their own P&L’s. That is a lot of keep up with.

Grocery is a pennies game too. While prices have really gone up lately, unit prices in grocery departments still hover in just the $4-$5 range. In my last role at Whole Foods in 2016, our average price in the department was under $3.50. This means that every penny counts and buyers need to zero in a very granular way by product, by store or business unit, by brand, by size, by week, by month or quarter to look at every important sales metric, such as topline revenue, gross profit dollars, gross margin rate, unit turns, retail price, cost, and the quarter to quarter and year to year trends of each of these and what is impacting such metrics, from new product launches, to UNFI cybercrimes, to pandemics, to BOGO promotions, to competitors opening nearby, to store closures and openings and remodels, to staff turnover where categories weren’t given proper attention for a few months or even years. It also explains why prices in grocery exceeded the rate of consumer inflation for years on end, the temptation to squeeze a few extra pennies on top of supplier cost increases and skim some extra gross margin to keep the finance wonks happy meant more job security, at least until those price thresholds exceeded consumer abilities to afford food and cratered demand. Demand elasticity dialectics. It must have been nice while it lasted.

The schedule makes it all manageable. It also makes the operational impacts of new product launches doable. In store resets and department, remodels are expensive and disruptive to day to day business and are much more viable and supported by stores if they are well planned, and there is a clear potential ROI for the work being done. And if a buyer has the motivation, inspiration or moxie to go “off-cycle” and review a product or take a meeting off schedule, that is a reason for appreciating the opportunity. But usually, the schedule is a way to maintain sanity and clarity in a hectic setting.

In my time at Whole Foods, we occasionally launched cool new products off-cycle, with the consent and consensus of the regional buyers who were responsible for slotting products on store shelves. Usually, we stuck to the schedule, and launched 500-700 new products a year nationally, after thorough reviews of 75 categories a year, 7-10 a month, ten months a year. Some of our best launches were done off-cycle, including Harmless Harvest coconut water. The brand had previously been approved during our beverage review, but the first shipment came in with some QA issues, so it was canceled. I told the brand to check back in if they figured things out. The founders came back a few months later with a new product and we had a few regions willing to take the risk. Within a couple years it was among the top 10 selling products at our stores and we couldn’t keep it in stock. This was a nice exception to the rule. But usually sticking with the schedule is the best plan.

Every Buyer Is Their Own.

Buyers are not monolithic. This should be obvious, but sometimes brand founders see buyers as homogenous and cloned from the genes of their organizations and bosses. Buyers’ personalities and vibes and strategies are as diverse as the varieties of products they stock. You can’t assume you understand buyer A after dealing with buyer B, even at the same company and category and department. Their personalities, life histories, innate abilities, work ethics, experiences, relationships to their jobs and colleagues can be unique. Occasionally you run into a company where the buyers are all Stepford Wives or Star Wars Clone Wars clones, but that is not the norm. This is also the case when buyers have come up through the ranks and have been trained and mentored by more experienced managers.

My purchasing supervisor at Whole Foods, Perry Abenante, taught me a lot about the business. He had come up through Daymon and Topco and had worked at Haggen before the Albertsons buyout disaster. Perry had a big heart, was intensely loyal and helped mentor a generation of buyers at Whole Foods on category management, assortment planning and supplier negotiations. Perry also taught us some terrible habits. He was short tempered, foul mouthed and too easily dismissive, and held brutal grudges. He also had an iron fist and kept folks in line even if they didn’t work for him. I wasn’t scared of Perry but everyone else was, probably why he kept me around. He loved food, but was not as interested in quality standards and sourcing frameworks as I was.

When I was selected to replace him after he got a plum gig at a fast-growing snack food maker, I kept his analytical methodologies and intensity, which helped save my job over and over, as well as his aggressive communication tendencies, which almost got me fired again and again. I also opened up our decision making process to be more consensus based and I doubled down on quantifying and operationalizing the growth of quality standards and purchasing frameworks, and made organic, Non-GMO, fair labor and allergen-free standards a hallmark of my career and our product mix, things that Perry wasn’t as motivated about. But none of that would have been possible without his training and example setting. I wasn’t his clone, but couldn’t have gone that far without him.

Buyer Priorities.

What I also got from Perry, and other mentors at Whole Foods like Michael Besancon and Walter Robb, as well as my own survival instincts from growing up in the Bronx in the 1980s, was how to balance financial priorities with product offerings, how to pay the rent while keeping things interesting and fulfilling, by dialing in what we launched, what we got rid of, what we promoted and marketed heavily, and how we would track it all. Buyers need to have this financial acumen, but it needs to be leveraged with product preferences that meet the needs of the shoppers. At the intersection of these two themes are the buyer’s priorities.

Some buyers will just manage the bottom line, with no imagination, risk taking or visions for the category. Just make the numbers. Churn and burn. Rake it in. Too much product and category segmentation. Food apartheid hardliners, chiseling demographic differences into core business strategies. Others go too far the other way and are practically social workers and big brothers/big sisters for brands or producers and won’t last long in the job if they aren’t paying the bills and keeping the revenue and gross margins flowing in. Brands need to know the buyer priorities before they walk in the door. Are they financials focused? Do they have wiggle room for risky trends? How do they react to consumer trends? Are they price-driven? Are they fast followers or get jealous when competitors lead on product choices? How much trade spend will they be demanding? Do they even like to eat food or are you all just numbers on an endless spreadsheet? Is the AI pulling strings? Algorithmic retail dictatorship? That’s coming fast.

My role at Whole Foods for seven years was owning the largest P&L in the company, the national grocery program, over 31% of the business. I was overworked, understaffed and very much underpaid, and every year I flipped between being a global All-star performer or almost getting fired for running my big Bronx mouth.

But I never missed my financial targets, sales, gross margin rates and gross margin dollars. We used to say that “grocery paid the rent”. The company executives would go on the earnings calls and weave some bullshit stories to keep the analysts happy, but the grocery nerds knew we were essential to the business, all those billions of pennies from grocery promotions, new product launches, every day low cost programs negotiated with hundreds of suppliers. It was all undergirded by an obsessive category management routine ten months of the year, but also by granular product attribute data that we tracked across categories, all the organic, Non-GMO, fair labor and allergen-free products that we saw our customers were obsessed with and were driving our business.

This is 2010-era. Way before #MAHA.

We were selling these products in greater numbers every year and tracked the sales, margins, unit trends quarter to quarter and year to year. The “better for you” products paid our bills, enabled our store staff to have above market wages and benefits and, of course, our investors to rake in huge dividends. And when the company let me and some of my close colleagues go, we who were tracking these product trends and financials, they lost the script for a year or so, and the margins and stock prices tanked and the company ended up getting snatched up by Amazon for pennies on the dollar. Sad.

These days, consumers are buying more and more “better for you” products. The reason why they can do that is that our disciplines of financial forecasting, category management, supply chain frameworks and retail operations enabled consumers to access more and more of the good stuff. It wasn’t magic. It was blood, sweat and math.

Buyers’ Backgrounds.

Buyers usually have different backgrounds than brand founders and entrepreneurs. Most folks who can start a food brand have some level of class privilege or economic security or access to capital. Maybe a trust fund or a rich uncle, or they are a nepo baby whose parents or forebears had a food company (that’s why it’s called “the friends and family round” of fundraising, lol). Or a prior career that was at least comfortable, if not lucrative. Or just an enormous reservoir of moxie, optimism and lack of risk aversion, especially as a woman or person of color bootstrapping a brand, plus an inhuman level of courage, and probably a fair bit of naivety and delusion bordering on megalomania. It takes a certain personality to be a food brand founder, in addition to these material reasons. This isn’t meant to be judgmental. It’s just facts. Buyers tend to have different career arcs and hero/villain origin stories.

Some buyers, like myself, came up through the stores. They cut their teeth in retail operations, were accountable to ever increasingly more valuable and difficult P&L’s and navigated the company politics and financial hurdles to get in the buyer’s seat, either through a patronage network or through their own stubborn work ethic. Other buyers came in through professional development or MBA programs, maybe recruited into middle management positions straight from business school or a consulting firm. And they tend to have a more sophisticated view of the business, at least at first, and can be a bit removed from the grunt work of store operations. And some buyers have made a lateral move from other middle management careers. Maybe they were a sales broker, or a financial planner or school teacher.

But what most buyers have in common is that they were not previously entrepreneurs. They may not understand the risks and terror that comes with starting a food brand. Or they may resent the slick, free-spirited energy that many brand founders exude, especially when compounded with ambitions to be the next billion dollar poppi or Siete unicorn brand. These class and cultural differences can add up when there are power dynamics involved and a buyer’s decision can make or break a brand’s business model and the founder and their employees’ livelihoods.

It’s not that they don’t care. But they are sometimes from a different planet, and especially when they have been in the role for a while, have gotten comfortable and routine with how they manage their business unit, and don’t always have the experience and empathy to understand what motivates brands and how to manage them. Buyers’ life experiences can sometimes be a world apart from a food brand, and that is important to understand.

This was a very particular problem for me as I rose up into corporate purchasing roles. My supervisors loved my fearless and no-bullshit Bronx attitude as negotiation tactics, to the extent that I made my numbers at least. But it also made me suspicious and judgmental of a lot of founders and brand executives that came through the offices.

If folks were dressed up in fancy suits or looked like they just got out of the tanning salon or country club, or if they acted like they were the next big thing and I was just a minor obstacle on their path to fame fortune, I was like, “fuck ‘em” and it would not bode well for them or their products. I would set out to crush their hopes and dreams, their bourgeouis ambitions, churn as much revenue as I could out of them as quickly as possible. What did I care? I worked my way up from stock clerk, I had no trust fund to create products and fuck around in my nonexistent spare time with starting a food business and I had kids to raise and bills to pay. I was part of the machine and the machine demanded my blood every quarter to keep those gross margin dollars incoming. I would cut meetings short, talk over them and just generally be a dick, and I did not care. It came naturally.

But sometimes brand founders or their marketers would come in and win my heart, with an authentic story about their products, something in their vibe or attitude that gelled with my experience and worldview, and of course, a great product or mission to make food and farming better, pay their workers well, build better supply chains or just generally support our collective well-being as a community and species, and a cost-retail scenario that met our financial needs, and it would click, we’d say yes and then put all the gears in motion to operationalize the launch and make it a success in our stores, putting my own reputation and name on the line to stump for and advocate for products that we had no investment in, but shared skin in the game in seeing their success as our success. Sometimes, but not always. But when it clicked, it was fantastic. Saffron Road. Purely Elizabeth. Justin’s. Siggi’s. Organicville. Suja. Nature’s Path. That made it worth the struggle. Good food for all.

Buyers In The Machine.

Buyers may be the public facing personnel of retailers to brands and their staff, but they still sit somewhere in the middle of vast and mind-numbing bureaucracies that have very little to do with the priorities of CPG founders and marketers. Retailers have marketing and digital staff, IT, data analytics, accounting and finance, and vast layers of retail and store operations power structures, from the clerks and cashiers, to the department-level buyers and managers, to store level managers and then district and regional managers overseeing groups of stores, all the way up to the heads of operations and executive teams.

Much of this bureaucracy does not make product decisions. Sure, they work with food all day long. They manage the store conditions and the store personnel. They hang new price tags and make sure resets and remodels happen. They hire and fire, or sit in meetings with union reps when they misbehave. They are not the decision makers for brands, but without them, no products get to shelf, no items are sold, no food is ordered, no money is made. Buyers and purchasing personnel live within these structures and brands need to at least have a sense of what say and what power their purchasing counterparts have in their day-to-day interactions.

When buyers say “yes” to a product launch, does it set off a cascade of events to ensure that their decisions are followed through in wholesalers and then in each of the stores? Do buyers have accountability to and/or with operations staff to ensure stuff gets done and that the right products are on shelf, generating revenue and fulfilling customer needs and fending off competitors and paying the bills? Brands should at least have a sense of this. The buyers, at the end of the day, are not the be all, end all, even though they appear to be. They have accountabilities. They have managers and supervisors above their pay grades that don’t necessarily know what they do or how or why, but expect them to keep the products and money coming in. Buyers can make promises that don’t get kept in stores because operations staff are not on the same page or have their own agendas.

I made it a point at Whole Foods to visit 100-150 stores a year, do a circuit of regional meetings, talk with store clerks and buyers and make sure everyone knew what we were doing in purchasing. Sometimes it went well, and we made new friends and met staff that we would recruit into the purchasing organization. Sometimes it did not go well. We once did a tour of stores in one of our largest operating regions. We were reviewing placements of new products and nationally negotiated promotions in stores, programming that had been approved by regional buyers whose job it was to make sure these things were getting done in stores. But in store after store in this region, folks were just doing their own things. Building endcaps with stock that had not been forecasted and planned for. Making shit up as they went along. Not hanging the sale signs of deals that we were contractually obligated to fulfill. Not being team players.

It turned out that the regional executives had let all their stores know that such nationally planned deals were optional and they did not have to follow through, even though regional buyers had agreed to them. It was a huge problem, because our leverage for national programs were built on our ability to follow through and generate the ROIs for the brands we were dealing with. One did not exist without the other. Buyers are dialectical materialists too. Negotiation leverage required operational excellence, especially since were still a small-ish national chain competing uphill with Walmart and Kroger.

Brands were constantly showing us how stores were not running programs; we were essentially stealing from them. It was embarrassing and frustrating. And when whole regions were saying yes to national programming but then being told by their operational leadership they really didn’t have to follow through, it made us look like jackasses, especially since we were so aggressive with brands. These types of miscommunications ended up being elevated to the executive teams, who held a series of high level supplier, purchasing and operations summits over the next couple years to get everyone on the same page. The result was not that the offending operations leaders were fired or demoted. Nope.

Instead, they decided to centralize purchasing operations and eliminate the regional buyers, creating a huge national buying bureaucracy that would negotiate on behalf of the company for all categories. This is, after all, how most retailers function. But it would make it difficult for brands to grow from store level to regional to national placement, the special distinction of local-ism and product differentiation that made Whole Foods special and a major pipeline of product innovation for our national programs, which constantly mentored regional brands into national partners. On the other hand, it would mean the right hand of purchasing and the left hand of operations would be in sync, and operations leaders wouldn’t have the excuse that they didn’t know or didn’t have buy in.

It was this operations bureaucracy that spurred the changes to national purchasing structures that Whole Foods implemented in the past few years. Buyers may be the most important stakeholders for brands, but buyers exist within a much bigger organization that can have a lot of say over how they buy, what they buy and how their decisions reflect in stores. Brands should keep that in mind, it could mean everything.

Buyers Don’t Make the Rules.

Buyers don’t make the rules, but they are accountable to enforcing them, especially when there are financial metrics involved. Buyers have financial targets that they are responsible for. Much of the time, they had little say in developing them. They came downstairs from the finance wonks doing MS excel backflips for their private equity or asset manager shareholders or family owners sitting on billions in inherited wealth. But once you are in the buyer seat, those targets by department or category are yours, you own them like they were your own business. If you can hit them consistently, you have a career. If you can’t or you otherwise don’t fit the mold, you will probably cycle out of the role in a year or two. Don’t take it personally. It’s just business.

And these financial targets entail many buyers accumulating huge revenue streams from business practices that are not very savory, and probably should not even be legal. Rent-seeking that Adam Smith and Mao Zedong would both abhor, rare philosophical bipartisanship. These practices include category captainships and slotting fees and free fill requirements for brands to get on shelf. These include promotional fees and advertising event fees. These include draconian payment terms, non-payment windows and unrealistically high inventory fill rates. These include wholesale cost plus markups that are below the wholesale cost of doing business, so the wholesaler nickels and dimes everyone else in the supply chain to offset the loss of doing business with the retailer. These include promotional billbacks and deductions that tack a markup onto supplier markdowns. These include bridge buying and forward buying on off invoice deals. These include selecting supplier partners based on their ability to bring in such revenue dollars consistently.

This means leaning on the biggest and most deep pocketed incumbent suppliers and taking either a conservative approach to new product innovation, or cycling through new products every category review cycle, pocketing the slotting fees and maintaining a high rate of new product attrition without ever giving trends enough time to gain steam and establish themselves on shelf. We used to joke with Siggi of Siggi’s Skyr that he was a ten year overnight success. He never would have made it that far now.

These buyer behaviors are driven by two things. Those aforementioned financial targets, which include topline sales, gross margin rates, gross profit dollars, tend not to have much flex. They are set in stone. Do or die. Make or break. Win or go home. And the lack of enforcement of “speed limits” on such business practices, in the form of antitrust laws such as Robinson Patman Act and Sherman Antitrust, means that there are very few professional buyers who know the ins and outs of these laws and whether or not their basic daily business practices are in fact legal, let alone ethical. It’s not their fault, even if they are responsible, but they are the tip of the spear, to both suppliers feeling the heat, and to accounting and financial teams demanding their coffers be filled every 30 or 90 days.

In my previous role at Whole Foods, I oversaw the National Promotions Program and grew it from a few million in annual revenue to nearly a quarter billion dollar run rate by the time I was asked to leave. It was a huge part of exceeding the sales and margin targets in our $5 billion annual department P&L. We not only had ad fees for shelf and off-shelf deals, but a variety of discount structures, including off-invoice and MCB (manufacturer chargebacks) deals, but also built out a custom application to do point of sale scanbacks, so suppliers only paid for the markdown on products scanned through the register. This was obviously very popular with brands, who were able to easily do promotions without losing their shirts to off-invoice forward buys at our wholesaler or have to do forensic accounting on invoices pillaged by MCB deductions and billbacks. The scanbacks created some problems with inventory accounting and timing of collections relative to when the promo period cycles fell on the accounting calendars, but as long as the money eventually came in, the FP&A folks were very happy.

The big problems came when my team decided to bill out fewer ad fees and instead encourage suppliers to use those funds for more scanbacks. The ad fees were lump sums tolls or taxes, not needed to cover our overhead, just impositions without real long term ROI for brands, and pure revenue collected by the company that never flowed through to customers. The scanbacks were instead performance based; stores had to stock inventory so it could be sold through the registers and generate the discount and resulting incremental gross profit dollars. Stores loved scanbacks. Suppliers loved scanbacks and hated ad fees. FP&A loved scanback revenue but were addicted to ad fees. Free money. Candy for the sugar addicts. Shit for the finance flies.

We had to constantly explain and occasionally argue with FP&A that we were making a smart fiduciary decision, getting suppliers to invest their $7500 fee in a vehicle that could transform into $10,000 or $20,000 at retail, instead of just $7500 in a ledger. Every quarter, explaining why our ad fee revenue was in the red by a few tens or hundreds of thousands of dollars and that it was being redirected into scanbacks that were bringing in several million in incremental profits. Of course, once many of us old school heads were put out to pasture in 2015-2016, and the Target and later, Amazon, bots took over at Whole Foods, they made all ad fees mandatory, then jacked them up much higher than ever, while also creating new inside revenue streams such as 3% merchandising fees and 10% Prime discounts. Extraction. Rent-seeking. Profiteering. Why? Because they could. And because it was inside revenue, it was easy money to pocket, and wholly unregulated. Sprouts soon followed suit. And wholesalers like UNFI and KeHe made it all possible.

Buyers don’t make the rules. They make blood sacrifices for the machine. Blood, sweat and math. Understand this and survive.

Buyers Need To Say “No”.

The most important word in a buyer’s language is “No”. Why? Buyers review thousands of products annually. Tens of thousands. Samplings. Tastings. Random packages sent to their desk or sample cooler. Trade shows. Table top shows. Supplier visits. Random meetings at stores, coffee shops or en route to elsewhere and in between.

This all takes a lot of discipline and filtering. It takes experience and knowledge. Leveraging data and instinct. Sensory vibes and patience, which is not always bountiful in hectic, stressful workdays. Buyers must be able to filter and analyze to survive and thrive. So much is being thrown their way, everyone wants their attention, approval, purchase orders, letters of welcome and onboarding, or discontinuation notices.

But alas. E Pluribus Unum, out of many one. That is on the dollar bill. It is also a necessity for category management. Not everyone gets to be mayor, that’s what John Mackey used to say, ironically enough (the dude was always the CEO, should have taken your own advice many years ago, my guy).

There is only so much space on shelves. So many slots at wholesale, so many cells and lines on a category review spreadsheet. Each one that comes in means something else must go. Saying yes too much means churn and burn. High rates of new product attrition, letting trends come and go, dying on the vine before they can ripen and mature, before customers can prove them viable. Millions in investor cash wasted, so sad.

And so, the most important word in a buyer’s vocabulary is “No”. Rejections far outweigh approvals. Lots of dark clouds before the silver linings. But it is better this way. It means there will be more opportunities next time. It means prior yes’s on shelf get another chance at life, to prove they can exceed category sales and margin targets. It means trends get a chance to stretch their legs and prove their stickiness. It means sacrificing some individual ambitions for the good of the whole, of the category, department and enterprise, the health of the industry and ultimately the favor of shoppers in stores buying food to keep these buyers and retail colleagues in their jobs, to keep the lights on and revenue coming in. To keep going and growing in a restless, competitive, cutthroat, consolidated, chaotic marketplace.

Buyers need to say no. It’s a good thing, it isn’t easy, it’s not always fun or pleasant and it can cost them friends, perks, popularity, peace of mind. But it’s the most important thing they can do.

peace.

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