Late last month, Calli Schmid, vice president of grocery at Meijer, sent the following email to "all Meijer grocery suppliers," essentially saying that the cost of doing business with the company would include the supply of free product to the half-dozen new stores being opened by the company this year:
Meijer is excited to continue another consecutive year of growth in the Midwest. As we all look ahead to 2023, we are excited to be committed to investing in new stores and remodeling existing stores to continue growing our respective businesses. 2023 will see the building of six new Meijer stores across various prototypes!
To further accelerate growth, we are asking suppliers to help partner and support our investment of new stores with one case of goods for each item carried. This small investment, shared across hundreds of suppliers in partnering with the Meijer, will showcase a shared commitment by all parties to see our businesses grow.
To ensure this commitment is done efficiently, here is the process we will be following:
• Meijer Grocery division will be requiring all vendors to supply a one (1) case free fill to go forward new stores.
• Calculation has been completed by the Meijer team.
• We will launch this program in our 2023 Super Center store openings (3) and will continue for the foreseeable future.
• The Grocery Inventory Managers will be setting up all trade agreements by 5/5/2023 and will need each vendor to approve those trade agreements by 5/12/2023.
If you have any questions on these expectations, please contact your Director for additional clarification. Thank you for the continued investment, and we are excited for growth in 2023!
- KC's View:
The industry insider who provided me with this email included the following comment:
Once again, a retailer goes down the path that manufacturers need to partner by giving their new stores a complete free fill. Sad.
There is a strong-arm nature to these emails that is disquieting - I assume that this free product is in addition to all the fees, allowances and promotional money that is being sent from the manufacturer to the retailer. But that's not enough - the supplier is being told that if you want to continue being a supplier in good standing to Meijer, you have to supply this much free product, at a cost determined by Meijer, and that the deal will continue for the foreseeable future.
And it is all bathed in the aura of "this is a partnership," while the reality is that Meijer is making suppliers an offer they can't refuse.
The retailers' perspective is that this is a way to mitigate the massive investment that it takes to build a new store, and while that has some validity, don't they realize that somebody, someplace has to pay for this product? It is going to come out in the cost of goods - and, in the end, it will be the consumer who will pay.
If I were a retailer - and it probably is a good thing that I am not - I would make these deals being made by my competition a centerpiece of my advertising and marketing. I would explain how all these promotional deals work, and why, in the end, all they do is obscure what things really cost. And I'd promise not to dip my beak in the same way other retailers do, with the goal of actually being a partner with suppliers to deliver the best possible value to my shoppers.
And, by the way - the very fact that this email was forwarded to me suggests that there is a degree of antipathy, if not outright resentment, in the supplier community about demands like these. Don't you think that suppliers are going to try to stick it to retailers when they get the opportunity?