A group of eight leading U.S. food brokers are combining forces to build brands for manufacturers and enhance retailer relationships.
The eight brokerage houses are ArchPoint Sales in San Antonio; Blackford Brokers in Shawnee Mission, Kan.; Brennan & Nagel Marketing and Sales, St. Louis; Carlin O’Brien, Chicago; Co-Sales Co., Arizona; ESM/Ferolie, New Jersey; KCBS, Cincinnati; and Riteway Sales & Marketing, Lakeland, Fla.
In addition, three “Information Centers of Excellence” will be located in Chicago, Montvale and Phoenix to serve the national platform and customers.
The launch was held at the headquarters of ESM/Ferolie on July 19 in Montvale, N.J. More than 250 people attended. In addition to the members of BeaconUnited, the standing-room-only turnout included “a great representation of manufacturers,” Tony Scudieri, president of ESM/Ferolie, told The Shelby Report.
Scudieri said combining these eight brokers into one group will enable clients to tactically and strategically reach their goals, and support from three centers of excellence would provide them “with fact-based selling solutions.
“As the winds of change continue to blow through our industry, it’s of paramount importance that we remain steadfastly focused with you on success,” Scudieri said. “Our aim’s never been higher, our potential never greater.”
But why is now the right time for such a coalition?
Richard Spoon, CEO of ArchPoint Group, says today’s conditions are akin to the 1991 storm, dubbed “The Perfect Storm” by Bob Case, a meteorologist in Boston. The storm was a confluence of a strong disturbance along the U.S./Canadian border, a huge pressure system that built over southeast Canada and the remnants of Hurricane Grace pulling in its tropical energy. The result was an epic storm.
But Case predicted the storm three to four days in advance because he saw all the factors moving together.
“What you’ve told us, (what) you’ve told our consulting team, is that a storm’s coming,” said Spoon. “And the storm’s coming at the intersection between these three communities: you, the retailer and the third party. You’re the ones who have suggested that now is the right time.”
Spoon said that retailers are looking for more marketing money and lower prices, but manufacturers are increasing prices, and on top of it all sits “a big, humongous, huge gorilla called alternative channels.
“We’re hammering them as manufacturers because we’re raising prices. We’re taking marketing money down in most cases rather than up. And it’s creating a very challenging storm for them,” Spoon said.
As a result, many retailers have increased their lines of own brand products.
“It’s fascinating to watch what they’re doing, and you get into some retailers, like H-E-B down in Texas, and they’re getting into …a bunch of private label,” Spoon said. “It’s interesting to watch. But all of this is about the storm that they’re in.”
He sees manufacturers stuck in the middle, and described the broker community as “interesting.”
He quoted websites of large brokers to point out the following:
- One represents 96,000 SKUs.
- One claims 1,200 clients.
- One claims to cover 344,000 outlets.
He said aggressive consolidation pushed the focus to size and scale, which, Spoon said, is a mistake.
“What should we be focused on?” he asked. “Performance.”
Clients should ask whether they are getting what they are paying for … “because the conversation in the industry is about size and scale and the conversation with Beacon United, it is about performance.”
As manufacturers are seeking top-line growth, they want a seat at the table with key retailers, and they want program performance. Execution is a big challenge.
“I want what I want done, as I ask, on the timing I ask it to get done,” Spoon said.
Manufacturers are looking for a partner to help grow business, not to just maintain it, and one that will do what it says it’s going to do. It has to be an investment with a good return.
“So if I think about the three groups (in) ‘The Perfect Storm,’ I’ve got retailers with a set of pressures; I’ve got the third party or brokerage with different set of pressures; and I’ve got you in the room with a set of pressures, and they all are colliding,” Spoon said. “Now is the time for a new solution. Now is the time to challenge the status quo and look for a different way to do it.”
Jesse Edelman, COO of ArchPoint Group, was next to address the group gathered for the launch of BeaconUnited. He said the four things manufacturers specifically need are growth, access and influence, performance and efficiency.
“We spent a lot of time thinking about those, spent a lot of time understanding what that required and what that would look like for us,” Edelman said. “Because in the end, what we figured is if we could deliver against those needs by the design and the execution of our model, then we know, unequivocally, we could become a viable choice as a strategic partner for all of you to grow your business from coast to coast.”
Demystifying the intricacies of local markets
Edelman said manufacturers need a partner fundamentally aligned to their growth, one who can offer direct and candid feedback, who understands what it takes to be successful and ultimately someone who gives them their experience in local markets with customers.
The goal of BeaconUnited is to deliver against four principals: uninterrupted customer/client focus, a seamless integration of change, managing consistently with the same level of commitment and focusing on execution across all markets.
“I can tell you personally that I’ve had time as a broker, I’ve had time as a manufacturer and just a little bit of time as retailer, and one of the great frustrations for me as a manufacturer was working with third parties that were learning their job on my dime, walking into the buyer’s office with me and introducing themselves to the buyer on my dime,” Edelman said.
BeaconUnited understands that it takes industry veterans with a track record of success to offer the experience manufacturers need, he said. Edelman said long-range success is rooted in the answers to these questions: how do I create meaningful, sustainable trials; how do I generate a repeat purchase; and, ultimately, how does my brand become a trusted choice on the shelf with the consumer?
Edelman said solving those three things delivers sustainable, long-term, profitable growth. He also said that the “strategic imperative of profitable growth is around this idea of efficiency … but I’ll never save my way to prosperity.”
Efficiencies do help save money, but they don’t really benefit long-term performance, success and growth.
“What you need is a partner that’s made the right investment in scale and synergy but not at the compromise of performance and success,” Edelman said. “There’s got to be a balance, and if we can strike that balance, I think we’ve ultimately met your needs. We believe, through the establishment of BeaconUnited, we’ve struck the perfect balance.”
BeaconUnited has brought together “fiercely independent brokers. What we have built as a foundation of this organization is while we have made a sizeable investment in scale and in synergy, we have maintained our fierce independence in the local markets because we know that that’s where the rubber meets the road. That’s where success is driven.”
He said the group of eight brokers is committed to growing brands, allowing for manufacturing partners’ guidance.
“Our efforts should lead clients, many of whom are lost amongst a sea of competitors, on a path to prosperity,” Edelman said. “I know that sounds very lofty, but it is about a path to prosperity. It’s about a joint mutual partnership on that path to prosperity.”
The goal of BeaconUnited is “to demystify the intricacies of local markets,” he added. “We want to help provide clarity. We want to give you a clear approach to what is needed. There has never been more of an important time, based on the challenges that each retailer is experiencing, to give you that clarity at the local market level.”
The eight members of BeaconUnited cover every area of the country—the Northeast (ESM), the Southeast (Riteway Sales & Marketing), Texas (ArchPoint Sales), the West Coast (Co-Sales Co.) and the heart of the country—KCBC out of Cincinnati, Carlin O’Brien in Chicago, Brennan & Nagel in St. Louis and Blackford Brokerage out of Kansas City.
Each remains locally owned and operated—and fiercely independent, Edelman said. They each have deep experience with retailers in their markets as well as on-the-ground, in-the-market leadership.
“Our owners are in the office. Our owners are working with the customers. Our owners are carrying bags. Our owners continue to be involved actively every day and will continue to be,” he said.
“Our goal is clear. If you love ESM, you’re going to love Co-Sales. If you love ArchPoint Sales, you are going to love Carlin O’Brien. If you love Brennan & Nagel, you’re going to love Riteway Sales & Marketing. You will hear this often from us. If you love us here, you are going to love us there.”
It is a balance of investment and infrastructure combined with a reinvestment in the local market. It also is about services. Edelman said BeaconUnited is prepared to offer world-class marketing and merchandising services, thought leadership for strategic planning, customer-centric category management, space technology and shelf support services—all through a combination of national and regional expertise and knowledge.
BeaconUnited also gives manufacturers one voice, one partner in their brands, and the profitable and sustainable growth of those brands, and ultimately mutual long-term success.
Building the infrastructure of BeaconUnited
A key pillar of BeaconUnited is the technological infrastructure behind it. Barb Usher, CFO/human resources for Co-Sales Co., explained the technology and analysis behind that infrastructure.
“Every member of this group has made a significant investment to form a network of technology and a team of analysts that will definitely level the playing field for national representation going forward,” Usher said.
Data will flow through the three Information Centers of Excellence across the country, and it will be tightly controlled, she said, and managed through BeaconUnited’s communications.
The group also entered into an agreement with Nielsen for nationally syndicated data at the customer level. Usher said the data will give BeaconUnited the ability to analyze all departments, all categories, all brands, down to the item level.
BeaconUnited also entered into an agreement with Data Alchemy, which provides pre-formatted templates for information to be delivered to the sales teams.
“The great thing about Data Alchemy is you don’t have to be an analyst to read it,” Usher said. “Anybody can go on and read the category, understand the facts.”
It also secured an ad-tracking source that will analyze performance and track brands against the competition. In addition, an electronic retail reporting system will deliver the results from merchandisers in the field. All of that information can be posted to a communication portal or web-based portal that will be available and customized for each business.
Each Information Center of Excellence will have a team leader to organize workloads and control data. Data analysts will build the pre-formatted templates and they will continually refresh the data “so there won’t be any waiting time for data to be delivered,” Usher said. “You’ll be able to access our information quickly and through our portal.”
Data specialists will go deeper into the analysis of categories to identify opportunities and make recommendations for solutions to key business issues. They will use syndicated data and customer/retailer internal data. That analysis can then be taken to a customer who is underperforming on certain brands and/or categories. Brands will be rated on their share across the category with details in dollars or units vs. a year ago, and information on average and promotional retail will be available as well.
Other services include the ability to track a brand of interest, including those of competitors. Templates can track weekly performance on promotions, too.
“With our electronic retail importing, we’re going to be able to communicate exactly what we’re going to do at retail, and it will be real time,” Usher said. “You’ll be able to see stores that have been called on. You’ll be able to see the results that the merchandisers achieved.”
It also provides continuity reports to quantify out-of-stocks, new items and refills.
“That’s the continuity reporting that would give us that level of detail, and it’s all tabulated for results across the country so we can give you quantifiable results of every single region and what we’ve achieved,” Usher said.
As BeaconUnited builds the web-based portal, it will do so to manufacturer specifications, and it could include product images of shippers, seasonal packs, bonus packs and display-ready units; sales plans posted for sales teams; consumer marketing calendars so that sales teams understand the support manufacturers are offering; customer profiles with details about all the customers in a market, the cost of doing business, their strategies and which priorities can tie in with a manufacturers’ brands; as well as retailer planograms.
“All of this will give us insights to drive your needs at the retailer and for your brands,” Usher said.
National reach, local market expertise
Jeff Nelson, Co-Sales Co. president and COO, asked attendees whether they’d ever worked at retail, if they remembered when they only had eight to 10 customers, when everything they sold stayed in the market, when they got graded by a retail supervisor at the end of the month based on the percentage of store coverage—when “we became the labor force for free for the retailer?
“There’s many, many forces pulling from us trying to be a sales organization,” Nelson said. “So when you look back at where you were, I want you to look at this organizationally when it comes to headquarters and retail. That’s the way we think. We still do a continuity call. All of us are deeply embedded in our markets.”
Nelson said no two customers are the same, and that those brokers who have grown up in their local markets understand the languages of various retailers, both big and small.
“We go through every store in our market. We do continuity calls, whether it’s a national, a regional or an independent call. We’re hitting those stores on a daily basis,” Nelson said. “We’re established as far as centralization. We understand the specific programs.”
He gave the example of a “price blaster” in a Kroger store, and how the store director is being measured on compliance for the price blaster.
“So here’s a manufacturer, when you’ve had a price blaster—we go all the way back down to that single store coverage and we verify that those are on the floor because they’re being managed, rated and probably their compensation relates to compliance on a price blaster,” Nelson said.
At Safeway, Nelson said, “We’re following those promotions in the individual store, making sure that the prices are right, as that’s critical as a manufacturer books a program, because we know, we’ve experienced, in some of the markets pricing will fluctuate. Our job is to be in those stores, even the national calls, to make sure there’s compliance for your programs.”
This is executed for regional customers and regional independent customers, too, he said.
“You’ve got to really know these customers,” Nelson said. “These are the customers we all cut our teeth on for years, and they remain what we would call regional independent customers.”
At WinCo, Nelson said, “You’ve got to have that standing appointment. If you don’t, you’re not getting the face time necessary to do business at WinCo.”
He asked, “How can you do a business plan for a customer like Bashas’ (located in Arizona) out of Southern California or Sioux City? It varies throughout the country. How can you understand the customer and the local needs of that customer and plan from somewhere else?
“We plan all of our promotions on a local basis when it comes to our independent retailers because we have standing appointments, and we call on them.”
Nelson said BeaconUnited would deliver on orders, making sure that the promotions are right and eliminating deductions.
“We think that’s important to you because it’s your money,” he said. “We want to keep your money in your pocket and not have it tied up to where you’re coming back to us with letters and three, four months later we’re getting the money back for you.”
BeaconUnited is focused on the independent retailers and wholesalers as well, Nelson said.
The “nationals,” as he referred to larger chains that have $500 billion worth of dollar volume; that leaves half to be had, he said. Independent retailers and the wholesalers bring “balance to the volume.
“Wholesalers are really important. Those are the guys that handle all those independents downstream,” Nelson said. “You go to a headquarters, you make the call, coordinate the headquarter execution, whatever the program, we speak their language.”
Reaching downstream customers is key.
“These are the calls where we simply leave our competition behind because it’s just too darned expensive historically to make this call,” Nelson said. “But we go down to that independent store level and we can call on Bob or Sue because we’ve called on them for years. We’ve won contests with them. We’ve got credibility. We’ve got a continuity call going with them.”
This is where the incremental opportunities lie, Nelson said.
“You guys know that at the end of the year, you take that other 50 percent I’m talking about plus; that’s how we make our numbers,” he said. “Because typically we know on the national basis they’re much, much more planned out further to do their promotions than we could do on an independent level.”
Nelson said the bottom line is “you can’t sell it if you don’t make the call. We make the call at retail.”
BeaconUnited offers local market expertise across the entire country.
“That’s what this organization is going to offer to all of our clients,” he said. “Tactical capabilities at retail: distribution verification—this goes from a Kroger all the way down to Tom’s Meat Store—pricing validation, product integrity, schematic compliance, backroom merchandising.”
He said “new items getting to shelf, building displays, selling flyers and spec orders—that’s where we take the numbers over the top.”
For independents, flexible shelving standards were added.
“We know that if we made the call that we have the ability to manipulate the shelf and that’s where we help build brands one store at a time,” Nelson said.
Bringing it all together
Stephen Clausen, regional director of growth & innovation for Nielsen, said his company is excited about BeaconUnited, and one reason is how the management team exhibits patience, persistence and professionalism. He said it was no small effort on the part of BeaconUnited to work with the Nielsen chain of command.
“The management team at BeaconUnited vigorously represented their business model and that fiercely independent nature,” he said.
He said that Nielsen has been very good at data and great at excellent customer service, but “here’s where we start to fall down a little bit: when it’s gets to smaller manufacturers and retailers, because a great deal of our resources are applied to global nationals.”
He said that’s where BeaconUnited comes in. Combined, they can answer business issues, offer specialized analytics, look at the mix of products and more.
“These are the things you are going to be hearing more about from us and thus more about from our partners also,” Clausen said. “Identifying where demand exists. What it means to a given manufacturer, to a given retailer. Are they in the right spot for you to leverage that demand?”
This makes BeaconUnited and Nielsen “ideal partners,” Clausen said. “Because we’re not always going to be there to answer everybody’s business question. We may be answering in the form of a phone call from Beacon to Nielsen, back to Beacon to you. But that’s going to happen really rapidly because of our client service excellence.”
Nielsen has licensed Beacon with insights and data, Clausen said, and “that’s going to allow them to take their expertise to the next level” based on its members’ “hundreds and hundreds of years of experience and granular strategy.”
He said insight plus trust made BeaconUnited—and the relationship with Nielsen—possible.
“They have their own insights. They’ve got good brains,” Clausen said. “We’re adding data to those good brains and we have a strong, strong level of trust with Beacon because of their commitment to integrity, professionalism … and their go-to-market strategy aligns perfectly with ours to affect client actions that at the end of the day mean nothing if it doesn’t deliver client value.”
To wrap things up, Antony Ferolie, COO of ESM/Ferolie, told attendees that building BeaconUnited was “a very long and challenging process,” but also “an extremely rewarding one.”
He said the members of BeaconUnited share many values: “entrepreneurial spirit and passion, local and regional expertise, a commitment to our people, to the business partnerships with our clients and our customers, and to integrity.
“Until today many manufacturers were faced with a very difficult choice,” Ferolie said. “That was the choice between a broker with a national reach vs. a broker with local expertise and market performance.”
BeaconUnited offers “the best of both worlds. You can have the national synergy that you’d expect, one voice, one point of contact, one condition check, centralized retail reporting, client focused marketing teams and national data analysis. And you can keep the performance you love: local market resources; deep, longstanding retailer relationships that enhance communication; and the ability to drive your sales at retail and headquarters.”
Ferolie ended by reinforcing the national reach/local market expertise appeal of BeaconUnited and the experience of its members.
“Through BeaconUnited you can keep the level of performance working for you and gain the national synergies as well. Every member of BeaconUnited is debt-free and we invest back in your business.”
More importantly,” Ferolie said, “if you love us now you will love us even more tomorrow.”