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Sorensen: Channel Competition Driving Growth of Wholesale Services 


by Cindy Sorensen / founder, The Grocery Group

Many of you can only imagine how much change occurs over the course of nearly 40 years in any given field. In 1983, I started my career in the grocery industry as a sales representative for Nestlé Foods. I was responsible for selling a portfolio of Nestlé products in 65 independent grocery stores throughout western Wisconsin and the St. Paul, Minnesota, market.   

Those 65 stores were serviced by direct and broker sales forces that sold products directly to them and represented nearly 75 percent of all food products sold. The sales reps provided a variety of services to retailers. Those included taking orders, shelf and category management, resets and ad planning. Other services they provided included: co-op advertising funds; display incentives; damage product reclamation and reimbursement; new item cut-ins; display building; and consumer research. In addition, they provided warehouse movement analytics. Syndicated data was not available because grocery stores did not have any scanners to collect it. 

Reflecting on the activities for which I was responsible as a sales rep, I realize how all of these same services are now available to retailers through their grocery wholesaler.  

During the 1990s, the grocery industry experienced growth in both traditional retailers and new channels of distribution. For example, dollar, mass and club channels had little – or no – representation prior to the ’90s. These new channels raised the competition for shopper dollars. Traditional grocery wholesalers responded by increasing their services to retailers. This allowed the retailers to be more efficient in how they allocated their human and capital resources, as well as to respond quicker to the growing competitive market.   

Wholesalers and distributors began to merge organizations. This, in turn, increased their expertise and efficiency. As they began to offer more services, a noticeable shift occurred in the wholesaler-retailer relationship. 

I can recall early in my career how many retailers had a contentious relationship with their wholesale partner. But four decades later, the wholesale-retailer relationship has grown into a partnership of respect based on a mutually beneficial value exchange.  

Wholesalers today offer many of the services that once had been provided by sales reps. This has resulted in a pivot in the skills that CPG and sales agencies perform for wholesalers and retailers.   

The sales rep-retailer relationship also, at times, had leaned toward distrust and contentiousness. But I have witnessed a shift in the relationships between wholesalers/retailers and vendor sales reps. Today, it is a much more collaborative arrangement with respect for common goals. 

The evolving competitive environment and ever-changing consumer have resulted in a higher level of expertise, services, understanding and respect across the supply chain.

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