Originally printed in the October 2018 issue of Produce Business.
The modern players score big by meeting changing needs and staying focused on the long view.
Wholesalers across the country, on and off terminal markets, are pulling out a new playbook to help customers in an increasingly competitive environment. “Service to customers has required more engagement and understanding of evolving business needs,” says David John III, business strategist for General Produce Company in Sacramento, CA. “With increasing food safety standards and higher end-user demands on all food purveyors, the role of the wholesaler has risen to be more than that of merely distribution of products. We find ourselves in the business of providing information, education, training, merchandising, reporting, marketing and community outreach.”
Food retailing continues to change at an accelerated pace, according to Jonathan Steffy, vice president and general manager at Four Seasons Produce in Ephrata, PA. “There are more channels than ever competing for the food dollar, and specialization has become a key part of success for many retailers,” he says. “Retailers, especially independent and natural food stores without large corporate infrastructures, cannot focus on specialization and catering to their target customers and communities plus all the other aspects of their business, if they are spending too much time on sourcing, logistics, sale planning, merchandising strategy and staff training. That is where service-minded wholesalers come in.”
Successful wholesalers have moved from simple buyers and sellers of produce into a greater benefactor role. “As produce wholesalers, we consider ourselves a service provider above all else,” says Stefanie Katzman, executive manager for S. Katzman Produce in Bronx, NY. “It’s the best description of our business. We provide logistical service, consolidation, wholesale-buying advantage, storage, fresh rotation, information and so much more. Wholesalers focus on all the other services around buying and selling.”
These days, wholesalers who consider themselves only a wholesaler aren’t long for this world, asserts Emily Kohlhas, director of marketing for John Vena Inc. in Philadelphia. “Wholesaling is an aspect of the work we do as a full-service produce partner,” she says. “We’re a specialty produce wholesaler, but we also do distribution, ripening, packing and importing. The real value we bring to the table comes from our suite of services, and the decades-old relationships we leverage to build partnerships that last much longer than a single transaction or even an entire season.”
“The real value we bring to the table comes from our suite of services, and the decades-old relationships we leverage to build partnerships that last much longer than a single transaction or even an entire season.”
— Emily Kohlhas, John Vena Inc.
The reality, explains Rick Feighery, vice president of sales for Procacci Brothers Sales Corporation in Philadelphia, is that retail chains are procuring most commodity items directly but need wholesale distributors as much as ever. “We, as a vertically integrated wholesaler, are very service-oriented,” he says. “Managing low volume items, niche categories, specialty pack sizes and reduced packs are differentiating factors of a wholesale repack distributor. I feel like we sometimes undervalue what we do. We work hard to make supply continuity seamless, and there is an internal cost that can’t be passed along.”
Wholesalers also fill a need as the retail playing field becomes more competitive in terms of labor cost. “There are many time constraints on personnel at the store level, so any services to get the job done effectively and efficiently are always a plus,” says Joe Granata, director of sales for FreshPro Food Distributors in West Caldwell, NJ. “These are extras setting wholesalers apart; for example, consolidation of deliveries from different vendors, store assistance for resets, or introduction to new technology.”
Moving The Ball
Wholesaler game plans have evolved to incorporate a more innovative role in moving product from point A to point B. Increased transportation costs and regulations result in greater demand for cross-docking and forward distribution, according to Feighery. “These days, buyers with less-than-load volume need to use a forward distribution person,” he says. “This forward distribution model has been in play with our cold storage operation and imports for a long time, but now we see need increasing with the West Coast. Shippers cannot manage the business alone, yet receivers rely on the shippers to do it. So we step in to fill this gap.”
New formats with just-in-time business models, including limited assortment stores and convenience stores, have created greater need for wholesaler distribution. “These formats take advantage of forward distribution capabilities,” says Feighery. “Since they don’t have storage capacity, they want delivery several days a week. Ten years ago, a store could have a truck with a full load make four or five direct drops, but the reality of doing this in today’s environment with timing, regulations and loading parameters is prohibitive.”
General Produce offers more cross-docking and forward distribution services due to customer requests and shipper/vendor need. “Transportation costs and new DOT regulations squeeze the supply chain on many fronts,” says John. “Reshaping how to deliver the goods — for example, consolidate and cross-dock loads or transfer products (flip loads) — all make for better efficiencies and cost savings. Our ability to connect suppliers with customer needs brings a necessary service to shippers and customers.”
Cross docking and redistribution is big business at Nickey Gregory Company, according to Andrew Scott, director of business development in Forest Park, GA. “We have numerous deals where we re-deliver across the Southeast on our own fleet of Gregory Family Express tractor-trailers,” he says. “We see more of these regional cross-dock deals popping up across the country.”
Four Seasons provides custom storage and distribution programs through its warehouse. “This is such an in-demand service on the East Coast that our sister company, Sunrise Logistics [in Ephrata, PA], continues to grow in serving the trade,” says Steffy. “Growers, shippers, importers and retailers use Sunrise Logistics’ cold storage, 3PL, freight brokerage, and packing and ripening services to meet the needs of getting perishable product to its final destination effectively.”
Wholesalers also step in to provide small volume products. “No matter how big or small a company, there are always some items they do not use in big volume,” says Katzman. “Wholesalers pass along some big volume price advantages and consolidation for purchasing and delivery. Wholesalers can provide a bulk loading advantage and then consolidate multiple products onto one truck for delivery so the retailers get the freshness and variety they are looking for.”
Kohlhas stresses specialty fruits and vegetables are more than just an added bonus; they’re essential. “But, not all stores can handle a bulk case of turmeric or habanero peppers,” she says. “We offer 5-pound splits, or any weight our program clients want, of a diverse range of specialties so produce managers order only as much as they need. Mixed pallets and DSD (Direct Store Delivery) are the norm. Eliminating excess inventory in the DC (Distribution Center) and at store level decreases shrink and frees up space to play with enhancing product assortment.”
“Wholesalers fill the supply chain gap with their flexibility and never-say-no attitude. Wholesalers offer same-day or next-day shorts/orders to customers. It’s important for retailers and foodservice customers to not be out of product, and this is where wholesalers step in.”
— Andrew Scott, Nickey Gregory
Feighery reports Procacci is a direct importer for tropical and ethnic items, servicing retail customers in these categories. “Other areas where chains do not normally have enough volume to go direct and rely on us include organics, seasonal items such as fruit baskets or chestnuts, and floral,” he says.
Assists, when the market is short or long, are another winning play for wholesalers and their customers. “Wholesalers fill the supply chain gap with their flexibility and never-say-no attitude,” says Scott of Nickey Gregory. “Wholesalers offer same-day or next-day shorts/orders to customers. It’s important for retailers and foodservice customers to not be out of product, and this is where wholesalers step in.”
Kohlhas notes John Vena Inc. supports spot buys by pulling product from a variety of sources when one growing region comes up short. “Retailers of all sizes would be well-served by making a strategic investment in a vendor partnership with a wholesale distributor they trust,” she says. “It’s a move that adds value in-store everyday if you let it, but you’ll see the big payoff when times are tough.”
Pulling From The LOCAL Bench
Local and organic programs are particular categories where retailers can utilize a wholesaler’s already-existing lineup. “Wholesalers act as a distribution center in this case,” explains Feighery. “It’s not feasible or advantageous for many retailers to buy direct on these products,” he says. “With organic, we’re talking about the synergy of being able to buy in volume, pull a full truck and get the product where it needs to go. You have to use a wholesaler.”
When a self-distributed retailer wants products, such as a broader variety of organics, Four Seasons’ Steffy explains, it may not be logistically sound to source FOB because it can add slots to its warehouse. “A specialized wholesaler can offer the solution, since they may have more critical mass on those items,” he says.
Organics is one of FreshPro’s top categories, according to Granata. “It’s a big drawing card with many of our customers,” he says. “They can do one-stop organic shopping.”
Where the population and volume support organic, reports Bob Corey, ambassador and consultant for Corey Brothers in Charleston, WV, more wholesalers are filling that role. “In our area, 90 percent-plus of organic sales are with Kroger and Walmart,” he says. “Our independents stock very little organic — a good marketing objective to enhance turnover at the wholesale level.”
On the local side, Procacci’s Feighery points to the advantage of efficiency via a wholesaler program. “A retailer’s time is valuable, not to mention the operation costs of multiple deliveries,” he says. “We utilize many local growers. In addition, we have a buyer who monitors the Vineland auction every day. He may deal with 50 to 60 different growers. Many chain buyers in the Northeast attend the auction and work with wholesalers to get product cooled, loaded, properly handled and delivered.”
MVP wholesalers all incorporate a significant local program. Scott reports Nickey Gregory offers a Georgia Grown program to customers in the spring and fall. S. Katzman got its start four generations ago working with local farmers. “Though we have grown over the years and expanded across the country and across the world, we still have great relationships and do lots of business with our local roots,” says Katzman. “Local is a significant trend, and consumers like to support their community.”
Linda Luka, director of marketing and communications for General Produce, observes how specialized wholesaler programs, such as “local,” increase retail influence. “Connecting retailers with local growers is one advantage a wholesaler can provide,” she says. “We are a conduit to consumers, retailers and foodservice operators. We make the connections for sales outlets and marketing efforts.”
General Produce has created “Grower Profiles” for most of its local farmers to facilitate the connection between consumer and fresh products. “Telling the story of the farmer is only one small piece of the puzzle,” says John. “We offer a monthly local sheet to guide local purchasing and highlight local products. On occasion, we have facilitated farmers’ market-style events with featured growers on-site at retail locations. This brings local to a whole new level with retailers and consumers.”
Increasingly wholesalers offer merchandising services to support their retail customers. “Merchandising is where transformative change can happen one store visit, one reset, one relationship, one training session at a time,” says Steffy. “Four Seasons’ team of merchandisers all have successful track records in running profitable produce departments and stores, both in chain and independent environments. They bring this wealth and breadth of knowledge to their work with the retailers they serve in the field.”
Four Seasons’ merchandising programs range from check-ins to review seasonality and advise on department topics, to helping do large-scale department sets and resets, to creating improvement plans for conditions, sales, gross margin and shrink. “Produce department staff training and show-and-tell reset events are large focus areas for our merchandisers,” says Steffy. “We offer ad-writing and marketing services customized to retailers’ needs. A few retailers have relied on us as the wholesaler partner to run their produce program in a fully-integrated way.”
“Our staff assists produce managers with creative displays as well as full re-sets when it’s time. The help is very much appreciated by retail partners, especially now, with labor so tight.”
— Rick Feighery, Procacci Brothers
S. Katzman offers a full merchandising and demo service to its customers. “Consumers prefer to shop in a store with vibrant, full displays,” says Katzman. “We have merchandisers who work with produce managers to do in-store setups while teaching less experienced managers how to maintain that setup after we leave. They discuss color contrast, seasonality, display cases, temperatures, variety and all the other intricacies that go into the perfect produce display.”
General Produce’s experienced merchandising staff works in key accounts (where the company is 100 percent the sole supplier). “In most of these accounts, our team is responsible for setting ad tables, building contest displays and executing a marketing plan for the store,” says Luka. “In other accounts, we will direct merchandisers for department resets or establishing new product lines. We can also coordinate, for example, with a salad vendor for schematics, sets and POS materials to launch products and lift sales.”
Procacci has eight merchandisers on the road all the time. “They are all knowledgeable associates working as liaisons between our buying office and stores,” says Feighery. “They are our eyes and ears everyday, helping to ensure stores are operating and executing strategies implemented by our customers. Our staff assists produce managers with creative displays as well as full re-sets when it’s time.
“The help is very much appreciated by retail partners, especially now, with labor so tight. Stores may have people on staff but use our merchandisers to supplement that staff. This is especially true in the summer when employees take vacations.”
Doing something special in merchandising has three impacts, according to Steffy. “First, it allows our merchandiser to help train store staff on best practices and display techniques. Second, the display-building process allows employees to express creativity and engage with shoppers. And last, we find special displays drive consumer excitement and sales, and then again later with repeat purchases if the new or seasonal item was introduced well. Partnering with trade marketing associations and vendors to make displays for retailers has also been effective.”
Retailers look to wholesale partners to provide expertise and information. Corey relates that more and more wholesalers provide assistance in produce personnel training and seasonal resets, as well as merchandising ideas. “Special events, such as farmers’ market sales and attractions, are growing,” he says.
Corey Brothers offers The Produce Corner website for retailers to use for customer and produce staff education. The wholesaler also coordinates a West Virginia Independent Supermarket ‘Great American Petting Zoo Tour’ each June. “We are in our 28th year,” says Corey. “The participating stores build special displays and do sampling and other events around the promotion, such as Zoo of Values sales. Nearly every store repeats each year.”
John Vena’s retail customers rely on the company’s merchandising expertise to build specialty programs. “We work with buyers to identify the most promising opportunities taking advantage of recipe trends, culinary happenings and seasonal demand,” says Kohlhas. “We’ve got our ears to the ground on a lot of these items, so we’ll offer guidance on pricing for their market as well. Because of the volatility in availability and pricing on a lot of these items, conventional ads aren’t usually feasible.
“We’ve had more success with retailers willing to keep space open for last-minute weekly or monthly offers put in place only a week or two in advance. It allows retailers to take advantage of items with a short season or unexpected gluts with competitive pricing.”
“Social media posts, email newsletters, chalkboard signs and bag-stuffers are all effective ways we see independent retailers and natural food stores promoting produce beyond costly traditional ad circulars.”
— Jonathan Steffy, Four Seasons Produce
FreshPro offers targeted weekly ad programs. “Customers can pick and choose what items fit into their weekly ad theme, and we offer any vendor or grower support and POS materials,” says Granata.
S. Katzman’s marketing team works with customers who do not have their own resources to design ads. “We also work with growers to get marketing material for their brands,” says Katzman. “In addition to buying and selling other brands, we have our own brand for which we provide in-store displays, promotional material, and print and digital media advertising.”
General Produce’s team works in concert with certain ad groups and retailers to write weekly ads. “We base this on seasonal items and great buys with growers and shippers,” says Luka. “Our buying team coordinates product volumes with specific customers. We provide ad fliers, retail ad cards and other support, such as product demos, to connect all the dots in the selling cycle.”
Helping independent retailers market in cost-effective ways is important, emphasizes Four Seasons’ Steffy. “Social media posts, email newsletters, chalkboard signs and bag-stuffers are all effective ways we see independent retailers and natural food stores promoting produce beyond costly traditional ad circulars,” he says. “Four Seasons has libraries of product photos, infographics, point-of-sale seasonality and usage signage, as well as in-store special fliers created in-house by our marketing team – all for the benefit of partner customers.”
Procacci also assists customers with designing and coordinating marketing materials. “We do a lot of facilitating to get stores the materials already available from grower/shippers, state departments of agriculture or commodity boards,” says Feighery.
Successful wholesalers are diagraming victory well into the future. “The wholesaler has a strong future due to its flexibility to adapt to changing markets and conditions,” says Scott of Nickey Gregory. “Processing, shorts/JIT orders, logistics, repacking, and DSD are just some of these abilities.”
Wholesalers will be true partners for customers and shippers alike, asserts John of General Produce. “The ability to adapt to shifting market trends, consumer demands and complex issues pertaining to transportation and labor make wholesalers ideal candidates for collaborating with partners throughout the supply chain,” he says. “From retail-ready displays to merchandising teams or consignment produce departments, wholesalers can step up to the challenges with resources and innovation.”
In the future, Steffy sees wholesalers even more involved in providing broad logistics solutions for non-self-distributed retailers beyond straight buy-sell-deliver transactions. “They will also become more integrated with data and reporting to help the retailer and the wholesaler make better decisions in promotion, pricing, seasonality and forecasting,” he says.
As retailing produce moves away from a strict commodity transaction and into more targeted marketing, wholesalers play a crucial role. “We are challenged to create and show customers programs, help them with struggles and fill the gap to take those struggles off their hands,” says Procacci’s Feighery. “This is our core business as a wholesaler — using all the tools in our box to pass value on to customers.”
Katzman recognizes how the inevitability of uncontrollable factors presents opportunity for wholesalers. “New rules and regulations will constantly be put in place,” she says. “More and more issues will arise supporting the need for wholesalers. Looking at our growth over the years, I am very excited for our future.”
WHO’S ON THE TEAM?
Despite the evolution of game-changing direct sourcing, wholesalers still serve as valuable team members for just about all formats and sizes of retail buyers at some point. “Wholesaler services are not limited to any particular format or size,” says Joe Granata, director of sales for FreshPro Food Distributors in West Caldwell, NJ. “They all use the services in different capacities to fit their individual needs.”
Stefanie Katzman, executive manager for S. Katzman Produce in the Bronx, NY, points out no matter how good you are in this industry, there are a few things you just cannot avoid, including weather, traffic and the infamous curveball. “When dealing with these variables, you are always going to need partners close by who have your back and can bail you out,” she says. “Produce comes from all over the world, and replacing poor or late arrivals must happen from nearby.”
Independent and specialty-niche retailers are perhaps the most apt to fully utilize everything a wholesaler offers. “Independent retailers from gourmet markets to country stores, to neighborhood grocers, to discounters benefit the most from service-minded wholesalers providing direct-store delivery,” says Jonathan Steffy, vice president and general manager at Four Seasons Produce in Ephrata, PA. “Natural food stores and food co-ops rely heavily on programs and services wholesalers provide to help them compete in this Whole Foods + Amazon world.”
A good wholesale partner, according to Emily Kohlhas, director of marketing for John Vena Inc. in Philadelphia, focuses on the needs of a particular segment and customizes programs to meet the needs of each individual account. “For instance, we’ve had a strong program supporting independent ethnic retailers for decades,” she says. “We understand where they can be flexible and what their priorities are. Our sales team is skilled at adapting to different needs.”
Larger chain retailers also use targeted aspects of the wholesale skill set. “Self-distributed chain stores often see benefit in partnering with wholesalers to solve specific needs,” says Steffy. “These could include sourcing local produce for a particular region, to performing private labeling, to offering ripening services, or supplying specialty product or organics that their own warehouse can’t easily support with critical mass.”
Kohlhas notes larger chain stores need specific, more tangible services. “The local and regional chains we work with usually take advantage of at least one of our added services,” she says. “This may be our custom splits program for bulk product, ripening services for avocados and mangos, or our limited line of retail-ready specialty items packed to order. Not to mention, of course, delivery and logistics.”
The bottom line, according to Bob Corey, ambassador and consultant for Corey Brothers in Charleston, WV, is all formats benefit from expertise. “Even big chains with their own programs may lack product or consumer knowledge,” he says. “So for them, utilizing tools such as Corey Brothers’ The Produce Corner website can fill this gap.”
Over the years, wholesalers have become strategists working to help customers develop a broader view.
“When the independent retailer and the wholesaler can plan together in advance, a winning solution typically emerges,” says Jonathan Steffy, vice president and general manager at Four Seasons Produce in Ephrata, PA. “Sharing common goals gets everyone rowing in the same direction. For some stores this is about planning a major remodel or laying out the department for their next store. For other stores, it’s a product mix change — perhaps transitioning to more organics but keeping SKU count and margin requirements in mind. For other stores, it is planning a promotional shift or training staff.”
S. Katzman in Bronx, NY, works with retailers on long-term planning focused around grower deals, seasonal items and goal-oriented growth. “We partner with growers on a set portion of certain crops to sell at a firm price based off firm projections,” says Stefanie Katzman, executive manager. “We work with customers when it’s time to change displays and switch out certain commodities. Long-term planning of all kinds allows our customers to align marketing materials, ads, and other types of communication to the consumer efficiently and effectively.”
General Produce Co. in Sacramento, CA, provides an annual Retail Planning Guide plotting the normal produce flow and schedule with seasonal merchandising events. “Then we blend customer specific events, promotions and community outreach into the calendar,” says Linda Luka, director of marketing and communications. “If there is an opportunity to partner with the retailer for certain dates or activities, we do so.”
Relying on wholesaler knowledge is essential for effective planning. “Choosing the right mix of products at the right price at the right time is crucial, and it’s something we do every week,” says Rick Feighery, vice president of sales at Procacci Brothers Sales Corp. in Philadelphia. “Writing 50 or 60 ads every week takes time and expertise.”
Steffy highlights the importance of planning ahead for local programs with larger retailers. “Planning is vital to get the stores what they need at a fair price when they need it,” he says. “Be it varietal pumpkins and decoratives, to special heirloom tomatoes, advanced planning allows for maximum success when the season arrives. Small, local farms take a major risk by planting something specific for a retailer, and on the other side the retailer counts on being in-stock with great quality when the local season is at its peak.”
Holidays and special promotions require advanced work between the company’s vendor/shippers and the sales and buying team. “Securing product for a time period and coordinating with the retailers for promotional space is essential,” Luka says.