BM: How do bakers negotiate with store directors?
Richardson: The store negotiates with a baker for price and the contract timeline, which is typically measured in years. The bakery that manufactures the store's private label generally gets a nice spread for its national brand. But it still goes back to negotiating price and timeline.
BM: How are store brands typically placed in comparison to national branded baked products?
Richardson: It depends on traffic flow. Stores that have a proven track record with private label would give private label first preference. It really depends on shopping habits from store to store, and there are always exceptions to the rule.
BM: What happens to bakers' shelf positioning when they don't keep product in stock?
Richardson: Competitors could come in and take advantage of the void. If the manufacturer fills the shelves and puts the surplus product in the back room but doesn't keep the shelves well stocked, he or she could face a problem.
BM: What determines where particular brands are placed on supermarket shelves?
Richardson: The guy who helps you the most and is actually in your store is going to get the best business. It's a relationship between the supplier and the supermarket, and that relationship is very important. The bakery account manager has a reason to be in the store and keep the shelves stocked because he has to fulfill his contract. Wholesalers produce product for retail sales, and they are happy to fulfill their contracts so they can earn a profit. Typically, contracts are one to three years, with an annual review. Suppliers are contracted for ‘X’ cases over a time period. That time period may be extended if the supplier can meet the order quantity stipulated in the contract.
BM: What is the biggest challenge supermarkets face in establishing shelf positioning for bakery items?
Richardson: The biggest challenge is knowing your product and knowing what sells. The product mix keeps changing. You need to know what products are selling and when to make room for a particular commodity. It all goes back to building relationships.