The polarisation of the US industry is taking shape rapidly. In 1999 for instance, the country's top 10 retailers represented 45 per cent of the marketplace - by 2004 that figure will have risen to nearer 70 per cent. The top 10 suppliers meanwhile will be responsible for 63.3 per cent of the produce sold in the larger chains in the US market by 2006, a PMA survey revealed. That sobering figure reaches an amazing 83.3 per cent when considering just the smaller chains.
This trend is reversed in ranging policy. Even though the produce department will continue to increase its range in years to come and stay as a major profit driver for US supermarket chains, the survey showed that floor space devoted to produce is continuing to decline. Therefore, more products are competing for less shelf space and a trend is emerging for smaller firms to have greater fresh produce profit potential.
As the number of buyers is decreasing alongside the number of suppliers, Tucker predicts a big communication challenge for suppliers and more need for optimum efficiency.
Some 46 per cent of retailers - and 82 per cent of suppliers - said that market consolidation has changed the way they do business. But there has not been much success thus far for b2b on-line auctions in the US, she added. 'They do not provide the level of trust and assurance to buyers who want to know who and what they are dealing with,' said Tucker. 'The survey suggests that we will see more private b2b communication channels and there has been heavy investment recently in this type of system.
'Technology has had a relatively minor impact on the supply chain to this point and most retailers are taking a wait and see stance. Technology is a tool, one that will never take the place of personal relationships, but the future will see more integration and the suppliers will need to accommodate for the increasing demand for technological know-how from their customers.' Mirroring perhaps what has been happening in the UK in the last couple of years, Tucker summarised another trend: 'The responsibility for many functions within the supply chain is being shifted backwards as retailers ask suppliers to take on more and share more tasks than ever before.' Interestingly, not one surveyed US retailer believed that promotion or market research was its responsibility, while 75 per cent said category management was a shared responsibility (only 54.5 per cent of suppliers concurred).
Added value, differentiation, alignment with other suppliers and improved information flow were among the recommendations made by PMA to suppliers wishing to maintain their business.
'Know your customer base,' Tucker told Brazilian suppliers. 'Work more closely with each other in all areas and act as consolidators for retail customers. Step up food safety and develop a proactive approach. Remember that one size does not fit all - fit your area and develop solutions to suit.'
