Shoppers expect to be enticed by bargains calling out from retail endcaps, but the less time spent sourcing those specials is more time available for marketing, merchandising and competing with the big guys, said Matt Hartz, grocery manager for New Pioneer Co-op.
"It's a cornerstone of the supermarket business," Hartz said. "We want to be competitive in all food categories—whether it's yogurt or cereal or chips—with everyone else out there in the market."
New Pioneer, an Iowa City, Iowa, consumer co-op with two stores, is one of 70 organizations participating in the Co-op Advantage Program, a "virtual chain" that allows the small independents to leverage their combined $350 million a year in buying clout.
Working 90 days out, a regional coordinator distributes a flier marketing 500 products from about 30 vendors. Buyers select their specials, and orders are placed. The size of the order, in theory, allows the network to negotiate for volume and shipping discounts. For now, the product list is made up mostly of packaged and frozen foods, wellness supplies and body care products, and the occasional bulk item.
"It's strictly a promotional program at this time," said Corinne Shindelar, executive director of Twin Cities Natural Food Co-ops and the Midwest Co-op Grocers Association. "But we are setting the foundation for the future."
The network may eventually be extended to include more general grocery items and, perhaps, to operational services, such as credit-card processing, inventory management, front-end supply ordering and deli supplies.
TCNFC and MWCGA launched CAP in Minneapolis in 1999. The program went national in March and is purportedly the only national co-op buyers' network. Shindelar said smaller purchasing programs have emerged around the country. CAP is attempting to develop a business template that may be useful to them.
Though the program results in bargains for the consumer, Hartz said he anticipates bigger savings in labor.
"At the store level, the program saves the buyers a significant amount of time each month in purchasing," Hartz said. "Instead of having to meet with multiple brokers and manufacturers' reps independently to fill the endcaps or meet the promotional schedule or keep up with category promotions each month, the program consolidates a tremendous amount of work for us. This frees us to focus on other things in the store, like merchandising."
Beyond the buyers' time, Hartz said the program helps his graphics department better schedule development of in-store signage and graphics and newsletter development.
"It's a labor savings, and labor is money," he said.
Natural Foods Merchandiser volume XXIII/number 7/p. 10