R&FF Retailer: Wegmans Still Rules

By Warren Thayer, Editorial Director, Refrigerated & Frozen Foods Retailer

Through
a special arrangement, what follows are excerpts of a current article from Refrigerated & Frozen
Foods Retailer magazine, presented here for discussion.

Yes, shoppers
love Wegmans, and there’s no question that it is one of the most innovative,
skillful merchandisers anywhere, bar none. The consumer focus group we ran
on the Rochester, N.Y.-based chain confirms what we’ve long believed about
the chain: that it is a shopper advocate with world-class instincts and execution
skills.

Refrigerated and frozen food vendors — at least the ones we interviewed for this story — would not disagree with any of that. But they differ on how well Wegmans partners with them. Ask one vendor about Wegmans, and you’ll hear strong praise. Ask another, and you’ll hear that it squeezes margins beyond what’s reasonable and treats vendors poorly. We heard considerably more bad than good on the trade relations’ front. In fairness, that’s not unusual in this adversarial climate, although the level of anger surprised us.

On the positive side, one vendor says, “Wegmans is the most desirable customer relative to its size that we have due to its quality, innovation and the consumer it attracts.” Another vendor says Wegmans delivers great speed to shelf on new items and a manageable tool for identification and correction of voids. This supplier adds that Wegmans provides its partners with accurate and up-to-date selling information.

But other vendors critical of Wegmans say it focuses so heavily on costs that there is little funding, time or energy left for partnering. Says one supplier: “They always give you the feeling that they need to get a little more from you and that they’re never happy.”

Says another, “They demand pricing that allows them to retail an item for X cents per unit higher than Wal-Mart on a like item while returning exorbitant margins. We have lost items that have solid movement and ranking simply because they could not make their margin requirements and be within X cents of Wal-Mart… This customer absorbs a grossly disproportionate amount of our time, energy and resources and in return we get nothing but stress, frustration and grief. Wal-Mart has the tough reputation, but I’d rather deal with 100 Wal-Marts the size of Wegmans than one Wegmans.”

Finally, still another vendor says, “My business is okay with Wegmans, but it is the worst headquarters call I make in this country” because it treats the selling community in frozen and refrigerated foods so poorly.

Wegmans declined an interview, as is its usual policy with trade press. But Jo Natale, director of media relations, noted that the chain has been consistently ranked among the ‘best retailers with which to do business’ in an annual survey by Cannondale Associates of manufacturers. In Cannondale’s 2007 survey (and in previous years), Wegmans was ranked in spite of its very small size relative to the other nine retailers in the top ten. It also ranked high in Cannondale’s best category management/buying teams; most innovative consumer marketing/merchandising; business fundamentals; best supply chain management; and best practice category management.

“Our vendors tell us although we’re tough, we are fair, have a clear strategy and always keep our promises,” she said in an e-mail.

Discussion Question: Are you surprised by the mixed grades that Wegmans is receiving as a vendor partner? Which complaints do you think are common across retailers and which seem particular to Wegmans?

• Wegmans Still Rules – Refrigerated & Frozen Foods Retailer