Coles pushing ahead with field agent restructuring

Posted by AFN Staff Writers on 14th August 2013

Australian merchandisers are “nervous” about the decision by the Coles supermarket group to push ahead with plans to restructure how field agents work in its supermarkets, according to the merchandisers’ industry representative group the Association of Sales and Merchandising Companies Australasia (ASMCA).

Fairfax Media reported a letter being sent by Coles to its suppliers this week saying that merchandisers Crossmark and AMC are to be its “preferred providers” of merchandising services in its stores. Suppliers wishing to use other merchandising companies will be required to have their agents undertake an accreditation course. Coles reportedly plans to have the new system in place towards the end of 2013.

The ASMCA told Australian Food News that Coles is justifying the restructure as a way to “reduce noise and improve consistency”.

Yet Paul Meyer, Chair of the ASMCA, told Australian Food News that improving consistency had always meant reducing the ‘out-of-stock’ gaps on the shelves.

“That is an absolute aim of our members, and that is the whole reason for the business, to try and minimise out of stocks,” Mr Meyer said.

Coles’ restructure may reduce competition

Mr Meyer said the ASMCA was engaged in an ongoing discussion with its members and with Coles to try and “minimise damage” to the merchandising industry. He said that ASMCA members feared that the restructure could put 5,000 to 7,000 merchandisers or field agents out of work.

“What we fear is that the preferred merchandisers will get more and more benefits over a non-approved merchandiser. We fear that it will become a two-horse race,” Mr Meyer said. “There are probably 30 different merchandising companies out there who are big enough to pitch for the business of multinational companies. So that gives all the multinational companies a great benefit to be able to shop around, to be able to go from one to the other to find a merchandising company that specialises in, say, hardware or pharmacy, and to ensure that there’s no conflict of interest,” he said.

Mr Meyer said potentially having just two merchandising companies looking after most stock in supermarkets was a “major flaw in the process”, and could put the merchandisers in a difficult position should they have two suppliers in the same category.

“One supplier wants to have greater floor space over another, so which one do you choose?” Mr Meyer said. “That’s why we have so many members, and a mixed competition, to make sure there are no conflicts of interest, and to make sure every single [food manufacturing] company is properly represented,” he said.

Mr Meyer said it was possible the reduced competition in the merchandising sector would also have a “knock on” effect, and eventually reduce the number of brands appearing on supermarket shelves.

Merchandisers agree with aims, but say method will not work

According to the ASMCA, Coles’ proposal is based on a new data program that is able to identify out-of-stock items and send notes to suppliers to let them know a problem has occurred. Having merchandisers already in-store, which forms part of Coles’ proposal, would “speed up” the process of addressing any issues.

The ASMCA said its members are on board with Coles’ aims to improve the consistency of products on shelves, but that the method the supermarket is proposing will not help the suppliers.

“In examples overseas where this has taken place – and there are many, many examples overseas where companies such as Coles have tried to control merchandisers – it has always failed,” Mr Meyer said.

Reducing merchandisers in-store will not “reduce noise”

According to the ASMCA, Coles has said that its store managers are often approached 30 or 40 times each day by merchandisers who need to get a problem fixed, which is affecting the managers’ productivity. Mr Meyer said reducing the amount of time Coles’ managers spend with merchandisers each day is what the supermarket group means by “reducing noise”, but that the restructure will not address that problem.

“It cannot happen, it will not happen the way that’s being proposed,” Mr Meyer said. “I think it’s that store managers’ time should be better managed,” he said.

“If you try to reduce the number of merchandisers from 30 down to 10, all it’s going to allow is those other 10 merchandisers more time with that store manager. Is it going to be able to free up his time? I very much doubt it,” Mr Meyer said.

Woolworths’ approach

According to the ASMCA, Coles’ rival Woolworths has approached the same issue of its store managers’ time by providing each manager with an iPad.

“Woolworths have gone down the path of getting all of their managers iPads, to ensure they spend more time out on the floor and can actually fix problems on the floor, rather than having to retreat back into their office,” Mr Meyer said “That’s a great productivity improvement for managers in Woolworths, and I wish Coles had gone down the same line,” he said.

Introducing industry accreditation and code of practice an alternative

The ASMCA is more positive about the accreditation system proposed by Coles, and suggests that this could be an industry-wide approach. Accreditation and a code of practice could include rules about what times of day supermarket store managers were available to merchandisers, according to the ASMCA. But to be effective, according to Mr Meyer, the accreditation would need to come from an independent body, such as the ASMCA.

The ASMCA said it developed an accreditation program 7 or 8 years ago, and asked the supermarket groups for their input. Mr Meyer said the ASMCA was now “re-engaging” with Coles to look at the possibility of verifying the supermarket group’s accreditation program, and perhaps add some of its own modules to the program for specialty services such as in-store demonstrators and in-store layouts.

“It is a worry for us that Coles have decided to go down what we think is a slightly drastic path,” Mr Meyer said. “Luckily Coles are coming back to us and we are in conversation,” he said.

“We are extremely appreciative of the fact that Coles are talking to us and allowing us some level of influence over the process to try and help to minimise the damage,” Mr Meye said. “We wish they had gone about it a different way. And again, we think the way that Woolworths have approached some of these difficulties in their business have been able to deal with it is probably the way that Coles should be going. But Coles have chosen this path and now we need to try and converse with them to minimise that damage,” he said.

Australian Food News first reported in July 2013 that merchandisers were opposed to the proposed restructure of merchandising services in Coles stores.

 

Coles to push ahead with merchandisers restructure