There was a time when each part of the supply chain stayed within a well-defined and mutually respected lane. Every link — grower, shipper, packinghouse, buying agent, broker, wholesaler, distributor, fresh-cut processor, purveyor, retail store, big box store, freight broker, common carrier — knew its exact function on the long road to get perishable agricultural goods to the consumer.
Every space relied on the others to fulfill their responsibilities and to stay in their own lanes. It was a well-understood process and ran like a well-oiled machine.
NO SET RULES
There simply are no set rules anymore:
- Growers and shippers often skip over the broker and wholesaler lanes without as much as a lane change signal to arrive directly at the retail store unloading dock.
- Wholesalers often cut off the brokers.
- Retail stores also run wholesale activities when the size of their premises and cold storage facilities permits.
- Former mom-and-pop ethnic stores are now independent chains, many having their own distribution centers.
- Chain stores are merging or acquiring others, and many times the wholesalers suffer when the new entity wants to be more “efficient” and cut out the middleman.
- Discount outlets that once relied on wholesalers compete with traditional retail stores by adding more produce to their stores and increasing their distribution centers.
- Big box chains are now in the produce business.
- Online vendors occupy a space and go direct to the consumer.
In this current landscape, wholesalers can find themselves facing competition from vendors and customers with whom they have previously been aligned. Unfortunately, they often are placed in the uncomfortable and threatening position of bidding against the very people with whom they still conduct business.
So, where is our new lane? How do we wholesalers survive without crashing into our suppliers, customers and vendors?
RENEWED EXCITEMENT
We are a tough bunch and have adjusted to remain a relevant, even necessary, conduit.
In the process, we discovered a new vitality and renewed excitement. We level up to streamline expenses and maximize efficiency. We developed additional ways to maintain our importance to the other lanes, all while generating stimulating new sources of revenue. In essence, we widened our lanes.
Our primary tools are still real estate (warehouse size and location), labor, trucks, experience, and our ability to develop and maintain long-lasting, trusting relationships. These allow us to provide vital customer services, such as additional transportation services to augment deliveries, consolidating, cross-docking, repacking and ripening, providing in-and-out short-term storage, merchandising and promotional assistance.
We increase our visibility with vendors and customers by gaining exclusive representation of interesting new products, such as vertically grown and “living” product, specialty items, non-agricultural produce department items that tie in to the produce and help increase incremental sales.
Merchandising support is becoming a standard service that places us right in the heart of the produce departments where we can interact with personnel to better serve them.
We also gain in-depth knowledge of our customers’ customers and learn their buying habits. This helps us in offering ad pricing to attract end-users.
More wholesalers have started their own growing operations, or partnerships with established growers and exporters, to ensure a consistent supply of quality inventory.
In the Los Angeles market, for example, many wholesalers have made exclusive arrangements with Mexican growers. Some wholesalers have even taken the next step in planning out annual sales promotions at supporting stores, often handling the marketing of products to the consumers.
During the pandemic, some wholesalers started offering boxes of produce directly to consumers. Though not as prevalent today, some have maintained that business and still have delivery services in smaller vans, which can also be used for purveying produce to restaurants.
The pandemic also forced wholesalers to re-evaluate their customer base, and many wholesalers got more involved in the bidding process for schools and other institutional businesses. Though the profit margin may not be as large, the volume going to schools keeps the machine running more efficiently and opens opportunities for creativity with packaging, processing, etc.
At SGS, we see ourselves succeeding at many of the newer ways of doing business. Perhaps the best analogy is that we see ourselves as a relatively midsized, but fast, car, dodging and weaving through congested traffic. Of course, we always keep both hands on the steering wheel and look for the safest routes, but sometimes the other “vehicles” have their own agenda and timelines to get to the end-user.
One thing is for certain: You’ll never get far looking in the rearview mirror.
Carole Shandler is the president of Shapiro-Gilman-Shandler Co., a fifth-generation produce wholesaler in downtown Los Angeles, adjacent to the Los Angeles Wholesale Produce Market. The company was founded in 1907.
