Urban Food Chains

the links between diet and power

France retail
Four percent is history
peter 0

Within living memory, a grocery business was considered successful if it earned a margin of three or four percent, but in the late 20th century supermarkets rewrote the rules.

Grocery multiples expect suppliers to have deep pockets and fund special offers at the drop of a hat.

Call it shelf money; marketing assistance; listing fees, the multiples started asking for — and getting — sums in the order of GBP 5000 a year per Stock Keeping Unit (SKU) for listing a product in an agreed number of stores (usually hundreds). Bearing in mind that a large supermarket will stock about 20,000 SKUs, some of which will be furnished by more than one supplier, the country’s major multiples are trousering millions in readies up front, without giving suppliers so much as a cat in hell’s chance of their money back if an SKU is delisted.

There are many ways the multiples can extract whatever money they feel a supplier should cough up: withholding invoice settlements; requiring suppliers to pay for Point Of Sale promotional material; special offers (these are always funded by the supplier); the list is a long one.


So the grocer that used to eke out resources to earn three or four percent has been consigned to history. France’s biggest retailer, Michel-Edouard Leclerc went on the record in October 2007 to say that a hypermarket needs to earn a margin of 25%. I saved the URL*, but Leclerc has deleted the blog post since then, leaving a rather fancy 404 page shown in the picture.

 * http://www.michel-edouard-leclerc.com/blog/m.e.l/archives/2007/10/index.php?date=20071025#000727

customs clearance Europe fruit haulage lorry plane plants retail ship vegetables
Amber light for greens
peter 0

UK fresh produce wholesalers were among the first adopters of end-to-end database-driven stock management. In the early 90s, when multiple retailers were rolling out electronic Point Of Sale systems, overnight there was enough reliable data to drive ordering and procurement systems.

To maintain year-round availability of core inventory, wholesalers needed to be very granular in what constitutes an SKU. By the standards of the day, the databases they developed were ahead of their time. By around 1994, one wholesaler was tracking product grades by (16-bit) colour, calibration range, farmgate and dockside Brix, crop/season dates, with regional adjustments for weather bringing seasons forward or holding them back.

The SKUs were effectively large matrices, with a very long tail of incremental detail that went far beyond grower details and crop varieties. The database effectively became the business and was stored in triplicate on hard drives that were lodged in rotation with the bank: one active, two off-site, rotated daily.

With a global reach, shiploads of third country fresh produce were being sold while the goods were still on the water. Title remained with the consignee until after the ship had docked and unloaded.

For third country fresh produce, the transition from the Common European Tariff to the UK Global Tariff is a detail for which the variables are knowable in advance. For third country produce, the UK already has the PEACH system (Procedure for Electronic Application for Certificates) which is run by DEFRA. Visit https://www.gov.uk/guidance/automatic-licence-verification-between-defra-rpa-and-hmrc where you can download a spreadsheet that maps CN numbers on to plant varieties and gives handling details for importers. The back end of PEACH is currently plumbed into TARIC-3, so a UK-based replacement  is doubtless in hand.

Import duty on imported fresh produce can be agreed on the  basis of a Method 4 valuation, agreed by HMRC (https://www.gov.uk/government/publications/fresh-fruit-and-vegetables-under-method-4-valuation). EU-grown fresh produce should be transferable to this method when the time comes, as the need arises.