In the mass retailing firmament, the retailer is king. For industry suppliers, a primary objective is getting close to the retail merchants who make the key decisions affecting their products.

retail merchants, retailer-supplier relationship, mass retailing, David Pinto, mass retail merchants, retail chains, Duncan Mac Naughton, Walmart, Mike Bloom, CVS, Joe Magnacca, Duane Reade, Walgreens

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Inside This Issue - Opinion

Retail merchants who understand the game

November 8th, 2010
by David Pinto

In the mass retailing firmament, the retailer is king. For industry suppliers, a primary objective is getting close to the retail merchants who make the key decisions affecting their products.

There’s no new news in the previous paragraph. Since the advent of mass retailing, as the stakes have risen with the growth of retail chains and the stores they manage, supplier access to retail merchants has been a focus, sometimes the key focus, of supplier strategies, plans, programs and initiatives. In the main, this has been an effective strategy — for the obvious reason that people prefer to do business with people they know.

For their part, mass retail merchants have not generally repaid the attention accorded them by suppliers. Simply put, they usually regard such attentions as their due. They believe, as well, that suppliers benefit more from their retailer relationships than do retailers — and that, in developing retailer friendships, they are only building their business.

Every so often, however, a retail merchant comes along who views the retailer-supplier relationship in broader and more strategic terms, who grasps the benefits of strong supplier connections, who understands that it’s nothing more than good business to get to know the people behind the merchandising decisions. They do so not to take advantage of a personal relationship, not to get another nickel in allowances, but to collaborate to build the business, to generate an additional dollar in volume.

Enlightened merchants do exist, though they are fewer in number than was once the case. Three deserve mention here.

The first is Duncan Mac Naughton, most recently a senior merchant at Walmart’s Canadian unit and, prior to that, a key merchant at Supervalu. Walmart announced late last summer that Mac Naughton would be returning to the United States as executive vice president of consumables, health and wellness, and

Knowingly or not, Walmart has done itself a huge favor by bringing this exemplary merchant to Bentonville, Ark. Indeed, Mac Naughton’s appointment has been eagerly applauded and embraced by the supplier community. While he worked at Supervalu, no merchant was more trusted, more respected and more accessible than Mac Naughton, none was more willing to see the supplier side of things, and none took the pains that Mac Naughton did to explain and justify Supervalu’s strategy, positioning and objectives.

Perhaps most important, the Supervalu merchants who reported to Mac Naughton shared his opinion of the suppliers’ importance, along with his willingness to grant suppliers access and to seriously consider their views.

Then there’s Mike Bloom, who, along with fulfilling his supply chain duties, serves as CVS’ chief merchant. Those who have not bothered to invest the time and effort required in getting to know Bloom — and getting past what some suppliers view as indifference to their agenda — sometimes dismiss him as just another senior merchant. Those who have been put off by his tendency to negotiate from CVS’ unparalleled position of strength sometimes unjustly label him as close-minded.

Truth is, Bloom has become, through unquestioned skill, diligence and an ability to master every challenge CVS has thrown at him, an exemplary merchant. This is true not only in the classic sense of insuring that his chain sells the right merchandise at the right time at the right price, and not only in his acknowledged success in building what has become one of the strongest and most stable merchandising staffs in chain drug retailing. No.

To put it simply, Mike Bloom has learned that most difficult lesson for merchants to master: the necessity of meeting suppliers halfway — and, equally meaningful, the willingness to do so. It is a lesson many senior merchants never learn or learn too late to be of any real value. In mastering this lesson at the peak of his career, Bloom has become an invaluable asset both to CVS and to those suppliers who have taken the time to reach out to him. Together, they have helped transform CVS into an unparalleled merchandising entity.

Finally, there’s Joe Magnacca, who has recently been elevated to the post of president of Duane Reade but is perhaps better known in the industry as the merchant behind that chain’s metamorphosis from the New York City drug chain of last choice to a legitimate presence in the New York market, a worthy shopper alternative to CVS and the Walgreens drug chain that recently acquired it.

Perhaps the fact that Ma­gnac­ca is Canadian has made him more receptive to meeting suppliers halfway. Maybe it’s his background at Loblaws and Shoppers Drug Mart, two of Canada’s strongest retailers, that has provided him with that open-minded view. Whatever the reason, he is today recognized as among the most accessible retail merchants in America, an executive willing to go to almost any length to give a supplier — and an innovative, though untested, product — a chance.

One story will justify the high opinion that most suppliers have of Magnacca. During the last week of November the National Association of Chain Drug Stores will hold its annual fall board meeting in New York City, an event that will bring some 100 retail and supplier leaders to this city. Last week, more than a month in advance of the event, Ma­gnac­ca called a senior NACDS staffer to ask if the executives in attendance might want to see Duane Reade’s newest stores — and that he, Magnacca, would be willing to conduct such a tour.

It is an example of a retail merchant who understands the game and is willing to share the lessons he’s learned with both his competitors (who, at any rate, can see the stores for themselves, a simple fact that continues to elude some retailers) and those suppliers who have helped Magnacca and his chain reach new levels of merchandising excellence.

At bottom, it is an approach to his industry other merchants might well consider copying during these especially perilous times for the retailer-supplier relationship, a relationship that once helped drive the industry.