07/06/05 Wal-Mart and the produce industry, Pt. 2

07/06/05 Wal-Mart and the produce industry, Pt. 2

There have been misconceptions about how a retail giant like Wal-Mart goes about doing business with produce growers and meat packers. And a lot of it stems from how Wal-Mart has revolutionized how it does business. But Bruce Petersen, the Senior Vice President of Perishables, says there is not really a mystique if a grower or a company wants to sell goods to Wal-Mart. The main though process for a grower is to think as a consumer would think, and then provide goods and services based on the consumer's demand. PETERSEN: The only sustainable business advantage in today's environment is speed. If we can understand what the customer wants, go through that decision process, and turn around and do something in a store faster than my competition, I'll win. Petersen says much of what Wal-Mart does from a produce sales and buying standpoint comes from Wal-Mart's early days in getting into the grocery business back in the late 1980's, where trial and error resulted in a successful formula. Take for example the process of buying produce. Petersen, who has been in the produce industry for thirty years, was a product of the old school. PETERSEN: Buyers at a lot of chain stores pick up the phone. "How much are your apples today?" "Well they're x- price today". Click. "How much are your apples today?" "X". "O.K. you're my partner today, because you're cheaper today". When you start talking about managing hundreds of millions, in fact, billions of dollars worth of revenue, it became very clear to me back in the early days if we were going to grow to the company we were going to become today and beyond, that that peddler mentality wasn't going to work too well. And that resulted in the introduction of some revolutionary ideas in the produce industry in the early 1990's, which Petersen said were not so revolutionary as models in other aspects of the business world. PETERSEN: One of these days, you as our supplier, are going to be keeping our Distribution Centers in stock without direct intervention from the buyer. I got this funny look. "You're going to do & what?" And I said, oh, as a matter of fact, we're also going to contract produce just a little bit. What we'd really like to do is get out of the business of kind of arguing about how much stuff costs on a daily basis, and kind of, get into more of an established contract and things with it. "You're going to do&what?" Petersen admits it is a notion that has taken some time for growers and shippers to get use to, and again has been the cause of some misconceptions. More on that in our next program.
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