In an effort to save millions of dollars annually, supermarket giant Coles is considering creating its own panel of field agents to replace traditional independent merchandising representatives.
The shift would make Coles the arbiter of fees charged to suppliers by field agents and allow the retailer to generate significant rebates in the process according to SMH.
The plan to dramatically cut independent merchandising representatives has allegedly sent waves of uncertainty throughout the agent ranks.
Merchandising reps watch over product on behalf of suppliers inside the store through restocking and changing price points, and currrently charge a fee of approximately five percent of sales to suppliers, equating to around $500 m annually.
A similar plan by Coles was blocked in 2006 by the competition regulator as it was deemed to be “third line forcing” which prevents a company from purchasing goods or services of a particular type from a third party nominated by the company.
The new proposal would see Coles hiring their own “approved” field agents who would charge fees to food suppliers for their services. The fee would be pushed below the industry standard of five percent and a rebate would be charged on top, enabling Coles to revert hundreds of millions of dollars back into their revenue stream.
The move would also mark a dramatic shift from current supplier relationships and continue along the supermarkets long term plan to simplify its supply chain and cut costs. Field agents who are not part of the Coles panel will either have to undergo a new Coles accredited training course for an undisclosed fee, or possibly be shut out of stores.
Coles believes the move will deliver more value for suppliers by simplifying and standardising duties performed by field reps.
''One area suppliers tell us we could improve is how we work with their field force teams – reps they employ to support their brand in-store,” said a Coles spokesman
''So we are currently exploring options to make this service better for suppliers, better for our stores and most importantly better for customers.''
The spokesmen said that the no decision will be made without consulting suppliers and Paul Meyer, chairman of the Association of Sales and Merchandising Australasia said that the peak body representing field agents has not yet been approached about the proposed changes.
''We understand that a private tender process has been undertaken, but we were not privy to the tender document,'' Mr Meyer said.
''The members of our association would be particularly concerned about, if correct, the implications of these rumoured changes to the current system.''