Supermarkets: Friend or foe to manufacturers?

Saturday, 26 March 2011 00:26 - - {{hitsCtrl.values.hits}}

The concept of supermarkets immerged and spread throughout the country with the emergence of the free market economy and has now become a substitute to the corner store we all used to visit in the old days.

The convenience and variety it offers has brought in customers from all walks of life shopping at these supermarkets and now supermarkets have become a one stop shop for all.

It has also become attractive to customers due to the accuracy in the weight of products, hygiene, and value added services they offer.

The supermarket industry is an operations intensive industry be it sourcing products, staff to marketing and advertising.

Currently all FMCG companies as well as small time manufacturers work hand in hand with supermarkets to provide the best value to the customer. In an era where the “customer is king” all parties in the modern trade try to give the best price to the customer.

Currently many supermarkets even tie up with small time manufacturers, farmers and fresh produce suppliers eliminating middlemen to pass down the cost saving to customers and also to uplift small time suppliers as a CSR initiative.

Pricing of products has always been a dilemma to the supermarket industry as the product prices cannot be increased arbitrarily – they are either governed by maximum retail prices or controlled (in the case of some essentials).

Big time FMCG’s get a lot of shelf space especially with their popular brands which are fast moving. Most supermarkets nowadays use strong marketing and advertising tactics to communicate to customers the benefits of shopping at a super market.

An interesting turn in the supermarket industry in Sri Lanka is the own branded products which we see on the shelves of almost all big time supermarkets. This trend initially began with giants like Tesco’s and Sainsbury abroad and has now permeated to Sri Lanka as well.

Most private labeled products are sold by supermarkets but produced by the original manufacturer.

With the same manufacturing price supermarkets provide the benefit to customers by giving these products at a very competitive price when compared with competitor products.

In that context supermarkets are a service that majority of us cannot do without in this day and age.

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