GPO Traction with Independents Changing The ‘Street’ Game

In late April, I attended a summit in Chicago exploring the rise of Group Purchasing Organization (GPO) membership among independent restaurant operators and the statistics surprised many of us in the room:

GPO Traction with Independents Changing The ‘Street’ Game

Source: “The Fight for Foodservice ‘Sweet Spot’: GPO Traction with Independents.” Pentallect. April 2017.

  • Nearly 40,000 independent operators belong to a GPO
  • Independents only represent 40% of total GPO purchasing volume, but comprise more locations than chains/groups (60% of GPO volume)
  • Independent membership in GPOs is projected to experience double-digit growth over the next five years

As Pentallect poignantly observed “independent foodservice operators [represent] a $100 billion market with little clout.”

Why It’s Happening

It’s a combination of several factors, but two themes emerged throughout the day: price and transparency

  • Independents pay 10% – 20% more than ‘groups’ for products and services
  • Average GPO gives operators an immediate 5% – 7% savings on margin
  • The rise of non-traditional foodservice ‘distributors’ (Restaurant Depot, Webstaurant Store, Amazon) are pushing the industry toward total price transparency

What We Think

Manufacturers that rely heavily on street business must have an overarching GPO strategy.

GPOs are here to stay. With penetration already high in non-commercial, expect aggressive pursuit of independents and even K-12 accounts. Adopting an overarching GPO strategy is critical to protect margins and will help ensure pricing consistency as operators demand (and receive) more price transparency.

What’s Next

There is no one-size-fits-all strategy that works for everyone. Manufacturers need to identify GPO partners that align with strategic portfolio and business priorities. Partnerships should:

  • Ensure programs align with one another
  • Ensure operator compliance
  • Have measurable ROI systems in place

Want a deeper dive on how GPOs with independents are changing the industry? Contact your account service representative to learn more.

The Case for ‘Product Narratives’ in Today’s Marketplace

Narratives in marketing are nothing new; we’ve been telling stories to customers since the invention of our trade. But the narratives that resonate with our target audience has shifted substantially over time. At their latest A.C.T. (Anthropology, Culture, Trends) Conference, “Telling the Story of Food,”, The Hartman Group asserted that brand-focused narratives are quickly being replaced by product-focused narratives.

The Case for ‘Product Narratives’ in Today’s Marketplace

Source: “Telling the Story of Food.” The Hartman Group. April 2017.

Why It’s Happening

Based on their research, The Hartman Group explains that over time, our values have evolved from ‘practical and rational’ to ‘contemporary and experiential,’ which have resulted in product narratives to gain traction.

Consumer values have evolved.

Source: “Telling the Story of Food.” The Hartman Group. April 2017

What We Think

Product narratives present a unique storytelling opportunity for marketers.

‘Old’ values and ‘brand narratives’ aren’t obsolete; affordability, consistency and convenience are certainly still important. But in today’s marketplace, these attributes are simply the cost of entry.

As our industry continues to change and our target audiences’ demands evolve more rapidly, ‘product narratives’ give us, as marketers, a unique tool to stay fresh and pertinent with tomorrow’s customer.

What’s Next

Ultimately, our goal with any new product initiative or legacy-brand refresh is singular: relevancy with our audience. Choosing the appropriate narrative – or combination of the two – will depend on your business objectives, target audience and go-to-market strategy.

Regardless of approach, we must successfully address the customer’s most important question: what’s in it for me?

Just some Thought for Food™

Questions, comments or want to learn more? Let's connect! akile@jtmega.com

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