CINCINNATI, OH – Kroger is looking to tighten up on late food deliveries, and could fine suppliers up to $500 for every order that is more than two days late to any of its 42 warehouses.
“It’s a massive opportunity from a financial and customer standpoint,” Robert Clark, Senior Vice President for Merchandising at Kroger, told The Wall Street Journal.
It’s a difficult compromise according to experts. On the one hand, meeting deadlines for delivery is important, while on the other, uncontrollable factors like weather, tech malfunctions, travel issues, or demand can all interfere with getting food shipments to their destination on time.
As Steve Matthesen, CEO of the consumer packaged goods sales and marketing agency Acosta, Inc., said to WSJ, “Shipping complete orders on time is a completely reasonable request but, turns out, it’s harder than it sounds.”
Because of this, retailers including Kroger have been understanding of delivery delays in the past, but sales of some $75 billion a year are lost because products are out of stock or unsellable for other reasons, according to the Food Marketing Institute.
“If it was an occasional issue, it wouldn’t have been worth the time and effort [to police deliveries],” Clark said.
The company will eventually fine for any shipment that isn’t received on the due day, WSJ reported, joining a trend of buyers like Walmart, which began charging monthly fines of 3% to suppliers for deliveries that don’t make it on the due day.
“We hope we don’t have to collect any fees from suppliers. We would much rather have all the product we ordered on time,” said Walmart Director of National Media Relations Kory Lundberg. In fact, Walmart noted that the change could create $1 billion in additional sales over time.
The issue is a costly one for suppliers to make the improvements needed, but hopefully, as both retailers commented, could come to better opportunities, consumption, and sales for all sides of the industry.
Read the full WSJ article here, and continue to read AndNowUKnow as we report on all relevant retail strategies.
