"We run some superb promotions which really enable our retailers to compete with the multiples, but time and time again we are let down on supply," complains Costcutter marketing director Angela Barber. "It's all very well for suppliers to complain about compliance but we have disciplined retailers who want to carry our promotions and we are let down by supplies."
Costcutter runs a three weekly promotional programme supported by two million leaflets distributed by its retailers.
Agreed supply levels fall down
"We agree sales forecasts with suppliers weeks in advance, but out of about 50 key promotional offers Â our lead deals Â there are always one or two where we have major supply problems, and sometimes it's as many as five or six. It's a real nightmare."
She accepts that occasionally forecasts can be wrong and the promotional stock will sell out more quickly than expected, but says far too often retailers are left with empty shelves because the agreed supply levels do not materialise.
Barber is reluctant to name the culprits, but says some are major blue chip companies. And this year Costcutter has major problems in the paperware and hot beverages category.
"The main problems are in the ambient area. It would be more understandable if it were fresh and chilled products because of the short shelf life, but when its long life ambient products it's even more frustrating."
Nisa-Today's is at the sharp end. It should receive the agreed volume of products from suppliers, enabling it to deliver them to Costcutter members, as well as Nisa members and many other independent stores. However, deputy managing director for central distribution John Sharpe is more conciliatory. While problems can arise, "some of this is related to retailers' and wholesalers' bad forecasting," he says. "If you provide the right forecasts and the right phasing of product, you generally get what you require.
"The problem is probably more acute in times of product shortage, where there might be some favouritism and suppliers might prioritise their larger customers. But I don't generally have many issues on this front."
In the cash and carry sector the problems are more severe, according to an executive with one leading company. "It is a huge problem in cash and carry. In one recent national promotion a company was allocated just 14 cases of product. That's fine for the first customer, but what then?"
Promotions are crucial for driving sales in the cash and carry sector because many of their retail customers will shop several depots looking for the best deals. Extra value promotions such as 33% extra fill or four for the price of three are popular with retailers because they provide good sell through to the customer, but special packs are where many of the major problems occur.
The last resort
Recent examples, he says, were price marked breakfast cereals where insufficient stock was produced, and extra free' biscuits where the product wasn't available when needed.
"I've also heard of a 10% free offer being substituted with 10% off invoice price deal because of non-availability. The deal may look similar but the end results are not. For a start, there's 10% less money in the till, and how much of that 10% margin benefit will the consumer ever see?"
For cash and carries it is crucial a promotion runs for the full three week period because the greatest sales often occur during an offer's final week, he says, but far too often there is a sign in the cash and carry apologising that an item is out of stock.
Ultimately, a supplier stands to lose business if it lets customers down, but Barber says while Costcutter has stopped doing promotional activity with a few suppliers, this is a last resort because brands are important to the independent sector.