Coles supply chain revamp to go ahead

The way grocery brand owners have their stock handled and promoted in supermarket aisles is set to change after Coles decided to push ahead with its overhaul of its supply chain.

A letter sent to Coles' suppliers this week reveals the supermarket chain has chosen marketing services companies Crossmark and AMC to be its first "preferred providers" of merchandising services in its stores.

The new system will start before the end of the year, with suppliers not wishing to hire Crossmark and AMC required to have their merchandising agents undertake an accreditation course.

In its letter to suppliers, Coles' supply management team says the supermarket has developed the new structure for merchandising reps to reduce disruption in the stores and provide a better and lower cost service to suppliers.

"As you are aware, there are up to 30 merchandise representatives that currently visit Coles stores on a busy day and there is no standard process, which causes significant business disruption in store, and a resource cost without a material benefit," the letter says.

"To help reduce this in-store disruption, and cost to both suppliers and Coles, we have selected two preferred field force providers, AMC and Crossmark."

As BusinessDay reported in June, the overhaul has sent shocks through agents, also known as merchandising reps, whose daily job it is to watch over product on behalf of suppliers inside the store including everything from restocking to replacing price tags. These field reps also typically replace perishable food stock, and negotiate deals with store managers over special promotions - all of which are key to promoting grocery brands and driving sales to shoppers.

Suppliers will be nudged into going through Coles' new merchandising structure, with those that use Crossmark and AMC expected to get a better value and service in store for their brands.

As an added sweetener to get suppliers on side, Coles has offered to reinvest any gains from the restructure back into supporting their brands.