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But even as some vendors lose customers, Riggan points out, others may gain from the merger. “On our side, it’s up to us to cultivate new business,” he says. “If you lose an account due to these changes, you just have to go get it back. There are no guarantees.”
McLaughlin notes that even in a successful merger, the transition period can be challenging. “In general it takes a long time for the anticipated synergies to be realized,” he says. “Until then, not only will [the retailer and its purchasing processes] be less efficient, but there could also be greater costs.”
Power Shifts
On the surface, consolidation puts more power in the hands of retailers. Growers feel supermarkets are in control, McLaughlin says, and they must follow new mandates because they need access to stores to sell their product. That said, retailers don’t hold all the cards. The need for massive quantities of produce gives the larger produce vendors who are able to supply these quantities some bargaining power when it comes to price, for example.
“When Walmart needs 100 loads of grapes or two ships of bananas a week, they just need the produce,” Peterson confirms. “That’s more important than what they pay. So suppliers have some power. They have a choice; they can say no.”
Riggan agrees, retailers must have product to fill their shelves. “Without vendors, they’re just a shell. There’s not a complete upper hand on either side.”
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