Ssi Case Distribution
Case 4: Alternative Distribution for SSI
Judith M. Whipple
Sugar Sweets, Inc. (SSI), was considering ways to increase market coverage and sales volume on its candy and snack products. Historically, the majority of SSI products were sold to consumers through various grocery and convenience stores. Vending machines and institutional sales, such as airports, represent the remaining consumer market segments. The selling environment for candy and snack foods was becoming increasingly competitive and traditional channels of distribution were being distorted, especially in the grocery and convenience trade.
Grocery and convenience stores were traditionally serviced through distributors known as candy and tobacco jobbers. These distributors purchased SSI products in large quantities and then sold them to retail stores for sale to consumers. The number of candy and tobacco jobbers was decreasing, which was distorting the traditional distribution channel. Two factors were causing this distortion. First, the wholesaler and distributor industry in general was going through consolidation as large distributors continued to get larger and more profitable, while smaller and less profitable distributors either were bought up or closed. Second, the popularity of warehouse club stores threatened candy and tobacco jobbers. Small mom-and-pop grocery or convenience stores were able to purchase many products they needed at these warehouse clubs at the same price or less than what the distributors offered. Furthermore, the warehouse clubs provided a one-stop shopping experience so that the grocery stores could purchase a wider range of products at the club store than was sold by any one candy and tobacco distributor. For example, a club store may offer a narrow selection of the most popular SSI products as well as its competitor’s products, while an individual distributor may handle SSI products exclusively. While SSI encouraged grocery and convenience stores to carry its products,
Judith M. Whipple
Sugar Sweets, Inc. (SSI), was considering ways to increase market coverage and sales volume on its candy and snack products. Historically, the majority of SSI products were sold to consumers through various grocery and convenience stores. Vending machines and institutional sales, such as airports, represent the remaining consumer market segments. The selling environment for candy and snack foods was becoming increasingly competitive and traditional channels of distribution were being distorted, especially in the grocery and convenience trade.
Grocery and convenience stores were traditionally serviced through distributors known as candy and tobacco jobbers. These distributors purchased SSI products in large quantities and then sold them to retail stores for sale to consumers. The number of candy and tobacco jobbers was decreasing, which was distorting the traditional distribution channel. Two factors were causing this distortion. First, the wholesaler and distributor industry in general was going through consolidation as large distributors continued to get larger and more profitable, while smaller and less profitable distributors either were bought up or closed. Second, the popularity of warehouse club stores threatened candy and tobacco jobbers. Small mom-and-pop grocery or convenience stores were able to purchase many products they needed at these warehouse clubs at the same price or less than what the distributors offered. Furthermore, the warehouse clubs provided a one-stop shopping experience so that the grocery stores could purchase a wider range of products at the club store than was sold by any one candy and tobacco distributor. For example, a club store may offer a narrow selection of the most popular SSI products as well as its competitor’s products, while an individual distributor may handle SSI products exclusively. While SSI encouraged grocery and convenience stores to carry its products,