[00:00:00.000] Well, it’s the end of the week. And look at us. We both put our party shirts on.

[00:00:03.850] It’s the end of the week. I should be on the golf course.

[00:00:07.090] You should. Sorry. Thank God the weather isn’t good today. And that’s why you’re not on the golf course. There you go. Hey, I heard Stefan that maybe you had a pretty big milestone recently.

[00:00:22.300] Yes. A big birthday. A big 6:0 birthday.

[00:00:27.530] Sixty years old. And you don’t look a day Over 58. Thank you, John. Very nice of you. But I heard you had a wonderful party, and it was a wonderful day. Absolutely.

[00:00:38.580] It was. Thanks.

[00:00:39.780] It’s nice to have a bunch of people who love you. Yeah. I have no idea what that’s like. So, you know. I’m jealous. I live vicariously through you.

[00:00:48.400] Well, you have another nine years in front of you.

[00:00:51.440] Right. So maybe I can make some friends. And today, I think you and I were having a conversation earlier this week, and some interesting thoughts. And we wanted to share it with the incredibly fast-growing audience for this podcast. And you are the the dollar store king Yeah. Thank you. At Lid because you have, as many people who’ve listened to the last episode with you know, but those who don’t, you have an extensive experience working both as a consultant and as an operator leading a supply chain in the dollar store world. So you have a lot of insights there. And so first, let’s check in. There’s been some interesting news about dollar stores these days. What do you have to tell us?

[00:01:42.900] Well, a lot of closure, a lot of opening. Overall, I think there’s been more openings than closures. So the market is growing and it’s growing in certain areas. Of course, They’re concentrating where they think their business is. Difference between Canada and in the US, through studies I read, Canada is getting more and more client in And even people that makes more money. While in the US, it’s the other way around. They’re blaming, and I read through some reports from those dollar store company, they’re blaming it on the mid, let’s We call it the mid-range- Retailer? People.

[00:02:33.950] Okay. Middle income people.

[00:02:34.960] Middle income people that are not coming to the dollar store as much.

[00:02:41.930] Interesting.

[00:02:42.820] And it’s the other way around. So it’s the reverse trend. And it’s the other Where are we around in Canada?

[00:02:45.960] In Canada, we are seeing folks from middle and upper income make more stops at a dollar store, and they’re shopping that same demographic as shopping less in the dollar stores in the US, which is really interesting. And one of the things that’s interesting related to that is I have a bit of a TikTok addiction, and I do like to pretend that it’s because of all the great news, I get a very easy access to news. But one thing that has been a big deal here, I know on both sides of the border, grocery prices are a big deal. And we talk about on TikTok, they love to pull out what does What does Campbell’s soup cost at the Dollar Store? And what does it cost at enemy number one of your large grocery chains? And the price differential is shocking for the same product. And I know that’s where it got interesting because you had a lot to say about that.

[00:03:48.720] Yeah, because we started talking about how grocery and Dollar Stores were trying to avoid each other competing. So they won’t carry the same- Assortment.

[00:04:04.970] Yeah, basically.

[00:04:06.020] So they’re trying to get their assortment unique. So every grocery chain, every dollar store, they’re both trying to get their line of product unique so they can control the price better. So they don’t have to compete one to another. Same thing within the same chain, if you look at their e-com platform and their brick and mortar stores, they won’t sell the same product. It’s just to make sure that they don’t have to compete against each other and they can control the price better. Well, that 60 I just turned reminds me of Steinberg back then when it was Dominion, Steinbergs, remember?

[00:04:54.950] Dominion, Steinbergs, the old grocery chains.

[00:04:57.700] Back then, it was a thing to try to get the lowest price possible.

[00:05:02.480] Everyone’s competing to get the lowest price possible.

[00:05:04.800] Exactly. Well, they’ve reached a point where there’s no more profit.

[00:05:09.560] Because right now, you’re now competing with the dollar stores for that lowest price possible. And the idea is, obviously, you’re not going to beat the dollar stores in theory.

[00:05:17.590] Exactly. So let’s get a different product, something else, and sell it at a pricing that makes sense and that creates profit for the company, Which absolutely makes sense. Yeah. So that’s why we’re seeing less and less variety on the shelves. Right.

[00:05:39.700] So the consumer walks in and then I’m walking into my grocery store preference, not because of a pricing issue, hopefully, at least this is the strategy. I’m walking in because there are certain key items that I love, I’ve grown to love, or you can take it to an extreme. I mean, we both know a retailer that takes it to an extreme. And maybe you could just without getting just the basic strategy of what that- Which is to get as many product brand name or sorry, they’re branding it through their companies and trying to get customer to love it.

[00:06:22.140] And that’s the only place you can get it. It’s the same thing. The big grocer in the States, they do the same thing. They have their brand name. It used to be just one mayonnaise for us here, but now there’s many of them. And some people will like a branded mayonnaise instead of the tradition of the- Right.

[00:06:52.160] The private label strategy, as we were saying just minutes ago, originally was a strategy of I’m going to give you a, call it equivalent quality to the national brand, but at a lower price. But the grocery store could do that because they collected more of the margin so they could lower the price and make it attractive. And the most famous, and this is one thing for the folks who don’t know the Canadian grocery history too well, but Loblaz was the company in North America that changed the game with their President’s Choice chocolate chip cookies and their President’s Choice mac and cheese, which became perceived by the consumer as a much higher quality product than anything that was in that part of the planogram. And so people actually started thinking of President’s Choice as a high-end brand, that it was the Weston family themselves. Almost like, now that I think about it, you know how they’re are products in the UK that get the seal, Her Majesties? Yeah. And it’s like, this chocolate chip cookie is the only one the Weston family would allow in their house. So it must be the best that you can get.

[00:08:14.440] Same with Cookies.

[00:08:15.760] Same with the cookies.

[00:08:17.080] And now we’re seeing a proliferation of that strategy is what you’re telling me. Exactly. And especially we see that. And again, we’ve seen that with lots of, well, you just take Trader Joe’s. I mean, Trader Joe’s private label is perceived as a premium. Not necessarily the greatest, but always like, oh, they’re going to have the interesting assortment. I’m going to go to Trader Joe’s and see what cookie products they’ve come up with.

[00:08:42.800] You go there for Salad Dressing. And they have salad dressings that are totally different than any other store. And then you go and I’ll try it. Okay, you like cucumber with whatever it is.

[00:08:55.890] A hundred %.

[00:08:56.630] Well, you can’t find it anywhere else. Or Kraft doesn’t It doesn’t manufacture it. So if you like it, well, then you have to go back to Trader Joe’s.

[00:09:07.160] You have to go back to Trader Joe’s and you don’t care that you paid an extra 17 cents for that salad dressing. Oh, you did. You paid that extra 17 cents. You didn’t notice. And they got their margin. And they don’t have to compete with the Kraft salad dressings that are in a dollar store.

[00:09:22.520] And that’s exactly why we wanted to have this chat because it went from a strategy of low price to a strategy of acquiringDifferentiated assortment. Yeah, and acquiring client base and locking them in. You log them in because they want your product. And your product is only available at your place.

[00:09:46.290] Yeah. I love this. And everyone should know this trick, because when we go to restaurants, the first thing when we’re having a lovely meal and they’ll say, well, we have a private wine list, privately built up wine list. And it’s just so that you can’t compare what the retail price is on the store’s shelves. So you don’t know how badly you’re getting ripped off.

[00:10:11.870] Well, every other bottle of wine, you can look on your phone and knowing that you’re paying three times the price of the SEQ here in Quebec or LCBO.

[00:10:23.210] I know this is a bit of a tangent, but one thing I want to say, if anyone is listening who is in the salad dressing world, at home, I make this pretty terrific Gochujang salad dressing. It’s like a cheap, fast, pathetic version of a kimchi. And you can… Kimchi, we think of it as a cabbage, but you can do it with any vegetable. And man, oh, man, someone’s got to come out with a jar of Gochujang salad dressing. It saved me a little bit of work because you have to slice the… I slice the green onions real thin into these straws. Anyway, I would pay 60, 75 cents more for that bottle of dressing.

[00:11:06.520] Okay. Well, I got to say that, well, now that we’re talking salad dressing, mine comes from Sagne because of someone I ideally love. And it’s Sagne made. But what is it? It’s unique. They call it the classic solid dressing, Vio. And we used to import- Where do you buy it? We used to import it from Sagne.

[00:11:37.670] No one knows where Sagne is. That’s a region about two hours north of Quebec City in Quebec. It’s absolutely gorgeous.

[00:11:44.830] So back then we used to go to Sagne to get it, and then it came to Quebec. But now we can get it here in our grocery store.

[00:11:52.300] We can? Yes. All right. I’ll look for it. I’ll get you. But isn’t that always the case? You know Specialty Foods, for example, what is the difference? We have a beloved customer, Stonewall Kitchen, and they’ve got their Wild Maine Blueberry Jam versus or Maine Wild Blueberry Jam, I should say, versus the Smuckers Jam. Now, how much of the, and I say this with love and respect to everyone involved, how much of the production method is different? They’re identical production methods. The recipe is different, and the quality ingredients could be different. But it’s so much is identical, but the label says Maine Wild Blueberry Jam, and already mentally, I’m getting a better product, right? Because it’s wild. Wild blueberries. None of these farmed blueberries. These are wild. And that trick has been proliferating across the industry. What does that say for the supply chain?

[00:12:59.450] It says a lot. It says a lot because right now, pricing is everything right now. And people are shopping through different channel, and it creates a lot of opportunity for grocers, a lot of opportunity for omnichannel. It creates a lot of opportunity because there’s a lot more channel than there was before. For us or for the supply chain, it means a lot more smaller order. Again, I had the discussion yesterday. We’re not going to the pallet, we’re going to the unit, right? When we talk about what’s the trend? Well, the trend is still that way because now that pricing is so important because of the economy and how it is. Well, people are shopping. So people are going to start doing stops at different places because they have to take Pay attention to what they’re spending because grocery is very expensive. Yeah.

[00:14:06.580] And one thing I’m thinking, again, informed by some of our shared experiences of late, it changes a… If you think the procurement team or what we used to call with Pride buyers, they have to shift their emphasis from price negotiation and bullying the vendor, which is not a fair way of saying it, but let’s just say that, to curation, to being very discriminating about what products I get up onto the store shelf. And that’s a merchandising and procurement changes their focus, doesn’t it?

[00:14:44.680] Yeah. Well, look at… I mean, a good example is, and I’ll stop there, but with Costco and their Kirkland product. That’s all I’ll say.

[00:14:55.390] Okay. Well done. But then on the other side, if I’m a manufacturer, a small family mid-size food processor, there’s some opportunity here. Absolutely. Because people will be looking for you if you can be a game changer in a category. You said the VO dressing. Now I am going to look for it and I will be curious to see how good it is. I will buy it regardless what the price is. My next bottle of salad dressing is this VO. So that creates opportunities. The The problem will be, to remind everyone, that these grocery chains are just as much about how easy can you integrate into their supply chain as they are the quality of your product. So you need to digitize. You need to be able to do the EDI communications. You need to have all that set up because that is actually not as important as the quality of the product that you’re making it.

[00:15:53.560] But the one product manufacturers are going to have to go through this food distributor. Because they won’t be able to be up to speed with that technology and everything that is required for a one product manufacturing company. If you’re a one product, it’s just not going to pay. And that’s how they’re going to get through it is going through food distributors and others.

[00:16:27.030] I would say, thinking about what you’re saying, I I would say that for the warehouse, let’s say, the retailer’s distribution center, get ready for more churn, a skew churn, get ready for a wider, potentially, base of slow moving product. Like you said, we are drifting from the pallet to the unit in our handling, and that’s happening in food service as much as it is in the retail world. And so that creates a more complicated operation. Absolutely. And by nature, a less productive operation, which is not something you can do anything about. It is baked into the problem you’re trying to solve as a distributor. Yes, it is. It is fascinating. Now, is there anything you want to add before we close up?

[00:17:17.120] No, I think we’ve covered it all.

[00:17:20.170] Can we promise ourselves next time to make sure that we’re not wearing the same shirt?

[00:17:26.380] Okay, let’s do that.

[00:17:28.170] I will wear gray next time. Okay. All right? And then you can wear anything else. I’ll be in gray. Cool. Stefan, have a great weekend.

[00:17:34.680] Thank you very much. You too. Take care. Bye.