History of the Grocery Trading Industry

Historically, prices that large retail supermarket chains pay for their goods have varied, sometimes greatly, from chain to chain. Surprising as it is to some, manufacturers have always been in the business of selling the same products to different retail Supermarket Chains and other distributors at different prices. This is because it is to the manufacturer's advantage to charge as much money as possible for their products. They achieve this goal by creating disorder amongst grocery buyers at the chains using a costing system based on 'list price' minus confusing discount vehicles with code names such as 'accruals' 'scan deals' and 'bill-backs' which purport to save the chains money on the cost of their goods. In fact this system and these 'programs' serve simply to fool buyers and their managers at the chains into either not knowing what they are actually paying for goods or by being so complex that the buyers become too tired or too overwhelmed to care.

In the 1960's from this environment evolved a multibillion-dollar industry known to grocery insiders as the 'diverting' industry. Supermarket Chains and other distributors began to use their ‘access’ to price to not only stock their shelves but to sell to middlemen (grocery traders or ‘diverters’) who then sell that product to other Supermarket Chains and distributors without access to that better price.

Although grocery trading has done its best to keep manufacturers from gouging retailers it has been limited for a couple of reasons. One is the practice of manufacturers reps to perpetuate personal, often self-serving relationships with grocery buyers that do not always including selling product to those buyers at the lowest possible price. This comes at the expense of the very supermarket chains they are supposed to serve, and ultimately the consumer, who pays for this inefficiency at the checkout line. Another was the limited capacity for grocery traders to share cost information with on an efficient basis prior to the Internet.

The National Food Exchange http://www.nationalfoodexchange.com/ was established to provide a standard pricing platform for the grocery wholesale industry.