2017/2018 LOBLAW SUPPLIER POLICIES FOR NATIONAL BRAND PRODUCTS

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1 2017/2018 LOBLAW SUPPLIER POLICIES FOR NATIONAL BRAND PRODUCTS The following is a list of our updated policies for all National Brand Product 1 Suppliers of Loblaw (which excludes Shoppers Drug Mart - Please refer to SDM Vendorboard for SDM policies and details). These policies are a condition of doing business with Loblaw and supplement Loblaw s Standard Terms and Conditions or any similar written terms and conditions you have in place with Loblaw. NEW PRODUCTS New listing presentations, product changes and product switches (pack, size, measure, description etc.) must be made twenty (20) weeks prior to first shipment (except products sold within our Home and Leisure division where they require (33) thirty three weeks prior to first shipment). This window of time is required to align with Loblaw s Planogram (POG) process and will ensure that we are both offering customers new product innovation as soon as it is available. Products launched outside these windows may miss the planogram release and may not be considered until the next launch window. In order to maximize support for your products at Loblaw, all new products must launch at your best cost of goods and must enhance the profitability of the category it is being listed within and must be presented to Loblaw at the same time as Supplier presents the item to other retailers (this includes new product market testing). Products cannot be developed as Display Ready Pallets (DRP) only. All products must be made available in corrugate cases. All products must be offered with minimum quantities as reasonably determined by Loblaw. We are committed to retail ready packaging (RRP). Products must be made available in RRP where planograms require it. Suppliers will be charged a listing fee for all new listings, or listings that require a change within Loblaw IT systems. Charges will apply specific to the category the item is being listed to or changed within. There are three types of standard fees: New Listing Fee applied to items that are not currently in our assortment network Switch Fee applied to items currently in our assortment network but that require a change to the case pack, unit of measurement, UPC, etc. Admin Fees applied to items currently in our assortment network but that require a change to the display vehicle (display ready pallets, prepacks, etc.) The fees vary by category and your Category Contact can provide you with the details. 1 There are some exceptions to these policies permitted for commodity type products and products sourced offshore.

2 Guiding Stars (applicable to food products only): To ensure accurate product ratings, Suppliers must immediately submit the most up to date product package for star rating evaluation. If there is a change to product formulations, you are required to provide Guiding Stars with updated nutritional information. GS1: All Suppliers are required to list each of their products through ECC Net, Canada's National Product registry. Loblaw requires Suppliers to include product image and dimension information on ECC Net, as well as a full case sample (where applicable) for measurement and planogram purposes. All new article creation requests or updates must be initiated by the Supplier through the Article Workflow Tool. Loblaw will continually make assortment decisions with a category. Loblaw and Supplier will share equally in the cost of the discontinuation arising from the discounting of the product at retail. The Supplier will be charged 50% of the current cost of the item(s) to support this discounting of product. Loblaw may provide the Supplier with the option to buy back the excess inventory from the Loblaw Distribution Centres at their own expense. BULK PACK SKU s All bulk pack items produced by Supplier must be presented and made available to Loblaw before or at the same time as Supplier presents the same item to other retailers. Suppliers must present Bulk Pack sku s that are compatible with Loblaw s distribution system. We require the best cost of goods on all Bulk Pack sku s vis-a-vis the retail size of the comparable product.

3 COST INCREASES LCL does not accept cost increases other than those that are: government-mandated (ex. CDC) directly resulting from commodity cost increases as verified by Loblaw s commodity group 2 national in scope (e.g. applied by the supplier to all of its retail customers) All cost increases must be effective on a Sunday from P2 P11. All cost increases must be ed to Loblaw at costincrease@loblaw.ca with the following information: 1. Minimum 12 weeks notice weeks notice starts with submission of the following 2. LCL Commodity/Input Form 3. Letter from Vendor VP/Business Lead confirming that the proposed cost increase has been presented to all retailers nationally Following the completion of negotiations, supplier will Loblaw and SDM cost change forms to Category Contacts. NOTE: size decreases are a cost increase Product downsizing is considered equivalent to a cost increase As a result, there must be corresponding decrease in the cost of the product commensurate to its decrease in the size, given that some costs are fixed, the cost decrease must be at least 90% of downsizing TOP SHELF/PRECIMA Participation in Top Shelf/Precima is expected by suppliers EDI/DATA If you receive a purchase order from us with the wrong UPC number, cost or unit of measure (case pack), stop do not ship call your category representative. If the product is shipped Loblaw assumes you have accepted the purchase order as written and will not accept a vendor inquiry. Loblaw will pay the lower of SAP cost and Supplier Invoice Cost. In order to drive improved EDI Trading, Loblaw has implemented a non-compliance charge to a maximum of $100 per Supplier caused EDI invoice rejection, net of LCL caused issues, effective P Investigating Supplier inquiries is a timely and expensive process for both Loblaw and the Supplier. Effective P Loblaw requires that all queries have the following minimum dollar value: A. Distribution Centre Inquiries minimum $50 per invoice B. Direct Store Delivery Inquiries minimum $25 per invoice 2 If over a 6 mos-1year period of time, the cost of the commodity consistently declines, Supplier will provide a corresponding decrease in the cost of goods.

4 CLEAR OUTS Loblaw requests clear-out stock based on its share of total purchases from the Supplier. We are committed to responding within hours after which time, Loblaw s share of clear out stock can be offer to Supplier s other customers. BONUS PACKS AND MULTIPACKS Loblaw does not accept Bonus Packs or Multipacks in the Grocery Department. If a Supplier launches any Bonus Pack or Multipack, Loblaw expects its cost of good on the regular selling unit to be equal to the unit cost of the Bonus Pack or Multipack. In the Household and HABA category, Bonus Packs should carry a cost of good with a validated and logical economical scale reflecting the true efficiencies of the size and package. The Bonus product should have the same width and height as the regular item on shelf, so as to not infringe on other Suppliers shelf space. Multipacks (single unit products wrapped together) should carry a cost of good no greater than that of the additional cost required to package. Items in a Multipack must be made available in a single unit format. DRP AND DISPLAYERS Any items shipped to Loblaw that are Display Ready (DRP), displayers or special configuration of a normal in-line item, must have all discounts applied based on total Loblaw purchases. By way of example, a special pallet displayer of brand X shampoo that carries a special cost reduction of $.50/unit will have the $.50 deducted off of invoice on 100% of all the DRP s of the brand X shampoo shipped into any Loblaw facility (DC or store). DRP s must be created utilizing retail ready packaging. Criteria (i.e. standards of dimensions, price points, and assortment) for DRP and displayers are banner specific. DEMOS Loblaw expects Suppliers to fund demonstration programs for their products in our stores. COUPONS Loblaw expects Suppliers to fund their products on our shelves through making coupons available to Loblaw. No shelf coupons are allowed in store except through our authorized methods, News Marketing Canada and Superstore Coupon Program. UNSALABLES All Suppliers shipping to a Loblaw DC must be part of the joint industry ECR Unsalable program.

5 STORE LEVEL ACTIVITIES (All Banners) Suppliers may not receive orders from stores unless specifically authorized by Loblaw Head Office. Suppliers may however issue credits to stores to help clear out stale or damaged product. No unauthorized merchandising materials are to be used in stores, including POS, Pre-packs, racks, coolers, contests, ballot boxes, characters, etc. No supplier gifts or incentives are to be given to store owners, managers or staff unless preapproved in writing from Head Office Suppliers may assist in planogram execution only with written approval from Loblaw Head Office. PROMOTIONS All promotional deals must be tailored to banner requirements as established by Loblaw. All promotional deals are to be entered on the Loblaw National Deal sheet form and are required to be submitted ten (10) to twelve (12) weeks prior to the promotion (including DRP s). Reminder promotion and shelf retails are at Loblaw discretion NEW STORE/NEW DISTRIBUTION CENTER (DC) OPENINGS For a new store, renovation or DC opening, Loblaw will expect a volume discount of 10% off invoice from its Suppliers. This discount will help to cover a portion of the costs of initially stocking a store or DC with Supplier s product. This discount of 10% will be applied to all shipments pre-opening and two weeks post-opening. If you require further details on any of the policies described above, including directions for submitting request or information to Loblaw as required by the policies, contact your Category Contact. Reminder Loblaw s Supplier Communication Guidelines (available on the Loblaw Vendor Portal or from your Category Contact) govern all your interactions with Loblaw.