Against odds: local products squeezed off shelves; store-shelf bidding policies are hindering growth opportunities for local food producers, professor says. (Sault Ste Marie).

If Sault Ste. Marie consumers find it difficult to source home-grown vegetables, northern-raised beef and other food products on their grocers' shelves, it is because "the system" is shutting them out of the market, says a professor at Algoma University College (AUC):

Marketing students at AUG are studying the purchasing policies of local grocers as part of an ongoing research project examining the issue of accessibility of local products in national chain stores.

And they believe there is enough evidence to call for a public inquiry into the practice of selling grocery store shelf space to the highest bidder, says AUG marketing professor Pelham Matthews.

"It's a practice that's stacked against small business," says Matthews, one that breeds less competition and reduces consumer choice.

In examining the city's economic diversification strategy, Pelham concludes the document was more geared toward attracting large out-of-town smokestack industries rather than encouraging economic growth among existing small- and medium-sized businesses.

Area companies such as Northern Quality Meats, Lock City Dairy, Superior Bakery and water bottlers Pure Lacqua are all viable local businesses, he says, but expansion is out of the question if they cannot get their product into retail stores.

So Matthews posed the question to his students: "Why can't you find local product on store shelves?"

Students began studying existing federal and provincial competition legislation before examining the purchasing policies and practices in four economic sectors: food, manufacturing, wood and retail.

While many grocery store managers were not easily forthcoming with details on their purchasing policies, Matthews and his assistant David Lind believe there is enough anecdotal information from small business owners to warrant government investigation.

Among the hurdles facing area producers is the grocers' shelving practices, says Matthews. Large multi-nationals spend millions of dollars on a provincial or regional basis bidding on shelf space in grocery chain stores, effectively shutting out local producers.

"It's an accepted practice in business," says Lind, an associate With Management and Marketing Research Group, who is assisting with the study. "What we're saying is it creates an unfair advantage and is anti-competitive."

"What's happened in the last 25 years," adds Matthews "is the big players have gotten bigger and established rules in their favour and established profitable relationships with their clients to keep the small (outfits) from getting bigger.

"This is the kind of gamesmanship that the (federal) Competition Act really doesn't address. Smart people can find the loopholes around the regulations.

With their early findings in hand, Matthews and Lind held a roundtable discussion in early March, which was attended by Sault MPP Tony Martin with representatives from the Sault Ste. Marie Chamber of Commerce, the Sault Ste. Marie Economic Development Corp. (EDC) and some small business owners. The discussion focused on the problems they face in the Sault marketplace.

From that meeting, the Sault EDC sent a letter on March 3 to A & P Canada president Eric Claus on behalf of Lock City owner Vic Fremlin reminding Claus that placing local products on store shelves is a 'win-win' situation. It supports local business, ensures a "reliable, flexible source" of product and enhances a company's corporate image, he noted in the letter.

"Certainly what we're hoping to do is raise the awareness of A & P of local products and to let them know we're standing behind our local producers," says Tom Hernden, the city's economic development officer, who had not received any response from the national chain by late March.

"Really the ultimate power lies within the consumers," says Hernden, "that's what forces these companies to make these decisions, that's where the true power lies.

"Small business growth plays an important role in economic development. Not only does it create local jobs and wealth, but assists us in attracting business from out-of-town. Typically they provide services that we can market to companies looking at Sault Ste. Marie from the outside."

Matthews says in order to compete, small producers must find better distribution methods to increase the convenience level for the consumer, such as creating a virtual marketplace or door-to-door delivery. As well, public education is key.

"You can't beat them at price...but you can out-promote them and educate the public with a grassroots approach that this is a local employer, they're your friends and neighbours, they pay taxes here and want to improve the-quality of life here."

A final report was expected to be compiled by late March, complete with a students' position paper that includes a brand awareness campaign and market penetration strategy for small business owners. Copies will be sent to the various community business and economic development stakeholders.

Sault Ste. Marie Top Employers

Company                             Type of Business  # of Empl.

1.  Algoma Steel                    Manufacturing       3,500
2.  Sault Ste. Marie Hospital       Health Care         1,712
3.  City of Sault Ste. Marie        Municipal Gov't     1,165
4.  Algoma District School Board    Education           1,600
5.  Huron-Superior Catholic School  Education            900
    Board
6.  Ontario Lottery Corporation     Lottery              842
7.  NuComm International            Call Centre          800
8.  RMH Teleservices                Call Centre          632
9.  Kopash Sanitation               Janitorial           500
10. St. Marys Paper                 Newsprint Mill       430
11. Community Living Algoma         Education            425
12. Sault College of Applied Arts   Education            370
13. Rome's Independent Grocer       Grocery Store        370
14. MNR                             Provincial Gov't     360
15. Group Health Care               Health Care          291
16. EDS-GM Roadside                 Call Centre          275
17. Algoma Central Railway          Transportation       267
18. Canadian Tire Associate         Retail               260
19. FJ Davey Home                   Seniors Home         215
20. Dept. National Defense          Federal Gov't        194

Source: City of Sault Ste. Marie,
www.sault-canada.com/business/ssm/facts