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The Innovation Table | Mark Semprini on Mastering Price and Purpose

By July 8, 2024No Comments
The Innovation Table | Mark Semprini on Mastering Price and Purpose

Mark Semprini is the VP of Category Management at Dutch Valley Food Distributors, Inc. With extensive experience spanning multiple decades in the retail and wholesale food industry, Mark has held significant roles in pricing, merchandising, and management. Prior to joining Dutch Valley, he held key positions including Director of Retail Pricing at C&S Wholesale Grocers for over 8 years and Director of Retail Pricing and Director of Merchandising at Associated Wholesalers, Inc. for over 17 years. Mark also served as a Store Manager at Giant Food grocery for over 12 years. He holds a B.A. in Accounting from Moravian University.

Edris Bemanian: Great to catch up, Mark. We’ve always had fun talking pricing, marketing, and about independent retailers over the years. Before jumping into the meat of those topics, let’s start with you. As evidenced by your history, you choose your employers very carefully and stay with them for quite some time after joining. What brought you to Dutch Valley Food Distributors, Inc.? 

Mark Semprini: In 2018 I was 57 years old and started viewing myself as being in the final stages of my career. It was critical to me to find an opportunity where I could drive meaningful initiatives that were fun, challenging, and supported across all levels of the organization. I learned over the course of my career how important that alignment and commitment is in terms of enabling success. 

EB: It sounds like you’re with an employer where passion and purpose align perfectly with your career journey. How would you describe the culture at Dutch Valley Food Distributors? 

MS: Dutch Valley Food Distributors is a family-owned, faith-based operation specializing in, but not limited to, the distribution of bulk foods. More than any other organization I have had the opportunity to be a part of, Dutch Valley professes the value of family, friends, and personal growth. I have actually been called out in the past for working too much … something I still have trouble getting a grasp on. Upon reading the Mission Statement of the company, I believe you will get a strong sense of what our corporate culture might look like. The difference here is that we truly strive to live that mission every day. 

EB: That is very inspiring! I know values and integrity are above all else for you, so I’m very happy for you. Now that you’ve been with Dutch Valley for a few years: what is your favorite product that the company distributes?

MS: 40lb Dehydrated Marshmallows from Kraft Foods. The best way to describe this item is to have you open a box of Lucky Charms cereal. The marshmallows in that product are dehydrated. I love this item for several reasons: Reason number one: it comes in a case the size of a washing machine. Reason number two: Dutch Valley virtually has the exclusive rights to distribute it. In my six years, I have seen this item go from being a niche novelty to a SKU utilized by very large chain supermarkets. 

EB: That’s a very visual answer! And maybe the most unique answer I’ve ever gotten to that question. Are there any exciting opportunities currently available at Dutch Valley that you’d like to share? 

MS: We are always seeking warehouse employees and truck drivers but there are only a few open office positions. In June, our Manager of Procurement is retiring, and we are currently looking to replace that position. We are also looking for an in-house web design associate. Our turnover rate has typically come in at 2% so open positions are not always easy to come along. I feel that our biggest opportunity for enhancement would come from the addition of a skilled Marketing Team. We are lacking the expertise and creative talent to build effective customer programs, so we get stuck doing the same things over and over. I believe strongly that if we could enhance this area of our company, we could gain significant “stickiness” with our customers. 

EB: Appreciate those answers, thanks Mark. You spent 12+ years as a retail operator and have since spent the last 30 years on the wholesale/distributor side. What has motivated you to continue focusing on merchandising, analytics, and pricing? 

MS: I consider myself a data geek who is fascinated by the retail food business. More than just the data though, I love to slice it and dice it until it can tell me a story. I have based many of my tactical decisions on those ‘stories’ with differing degrees of success. I am driven by learning new metrics to pour over, or new store-level observations showing a shift in strategy. I like to dig at what was behind that shift. 

EB: And I can personally attest to your love for data. You don’t have to answer specifically through a data lens for the next question. What are some of your proudest accomplishments in terms of pricing and merchandising? 

MS: In pricing, my proudest accomplishment came while I was with AWI [Associated Wholesalers, Inc.]. As part of a corporate acquisition, AWI discovered that they were the owners of some code which they attempted to use to drive their customer retail pricing platform. Over three years, they inserted three different Directors of Pricing with a mission to get this code (we referred to it as SPS) to be functional with what we titled “Sensitivity Pricing.” All three failed in this mission. Out of the blue, the President of the company tapped me on the shoulder one Friday morning and told me he wanted me to take my best shot at it. Within my first year, with the help of some dedicated IT folks, I was able to get the software up and running. When I left AWI, we had developed just short of 100 unique price zones targeting seven different chain competitors. At Dutch Valley, I was recently promoted to VP of Category Management, though the actual title behind the VP may morph a bit over time. Over the last ten years or so I thought I was over the pursuit of titles in favor of chasing dollars. I must admit though, when that announcement came to my ears, I felt very good about what I have accomplished and what I have offered Dutch Valley. In this new role, I will be working to bring category management concepts to this company for the first time, so everything we do, I will be building from the ground up. I cannot wait. 

EB: Congratulations on your promotion. You didn’t mention that before! It’s clear that your innovative approach and perseverance have not only solved complex challenges but also set the stage for significant advancements. What is the secret to driving successful partnerships between distributors and retailers? 

MS: Simply stated…integrity! I told my customers back then as I do today: “You may not like every price I give you, but I should be able to explain how I got to it.” I have lived by that phrase for the last thirteen years or so, and it has served me well. Independent Retailers look to their distributors for guidance and direction. They are not privileged to have category trends, merchandising techniques, and margin management tools at their disposal. If we can bring that to their table, and drive positive results, our cost of goods becomes a secondary topic. 

EB: That’s a great answer. Explainability, particularly with the accelerated adoption of strategic pricing tools, is becoming a bigger focus for us across our suite. Retailers and Brands don’t want black box recommendations, insights, etc. They want to be able to explain the context behind the recommendations to their downstream stakeholders, so I really appreciate your answer. Could you tell us about one or two of your most challenging learning experiences, assignments, projects, etc. while working in the industry? 

MS: As a Category Manager for AWI, I was on the hook to write two category business plans a year. This was clearly where I nurtured my love for this business. I compared each plan to an archeological dig. After months and months of fact-finding, data crunching, and tactic building, I had to take my business plan to our Independent Retailers and convince them that what I wanted to implement in the category was going to benefit them in the long run. Independents are not known for their enthusiasm to accept change quickly, which made this task seem daunting at times. When tactics worked it was the most rewarding feeling I could ever ask for. When they did not, I had to be responsive and ready a plan B. 

EB: There’s a uniquely great feeling about helping an independent retailer achieve their target outcomes since it’s so personal for them. I resonate with your answer quite a bit. Since you brought up tactics and playbooks: do you have any fun war stories when it comes to pricing or merchandising that you can share? 

MS: Lots to choose from here. Unit of measure standards for the Department of Weights and Measures in New Jersey as it relates to paper products. Explaining to Senior VP’s that a fluid ounce and an ounce do not both weigh an ounce. The installation of the Philadelphia Beverage Tax as a distributor of “sugar added” beverages. Explaining the concept of price clusters to an IT team in hopes of re-writing logic. Explaining to CPI that every food retailer in the country carries Campbell’s 10.75oz Tomato Soup. 

EB: Haha, that’s funny. We should come back and do a part two and follow up on some of those. What would you do if you were the CEO of a large manufacturer/brand today given everything that’s going on around us? 

MS: First and foremost, I would lead an initiative to figure out doing business through an e-commerce platform instead of relying so heavily on a brick-and-mortar outlet. National Brands are being consumed by specialty one-offs offering better, faster, bigger selection, customized sizing, delivered right to your door. I never thought I would see the day when I would buy most of my clothing from online retailers…but yet here we are. In the food business, I am fascinated by a company called Oats Overnight. The point I made a few years ago on this question is even more true today. The Covid era forced many in our business to find creative alternative ways to do business if they were to survive. What started as a pandemic, turned into a boon time for our business. 

EB: Which companies are you really impressed with and why? Which retailer? Which manufacturers? 

MS: I am extremely impressed with Aldi. They have streamlined the retail food operation to an extreme and yet they are able to deliver consistent freshness, selection, and quality within the categories they have chosen to carry. Stores are clean, well-stocked, and priced far lower than the big box and chain retailers. Unless a delivery has just been received, the only employees you will find are the cashier(s) on the front end. 

On the manufacturing side, I used to be infatuated with P&G. The technology and research they would put into an item and a category was second to none. Over the last ten to fifteen years though, the shine has come off that apple. 

EB: What trends are you most focused on in retail, broadly? 

MS: In my current role, I feel I am divorced of current category trends as my company does not routinely subscribe to syndicated data. For that reason, we compare ourselves to ourselves for the most part. I did watch something very interesting during the first year of Covid as Candy, our #1 category, slipped to #3 giving way to basic needs categories such as Flour and Oats. Looking back, this phenomenon was very logical as our customers were looking to serve basic human needs for food instead of catering to the impulsivity of snacks and candy. Today, as inflation goes off the charts, we are seeing a marked decline in unit sales to our customers. I feel this trend also has a logical explanation tied to current events. When prices go up, budgets to buy what you always bought do not increase accordingly. Our business has been riding fat and happy on Covid spending for nearly three years now, but the tide has changed. 

EB: How important is competitive intelligence and how have you seen it evolve over your career? 

MS: I was married to the idea of competitive retail intelligence from the outset of my pricing career. I will probably always feel that way. I am intrigued by the ability to use a wealth of competitive retail price intelligence from a concentrated geography to figure out item price sensitivity and elasticity. 

EB: You and I have delivered a number of presentations together to independent retailers ranging from 1 to 100+ stores. What always struck me was that despite technological hurdles, there seemed to always be a desire or willingness to embrace technology. What were your biggest takeaways from those sessions? 

MS: Those were certainly fun sessions. My biggest takeaway was that retailers were looking for a crawl-walk-run roadmap, which is why I think our presentations resonated. We started out with the importance of competitive intelligence as a baseline, then the importance of identifying your true KVI’s and how they did or did not vary across stores, then we went onto price optimization with some level of bounding through sensible, explainable rules. 

EB: On that note, since competitive intelligence is the underpinning for the crawl stage of a pricing strategy: what do you see as the trends in competitive pricing data collection? 

MS: The ongoing evolution of web scraping capabilities, better identification of the varying types of promotions on websites, faster identification of price zones. All things that you and I have talked about over the years, so these won’t be any surprise to you. But I think those will continue to evolve in a manner that opens up opportunities for those paying attention. Today, I am seeing more and more businesses go to what I like to call “airline” pricing. 

EB: What advice do you have for your peers in the industry who are building a pricing analytics capability in their organization? 

MS: Value and build the relationship between the pricing analyst and the IT team developing the data. Each party must be speaking the same language and using the same terms. Often, IT teams build what they think you might want while pricing people can overlook metrics because it wasn’t really what they were looking for. Data for the sake of data has no value. 

EB: What role do you see for Price Image or price perception in a retailer’s pricing strategy? 

MS: From an in-depth experience from my days at Giant Foods, a poor price perception is extremely difficult to overcome…even after you know you have set yourself as the low-price leader in your market, it can take years! Competitive cluster pricing is the most effective way to help to zero in on the exact items end-consumers are most zeroed in on. Re-purchase frequency and switching alternatives play a huge role in identifying these key items. 

EB: Great points, Mark. Those that are intentional and set, execute, and measure against actual Price Image and profit goals are the ones that take their price perception into their own hands. In our experience, the marriage of competitive strategy analytics—or reverse-engineering competitor price zones and price investments—with Price Image measurement and optimization leads to a 5-8% improvement in gross profits, which I know is no surprise to you. 

Switching gears to answer some questions that we hear a lot from a career development perspective. What advice do you have for someone interested in exploring pricing as a career? 

MS: Explore your everyday habits in your own personal life. If you are not driven to cross all the “t’s” and dot all the “i’s” every single time, pricing is not for you. It is my belief that successful recruits spend part of their life at store level learning the idiosyncrasies of products as it relates to adjacencies, shelf placements, brand positioning, etc. The knowledge gained from this experience pays huge dividends when it comes time to do the analytical work in pricing. 

EB: What do you recommend that people who want to accelerate their pricing careers do? 

MS: I learned over my history in this business that every career path should have a stop in category management. Until a person can understand and speak to the five pillars of category management, pricing will only ever be a bunch of numbers. 

EB: These are great insights, thank you! And now for some fun rapid-fire questions: what TV shows are you watching? 

MS: Mostly sports events with a passion for golf (this is Masters week). My wife and I enjoy serial programs on Netflix and Prime such as Better Call Saul, The Queens Gambit, and Driving for Life. 

EB: What books are you reading? 

MS: I have never been an avid reader, but when I do, I binge read. I love books from Dean Koontz, Dan Brown, and Stephen King. 

EB: Oh man, I love “Cell” by Stephen King and “Velocity” and other books by Dean Koontz always kept me on my toes back in the day. What’s your favorite life motto / quote? 

MS: “Why so serious?” It’s from the Joker in The Dark Knight. 

EB: Funny, that’s one of my all-time favorite movies too. What’s your favorite dish? Favorite restaurant? 

MS: My wife and I both love to experiment with different foods we have never had before. She is a fantastic cook and I love her Braciole. Recently, I had Poutine for the first time and loved it. 

MS: I don’t have a favorite restaurant, but I can say that I will never do dinner in a chain restaurant. 

EB: Mark, this has been great. I get the sense that you still have a lot of insight to share. Maybe we should plan a follow up conversation. 

MS: Thanks! I always appreciate the opportunity to speak with you and would welcome another session! 

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