A 'payoff' for resets.
There's no denying that scanning has made better product merchandisers of supermarketers. The ability to track product movement on a daily basis has provided the wherewithall to pare away slow moving items and highlight those products that sell best. Although the data behind this in-store product shuffling is provided by high-tech means, the actual product remerchandising involves old fashioned elbow grease. It's at this stage that supplier and food broker sales forces generally enter the picture and problems begin.
It's not that suppliers and brokers object to helping out. They do, however, object to the tactics supermarketers use to get them to help out. Threatened loss of shelf space is one of the more commonly used inducements. Then there's the practice of literally locking sales representatives in stores until they finish the remerchandising process. During some of these lock-ins, sales reps are often encouraged to remerchandise unrelated categories after they've finished with their own.
Manufacturers and food brokers say their pocketbooks--as well as their pride--are hurt by the practice. Manufacturer direct sales forces spend as much as 10% to 15% of their time on store resets. At today's salaries, store resets average out to as much as $2 million to $3 million for each manufacturer annually. Discussions with food brokers reveal that store resets in large markets cost many food brokers in excess of $300,000 a year.
In some instances, the demoralizing effects of store resets have pushed top salespeople to the point where they have left the food products industry for other industries that don't deal with supermarkets. Many brokers have been able to head off this problem by developing store reset divisions. This solution, however, isn't practical for manufacturers.
With the use of scanning increasing, and store reset rates rising proportionately, manufacturers and brokers see the problem only getting worse. With no signs of supermarkets easing up on their demands, many manufacturers are already refusing to do resets. As more and more manufacturers refuse their services, food brokers find themselves taking on more of the chore. Considering the amount of food broker dollars already going out to store resets, it's conceivable that most food brokers will also have to back away from store resets or face a serious impact on their profit margins.
Despite their complaints, manufacturers and brokers aren't opposed to the idea of helping the trade remerchandise products. However, they feel they have little to show for their efforts and expenses. If any true meeting of the minds is going to take place, the supermarket industry needs to come to terms with the problem and find ways to reward manufacturers and brokers who participate in the store reset process. To head off what appears to be an explosive situation in the making, supermarketers should take steps to turn store resets into a positive experience for manufacturers and brokers. Here are some suggestions toward that end:
* Abolish lock-in policies. This is a demoralizing practice. Many sales VPs have already decided to boycott lock-ins and retailers who continue to enforce them.
* Enable manufacturers and brokers to realize benefits from the resets. One solution could be credit for time spent in the stores. These credits could be redeemed for features, in-store displays, reductions in roto costs, etc. For instance, brokers or manufacturers that spend 100 hours on a retailer's store sets could redeem their time for a two-column inch regular price feature on one of their time products. This would be a positive incentive for them to participate and would be inexpensive for retailers.
* Provide manufacturers/food brokers with advance notice of store resets. Four weeks advance notice is good. In addition to minimizing disruptions in coverage patterns, this pre-set dialogue will also provide opportunities for retailers, manufacturers and brokers to come to terms with problems caused by store resets.
At The Northeastern Organization, we've already begun this process of bringing the three participants together through our Broker and Direct Sales Forums. We welcome the comments and recommendations of any manufacturer, broker and retailer who would like to join our efforts to solve this problem.
The more supermarketers look into the problem, the more they will realize the solution rests with a willingness to take on a partnership attitude with manufacturers and brokers. This solution shouldn't come as a surprise. After all, it seems to have been the lack of this principle that has kept the problem alive and festering.
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|Title Annotation:||product merchandising|
|Author:||Huguet, James H.|
|Date:||Oct 1, 1984|
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