Coping with the new item deluge: store-level issues.
This installment of Progressive Grocer's HBA Buyer Survey on new items centers on action at the store level, where the best-laid plans often go astray.
HBA buyers surveyed for Progressive Grocer's HBA Buyer Survey on new items report that they are advancing in systems and technology to cope with the flood of new items.
For instance, an Eastern chain HBA buyer says his company has provided 20,000 square feet in the warehouse for a grocery/frozens/non-foods setup room with about 500 linear base feet for HBA. He claims the room, plus a newly installed computerized space management program, will make it easier to find a proper home for new items and assist in planning resets.
But even this is hardly enough. It all comes to naught if follow-through at store level fails to get the new items on the shelf quickly, in the right place and into the reordering loop.
Most buyers say they're "somewhat satisfied" with the timing aspect. Direct-buying chains seem to be doing the best. One-fifth say they're "very satisfied," 72% say "somewhat satisfied" and only 9% say they're "dissatisfied."
Buyers representing independents are also optimistic, a somewhat surprising view considering that independents typically have smaller HBA departments, which are more resistant to new-item changes. Their view is also contradicted to some degree by distributors. More than 40% of distributors say they're unhappy with how long it takes to get new items into distribution.
"It's inherent in the system," explains a manufacturer marketing executive. "Chains have more control over their stores so they can--in theory, at least--ensure store-level action. Distributors serving independents not only have less space to work with, they often have to get approval before placing a new item, which takes time.
"As for the independents and smaller chains," he says, "frankly they aren't always aware of what new items are out there, at least in the time frame the big chains work with. So when they say they're doing fine with new items, it may be a hopeful statement, but they probably don't know the full story."
Bringing independents aboard the new item bandwagon would be a step forward for the industry, the executive adds, since they account for about a third of supermarket HBA sales--more than $3 billion a year. On average for all segments of the supermarket HBA business, it takes about four weeks for an authorized new item to reach distribution in 75% or more of a company's HBA departments, according to Progressive Grocer's survey.
But variations exist. Among the industry segments, distributors lag behind direct and non-direct chains and independents in achieving that 75% figure. Only 40% of distributors say they hit the target within four weeks. About three out of four chains and independents (who may not have enough information to substantiate their claim) report they achieve 75% distribution in four weeks or less.
Most buyers say there's been some progress in getting items on the shelf after authorization. However, about 20% of buyers say the situation has actually worsened. Several buyers say this is because the flood of new items has gone on for so long that buying and handling improvements are just barely keeping up with the tide.
Most buyers say they provide stores with recommendations (or requirements) on where new items should be located. But one in four is not satisfied that the recommendations are promptly and accurately implemented. Their complaints range from "can't get good help these days" to "lack of management support."
Clearly, there's a way to go before supermarkets reach the desired high mark of efficiency in dealing with new items.
On the positive side, however, definite gains are reported.
Some are contradictory. For instance, there are frequent mentions by non-direct-buying retailers about service by outside distributors. Some say that getting away from outside service has improved the new item situation since "our own people take more interest." Others report that a return to outside service makes the difference, since store people cannot match outside specialists.
Among direct-buying chains, particularly, the key to getting new items into the store and on the shelf is not to wait for the stores to order. It's better to force the issue, buyers say, by sending a shipping or shelf ordering unit (usually three or six pieces) along with the appropriate shelf tags.
Beth Harrison, non-foods director of Hughes Markets, Los Angeles, has seen an improvement recently, since the chain began warehousing about 60% of its HBA needs.
Some smaller companies are also adopting the "force out" system, at least in a limited way. Sandy Valle, non-foods director of 18-store Gooding's in Altamonte Springs, Fla., says, "If a really strong item comes along, like the recent intro of a new meal replacement line, I'll force in a minimum pack of three pieces to all stores."
The typical procedure is for him to authorize items from the wholesaler and let the stores order in. Valle adds that the mass merchandiser providing extended lines takes care of placing new specialty items Valle has authorized.
Manufacturer sales reps and brokers provide strong assistance in getting new items on the shelves, most buyers say.
Direct-buying chains are the primary beneficiaries; 75% of direct buyers say they receive help from suppliers, primarily from field reports that check shelf-implementation of authorized items. Less than half of distributors (44%) say they receive this assistance.
But manufacturer reps are not necessarily encouraged to make store calls on new items. Less than half of buyers say manufacturer calls are welcomed. Direct and non-direct chains are the most likely to discourage such visits.
Distributors, on the other hand, largely approve such assistance. Says one: "We need all the help we can get to move our retailer customers toward a more favorable attitude on new items."
A buyer for a large Midwest chain says manufacturer store visits "take too much of the store manager's time." He adds, "We've already made the decisions, drawn up the planograms at headquarters and force-shipped the items. We don't need any extra help."
A Kroger division buyer plays it both ways. Encouragement of manufacturer visits, he says, varies with the situation and manufacturer. "A major launch by a major manufacturer with a knowledgeable, honest sales force or brokers would be an exception to our general rule against store calls on new items. On some big deals we know we must move fast."
As for featuring new items in ads, several buyers say that is one of the best ways to get store-level action.
"One of the big no-nos in this business," says a wholesaler buyer with a large voluntary group, "is to disappoint consumers on ad specials. So if the stores know a new item is going to be featured in the ads, it's almost sure they'll order it in."
But that's not the end of the matter, he adds. "There's still the question of quantities--whether enough (or too much) was ordered--and whether that new item actually has a home on the shelf and not just a temporary special-display position."
|On new items, you can't overcommunicate'
Communication and motivation undoubtedly play roles in new item follow-through at store level, but it's difficult to weigh how important they are.
One aspect, the weekly store bulletin or ordering guide, was commented on in the buyer survey. About half of the buyers say they provide at least a brief description of the new item. Direct-chain buyers are particularly involved in this, with 75% indicating they provide some information.
Incorporating manufacturer sell sheets in the order guide is not favored by direct buyers, but is done by over half of non-direct chains and independents and particularly by distributors. Nearly two-thirds of distributors (63%) say they sometimes include the sales materials in their weekly bulletins.
"For the best success with new items, you should let the store people know more about the item, the manufacturer's story and marketing plan," says Jim Miller, non-foods director for Piggly Wiggly, Memphis, Tenn. On the other hand, Lou Mullins, non-foods supervisor for Thrifty Foods in Burlington, Wash., says he lacks the time to provide extra information. He also feels store people "can do without" the details, since "manufacturers usually do a good job in making stores aware of their new products."
On the negative side, a Western chain buyer with 36 large stores, says his weekly bulletin is "no big deal." He believes that store people, including managers, are too busy or not interested in reading about details. He prefers meetings with non-foods department heads to talk up new items, although he admits the schedule seldom exceeds two meetings a year.
Another chain buyer relies on his advanced computerized space management/planogram program and "store personnel trained to follow orders" to put up and display new items more or less automatically. "There's no need," he says, "to propagandize the new items."
A HBA director for a top chain disagrees. For the past three years, his department has produced a merchandising guide every six weeks, which focuses on new items, giving each one a short description.
He says that writing these blurbs is "part of our workload, not an extra chore. We believe our store people work better when they know the why of things--why we bought these new items, for instance. They'll also be more interested in getting the new items up and ready and be better prepared to answer customer questions."
An ambitious new item communication effort comes from McKesson Service Merchandising (formerly named Mass Merchandisers) of Harrison, Ark.
McKesson, the nation's largest service merchandiser, is completing the first year of this 12- to 24-page monthly publication, stapled and printed on letter-size, heavy white stock. Its distribution includes retailers, key account people and its own sales people, who find it helpful in selling new items to their retail accounts, according to Darrell Wilson, vice president, HBC purchasing.
The booklet's cover is devoted to a single product line, which is fully described on the first inside page. Other featured products, including GM as well as HBA, occupy full or half pages. The program also includes a new design for shelf talkers.
Another service merchandiser has speeded up new item distribution with a contest and incentive program for its sales people. "They get paid a bonus for being first to achieve a certain standard of distribution among all their stores," says a spokesman. "Believe me, that makes a difference."
Adding more field merchandisers and supervisors has helped many retailers and distributors improve their new item distribution.
"The best communications of all," says a major wholesaler, "is to have an experienced, hard-working supervisor come into the store and check the new items and drag them out of the backroom where they may be sitting." However, he adds, the cost of putting more people on the road is prohibitive. He believes that this "best course for new items" may be curtailed in the future.
The wholesaler notes that district managers can and do push new items, "but unfortunately they're more interested in grocery than non-foods."
Several buyers in smaller chains say they have increased the number of meetings with GM/HBA department managers and that new items figure prominently in the program. "The idea is to encourage store people to pay more attention to this important part of the HBA business," says Bobbi Hamelman of Mega Warehouse Foods, Mesa, Ariz.
From the manufacturer's point of view, the communication issue for new items is critically important, says a top sales/marketing executive for one of the country's largest HBA manufacturers. He puts it this way: "It's difficult to imagine how you can overcommunicate the importance of new items to the store people. The more they are brought into the loop, the better it is for everyone."
Communication should be a two-way street, he adds. "There should be some way--meetings or whatever--to hear what the store-level grass-roots people have to say. Sometimes that can be more important than the opinions of buyers."
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|Title Annotation:||GM/HBA; health and beauty aids; HBA Buyer Survey, part 2|
|Date:||May 1, 1991|
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