Managing meat for profit.
Efficient management of the meat case is becoming an area of increasing interest as packers, processors and retailers evaluate the future of the meat marketplace. Category management techniques widely used in non-perishables have prompted a new initiative among meat managers to implement similar strategies to better address consumer demands and increase overall profitability.
Leading the movement, the National Cattlemen's Beef Association (NCBA), Chicago, Ill., recently released "Category Management for Fresh Meat," a report designed to introduce retailers to the concept of category management as a competitive tactic and outline its basic principles.
The report is the result of NCBA's work toward better understanding the principles of category management and adapting practices to fit the unique needs of the meat department.
"Historically, meat managers said category management couldn't be applied to meat because of the complicated components of department operations," says Kevin Yost, executive director of channel marketing for NCBA. "We agree that adjustments must be made, but the basic principles can be applied. NCBA has developed a category management program for fresh meat to help retailers better understand consumer demand and meet needs."
Yost believes the emergence of category management in the meat department is a result of supermarket executives' emphasis on store perimeters as the chief weapon against competing foodservice outlets.
"We saw a real convergence of needs," says Yost. "Retailers are rethinking total perishables and focusing on the perimeter of the store as an area that can distinguish them from competitors. Because the meat department earns about 33 percent of dollars spent in perishables, many retailers want to tackle an obvious opportunity.
"Category management allows senior management to take the same business approach to meat as they do to other departments," he says. "That way they can compare apples to apples when evaluating departments."
The basks of category management
The report outline; the basic principles of meat category management and identifies four major areas in which category managers need detailed information to develop effective business plans:
* Costs - item-level costs for product categories;
* Consumer information - demographics, lifestyle and purchasing pattern data;
* Competition and the market - information on what the competition is doing in the marketplace and how your meat department compares;
* Category driver - promotions, prices, assortment, display and advertising.
According to the report, meat managers use this information to define categories within the department, set roles and goals within the category, and assess category characteristics and potential. Retailers are then advised to outline strategic, tactical, financial and implementation plans in accordance with the defined objectives.
According to Yost, insufficient consumer data is the primary deterrent to category management in the meat department.
"The number one obstacle is lack of good consumer information," Yost says. "Category management absolutely has to be focused on the consumer and on making the shopping experience easier."
To help retailers have more extensive data readily accessible, NCBA has developed a series of information initiatives and projects designed to expand consumer purchase information. Included in these projects is the Value based Meat Management information system, Meat Case Selection research, Meat Purchase Diary, and a database project for random-weight fresh meat for which Information Resources Inc., Chicago, Ill., will collect meat purchasing data from 20 to 22 retail marketing areas. NCBA also heads the Uniform Retail Meat Identity Standards (URMIS} system initiative for standardizing meat coding.
"There has been a void in scan and point-of-sale data because there hasn't been an industry standard for product identification or UPC coding. With new NCBA projects like URMIS and the Meat Purchase Diary, information is one hurdle we think we can overcome," Yost says.
Playing off strengths
Several advantages help offset the obstacles that hinder the implementation of category management. Traditional meat department operations have seasoned managers, giving them a strong base of knowledge on watching consumer trends.
"There are some strong advantages," says Yost. "Meat managers have a good understanding of what moves in the meat department and what doesn't, so there is an incredible understanding of product sales. They have a lot of contact with consumers.
"In addition, changes can be made very quickly in the meat department, because the case changes daily and can expand or retract according to demand. There is great micro-marketing opportunity because of the daily turn of the department and the understanding at store-level. Managers can really adjust to provide the right products," Yost comments.
Retailers can begin implementing category management on a small scale using elements of the program according to need, but should focus on implementing the entire strategy in the future, the report says.
To begin, Yost suggests adapting to URMIS coding and looking to industry associations and suppliers for consumer data.
"There is a lot of industry information out there, from the NCBA, the Food Marketing Institute and other organizations. Ask your suppliers to provide you with available data," Yost advises.
"Also work on systems, cleaning up codes so you can more effectively track what's happening in your store. Use scan data reports to find out which items are doing well and what you can do to better market your products."
Yost also stresses the importance of supplier participation in category management success.
"One of the key challenges is that we need to get the suppliers involved. That's what's happened in other categories - the [large suppliers] have come in and brought a lot to the table. Really ask and ask again, and ask a third time for your suppliers to provide information and work together with you to achieve success," Yost says.
And senior-level support? According to the NCBA, CEO commitment is key.
"Those retailers that are getting support from top-level management are the ones moving into category management quickly," Yost says. "They view category management as a competitive advantage."
RELATED ARTICLE: Category management and product innovation
Category management in the meat department, designed to increase efficiency in operations and enhance consumer focus, also opens doors for value-added product lines and branded meats.
"Our meat case research says that consumers are overwhelmingly confused by the meat case," says Kevin Yost, executive director of channel marketing for the National Cattlemen's Beef Association (NCBA), Chicago, Ill. "Retailers and suppliers have to ask what they can do to lessen that confusion. [The NCBA] thinks that category management helps further value-added, case-ready and branded items because, whether it's the retailer or processor rolling them out, they allow the retailer to better understand the consumer and meet demand."
According to Dick Bond, president and chief operating officer for IBP Inc., Dakota City, Neb., case-ready products benefit both operations and category management efforts. IBP recently introduced a 21-item, vacuum-packaged, case-read;y beef and pork product line for retailers.
"These types of products can and do help category management projects. We as a company are supporting the concept of category management and case space allocation," says Bond. "In developing our product line, our perception of the line being helpful for the retailer was about 70 percent of the reason behind product development. It's an added advantage."
Bond says the products aid in reduction of out of stocks, expansion of product offerings and increased meat safety. He believes case-ready products also provide labor benefits.
"Case-ready redirects labor from cutting meat to more consumer-oriented work," Bond says.
As for as the urgency of implementing category management strategies, Bond says retailers can relax.
"Do I think complete category management is essential today? No. People are running very good departments without it," he says. "It's a slow process because it's more complex than saying, 'Yes, we as a retailer use category management.' I think it's an evolutionary process, not a revolutionary process."
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|Title Annotation:||category management for the meat industry; includes related article on category management and product innovation|
|Date:||Dec 1, 1997|
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