CHICAGO -- As brand marketers and supermarket retailers use daily point-of-sale data to jointly conduct their category management activities, they had best agree on what the numbers mean.
Advances in store data reporting have brought into sharper focus the need for mutually trusted, common sales measurements, according to Doug Adams, president of Efficient Consumer Response and operational applications at Nielsen North America, Northbrook, Ill.
Speaking here at a conference titled Implementing Category Management, sponsored by International Business Communications, Southborough, Mass., Adams outlined what he called a "one-number system" under which a third party would be responsible for cleaning raw store data and converting it into a form that is reliable for both parties.
Discrepancies between how the retailer measures item sales within a category and the performance data available to a manufacturer can impede effective working together, he explained. Unavoidable errors or gaps in sales data sometimes arise due to checkout errors or a system crash in a store. Even variations in category definitions can impair communications and undermine trust.
From the retailer's perspective, if store managers add up all their sales and category buyers add up all their sales, the two may not match because of incompleteness of the information. Current sales performance measurement methods rely on weekly panel data processed in a central computer, Adams said.
Under a one-number system, everyone is looking at the same sales numbers that are within the context of the retailer's category definition.
During a sales call when a manufacturer and a retailer discuss how a product sold in the stores last week, they won't get into the issue of whether the data is right or whether someone is lying to them because all are looking at same data base.
Adams said that sales information is no longer being thought of as just providing strategic value. With the switch to full-census reporting, it is becoming a tactical tool for category management and operations.
"Kroger, H-E-B and Homeland have experience. When you get the store managers involved you can see dramatic changes. Out-of-stocks and spoilage decrease. There is sharper price competition. Probably one-half to two-thirds of data quality problems can be fixed when the store manager has a vested interest." Nielsen is working on a one-number system to meet the industry need for reliable figures on consumer take-away. This can be used to drive the whole distribution system back to the point of production, he said.
A one-number system is essential to meeting the industry's Efficient Consumer Response goals, Adams said. "You need a scorecard that everyone understands."
