The food industry's quick response this spring in rolling out Aleve, the new analgesic from Procter & Gamble and Syntex Corp., was a demonstration of the General Merchandise Distributors Council's Educational Foundation at work.
Two studies on the prescription-to-over-the-counter switch market, released by GMDC's Educational Foundation last year and early this year, provided the impetus and gave food distributors and retailers the knowledge they needed in getting Aleve into their stores almost immediately after its June launch.
The pain-reliever in Aleve, naproxen sodium, was formerly available only by prescription.
"The feedback from Procter & Gamble is that in general our group [grocery wholesalers and retailers] did a better job on this product rollout than they have ever done on anything else," said Dave McConnell Jr., vice president of administration and communication at GMDC. "That tells me if we create some educational tools and awareness, people will pay attention and react," he added.
Dean Skadberg, director of industry affairs at Procter & Gamble, Cincinnati, confirmed McConnell's remarks. "To the extent that our distributor partners took the studies to heart -- and our recent experience with Aleve is a good indicator that they did -- I would say that the study is a real landmark piece of research for the industry. The timing coincided nicely with Aleve's introduction.
"The Rx-to-OTC studies are a classic example of how an association works to help its membership compete in the marketplace," Skadberg added.
GMDC formed the Educational Foundation in 1992 to develop tools to help grocery retailers and wholesalers recapture the erosion of nonfood sales to alternative channels.
"As an association we were tired of seeing our market share erode," said Rick Tilton, president of GMDC, who serves on the Educational Foundation's board as secretary/treasurer.
Ron Turner, vice president of member affairs and education, is in charge of coordinating Educational Foundation projects. He said the foundation was formed because of the industry's need for "credible education and information.
"There is a big desire on our part to learn. There are some workshops we can attend, but on an ongoing basis, nobody is addressing the issues we would like to address."
Added McConnell, who is in charge of the foundation's category manual project, "There is a responsibility within the association to help our people be more aggressive and give them the tools so they can act instead of react to competitors."
The prescription-to-OTC studies came about because "everyone was talking about getting ready to capture these tremendous sales and profits. But no one was addressing it," said Turner.
The first study, "The Implications of the Rx-to-OTC Switch Products Within the Supermarket Industry," presented an overview of what has happened over the past 10 years with prescription-to-OTC switch products. It also examined its market potential for the next five to six years. Other information in the report included the major players involved in the switches, the size of market, and what supermarkets need to do to get ready to participate in opportunities offered by new switch products.
In a joint effort with the Food Marketing Institute, the GMDC presented a second report earlier this year, "The ABCs of Rx-to-OTC Merchandising," which looked at actual merchandising techniques of prescription-to-OTC products. Featured in the report were cases of three high-performing retailers and what they had done with recent prescription-to-OTC items.
"We feel we have brought that subject to a high plane," said Turner. GMDC shared its findings on the studies with the entire industry and not just its membership.
Other projects of the foundation include a category operations manual, which is coordinated and produced by McConnell.
The manual will be an ongoing project, said McConnell. This year it has been expanded from eight categories to 32 and is expected to include a total of 40 categories.
"The concept was to put together a quick reference category review where we profile three key areas: Category Situation Review, Category Strategies and Report Card," explained McConnell.
Manufacturers have an opportunity to sponsor specific categories. There can be multiple sponsors for a category. Category trends, dollar volume, market share, ad support and demographics are examined in the manual. This information is analyzed graphically in chart format.
A section of the manual focuses on recommendations from manufacturers on merchandising strategies: seasonal and everyday merchandising opportunities and methods for competing with other classes of trade.
The last section of the manual is a report card. Volume figures are recapped and retailers are asked to set objectives for the category in terms of volume and market share. They try to measure the results, compared with their own objectives.
"It provides grocery with a benchmark," said McConnell. "The idea is to get people excited about different categories. It's a working tool in an industry were there are not a whole lot of tools," he said.
Several major projects are under consideration for 1995. They include studies on: "smart assortments," efficient store assortments; improving ethnic presentations at supermarkets, and maximizing sales and profits at the front end.
A study on smart assortments would include case studies of three or four retailers in which several categories would be examined to determine what defines a smart assortment. Test studies would be made on smart assortments and compared with other controlled tests.
"We feel we in the supermarket industry in health and beauty care and general merchandise are probably too broad in our variety and not smart in our variety. What can we do to get into smart assortments? We need quantitative and qualitative numbers," said Turner. He added that such a study would coincide with Efficient Consumer Response from a cost-reduction standpoint. Looking at ethnic presentations in nonfood, Turner said, "A lot of work has been done on the food side and some have improved their position. But nobody has done anything on nonfood."
Nonfood also may be losing at the front end. "We'd like to do studies on front-end merchandising and see where the payback is and who is taking care of the business, not only in profits but in pleasing consumers," Turner said.
Major projects are approved by the Educational Foundation's nine-member board of directors, made up of four members of the wholesaler-retailer community and four manufacturers, plus the GMDC president.
The foundation is funded through a percentage of membership dues, special membership sponsors and the sponsorship of specific projects like prescription-to-OTC studies. According to Turner, 20% to 25% of the company donations are from wholesale-retail members and not just from manufacturers.
"Although nonfoods business has continued to grow in dollar volume for the last several years," said Tilton, "we need to develop effective strategies, utilize our competitive strengths and capture greater market share.
