A Different
ve In your June 10 editorial, titled "Your Payment, My Captain?," you suggested that perhaps you were posing the issue [of retailers charging "captaincy fees" for allowing a manufacturer to lead a segment of a retailer's category management effort] somewhat "too starkly." Here's a somewhat different perspective. At IRI, more than once we have been caught in the middle of the conflict between the retailer, on whom we depend to obtain our raw material, and manufacturers, who are our primary source of revenue. Manufacturers need to look in the mirror first when they begin to be uncomfortable with "greens fees" retailers are charging to walk onto the first tee of the category management course. But this is a result of years of retailer frustration connected to manufacturers investing heavily in information and producing an endless stream of biased, self-serving category management analyses that ultimately victimized the retailers rather than assisted them. It would be unfair to lump all manufacturers into this category, but certainly this was mainstream practice. (Data suppliers are not free from guilt here.)
There are two notions our industry must consider in the near term that can be of significant help:
First, the industry should adopt the concept of "standardized category definitions." I have spent over the last year talking about this concept to retailers, wholesalers, manufacturers and brokers and have met with nearly universal enthusiasm. This plan is not designed to eliminate the flexibility of the retailer to relate to the customer in unique ways in key categories. In the vast majority of packaged goods categories, that flexibility is irrelevant.
Second, there is a need for all trading partners to exchange information more freely than ever before. In that light, data alignment becomes a critical issue. Currently, top-level consultants are furthering the idea of the ultimate "data warehouse," which will take the most data from any source such as scanning, frequent shopper, household, pricing and external data from syndicated suppliers and other sources. The myth is this approach will provide the ultimate competitive advantage. Today's technology cannot support this "silver-bullet" approach. The concept itself is sound but, currently, the likely scenario is a money pit unlike anything this industry has ever seen. The potholes you see on this road to success could be graves for those unfortunate enough to hit one.
STEVE FRENDA executive VP,
Retail services Information Resources Inc. Chicago
Applause
I applaud your editorial comment [of June 10] titled "Your Payment, My Captain?" It was especially good and really courageous.
We at Del Monte, despite our current LBO status, have invested millions of dollars in all the components of ECR, with a particularly high emphasis on category management. And that's just one of many initiatives we are taking to help our customers work in partnership with us to better manage the categories in which we operate, hopefully to our mutual benefit.
Most all of us on the manufacturer side of the business are working at being better partners with our retailers and wholesalers. I would hope that we don't relegate the various components of ECR to the level of abuse that slotting allowances, diverting and other system inefficiencies have experienced.
