ORLANDO, Fla. -- Distribution of nonfood to supermarkets is shifting away from an emphasis on procurement of product, or buying, to selling items that meet with consumer demand at store level.
This new focus within the three-tier distribution system, tied into the industry's Efficient Consumer Response initiative, is changing the way Millbrook Distribution Services does business, Robert Sigel, president and chief executive officer, told a gathering of just over 1,000 people here for the company's first national meeting and trade show, Expo '95, July 30 to Aug. 1.
"New programs that we have developed just sell retail and merchandising services, where the buying of actual product is not a prerequisite. In brief, we are now in the business of distributing solutions," Sigel said. "Millbrook Distributing Solutions" is the company's new motto, which is reflected in the company's new advertising campaign.
Some of the new programs Millbrook is offering its customers often go against the traditional concept of service merchandising. For example, Millbrook is in the process of developing computer software used to train retail personnel to do their own servicing of products.
The company will initiate category management programs at retail to evaluate the necessary amount of space devoted to a category, and if the space is not productive the category may be eliminated or reduced.
"We want to eliminate those categories that aren't destination categories and perhaps concede -- which is a major change in our thinking -- that perhaps the deep discounters got it," Sigel told SN.
In his remarks to attendees, which included about 100 retail companies, many of them supermarkets, Sigel said Millbrook's mission is to "be the low-cost provider of value-added distribution services for the consumer industry, maximizing return for our stake holders." He said the company will pursue activity-based costing (ABC) not only to achieve its goal as a low-cost provider, but to prove to its retail customers that the services Millbrook provides are indeed cost effective. "We will also use ABC to provide the retailer with a compelling reason to use our services, as well as to advise them on what they may be able to do best themselves," said Sigel.
In response to changes in the marketplace, Millbrook, a division of McKesson Corp., San Francisco, which has distribution facilities in Harrison, Ark., and Leicester, Mass., has undergone a re-engineering over the past 19 months to maximize its own resources, and position itself to better serve the individual needs of its retailers in supplying nonfood and specialty foods.
In doing so, the company has formed three divisions to service independent retailers, retail chains and specialty foods. Within those divisions, Millbrook plans to execute a number of different strategies. "We can do other things besides just sell products," said Sigel. "We can sell our merchandising services, purchasing systems and retail support systems." Sigel pointed to the strengths of the Millbrook organization as being national in scope, and capable, with 32,000 stockkeeping units, of offering more nonfood product variety than other distributors. This is backed by the expertise of Millbrook personnel, he said.