Skip navigation

NEW REPORT PLOTS NEXT ECR STEP

WASHINGTON -- With most grocery industry executives aware of the Efficient Consumer Response project, industry leaders now need to better address concerns about implementation, according to a new report.This includes communicating "a dynamic and holistic vision of ECR" to all segments of the industry, the report said. Additionally, a "systematic road map" should be developed to help companies determine

WASHINGTON -- With most grocery industry executives aware of the Efficient Consumer Response project, industry leaders now need to better address concerns about implementation, according to a new report.

This includes communicating "a dynamic and holistic vision of ECR" to all segments of the industry, the report said. Additionally, a "systematic road map" should be developed to help companies determine where and how to begin ECR implementation, the report said.

These were among the findings of the new report, called "ECR: Perceived Barriers and Opportunities." Thomas J. Hoban, a sociology professor at North Carolina State University, prepared the report for the joint industry committee overseeing the ECR project. Its purpose was to develop recommendations to help facilitate industrywide implementation of ECR.

The findings were released by the Food Marketing Institute here late last month.

ECR, which was formally introduced to the industry last year, calls for streamlining the existing distribution system, thereby reducing industrywide costs by an estimated $30 billion annually.

According to the Hoban report, awareness of the Efficient Consumer Response initiative among top industry executives is "quite high, and broad-based support exists for the general concepts and practices of ECR."

Although most respondents viewed ECR as a positive initiative and "critical" for meeting the competition from alternative formats, the report found there are barriers to successful implementation, especially resistance to change among people in the industry. Other barriers relate to the "perceived complexity and overwhelming scope" of the ECR project.

Hoban's findings are based on an analysis of 39 in-depth telephone interviews conducted with top executives of 15 manufacturing, 10 wholesaling and 14 retailing companies.

"Many respondents are not comfortable that the full range of potential effects of ECR have been identified and analyzed," the study said. "Concerns were raised that some serious consequences have not been anticipated . . . . Most admit that they have little insight into how the benefits and implementation costs of ECR will ultimately be allocated within the system."

The study recommended a number of "tactical initiatives for facilitating implementation of ECR and minimizing negative impacts on different segments." The three main strategic thrusts industry leaders should follow are:

· Developing and distributing a systematic road map to help companies determine where to start and how to move forward.

· Maintaining and consistently communicating to all parties involved a broad, dynamic and holistic vision of ECR.

· Collecting, evaluating and synthesizing the experience and information being gained by individual companies who are entering into their own ECR projects with selected partners.

Additionally, there is a need to "simplify the ECR concept and recognize that practices vary in their relevance and acceptability," the study said. "Adoption of ECR practices need to be prioritized so those with the greatest benefits and least difficulty are promoted at the initial stages."

The study also found differing views of ECR among the three main segments of the supermarket industry. Wholesalers tended to be the most cautious about ECR and "would generally like to see the pace of implementation slowed," the Hoban report said.

"As a group, wholesalers feel that they have the most to lose from ECR," it said. "Elimination of certain practices (such as forward buying and diverting) would remove a major source of revenues for them."

Manufacturers were the most enthusiastic and expressed the "greatest sense of urgency" about the pace of ECR implementation. Retailers had mixed views, with many seeing ECR as driven by manufacturers. Some expressed concern that the benefits to consumers "have not been clearly identified and emphasized."

Another barrier to some retailers' adoption of ECR is the belief that it is not applicable for non-everyday-low-price operators.

The study's finding that awareness of ECR is "quite high" and that broad-based support exists for the general concept is in contrast to an earlier independent survey of industry executives. That survey, by Meyers Research Center, New York, found almost two-thirds of all the executives surveyed indicated their companies were not planning to introduce ECR programs.