CHICAGO -- Brand marketers are ready to launch their first supermarket promotions through Information Resources Inc.'s scanner-verified program.
"The first promotions will be in February and March in five introductory markets," said Tom Sullivan, executive vice president and general manager of the syndicated data provider's Customer Marketing Resources division.
Albany, N.Y., Chicago, Denver, San Francisco and Houston are the introductory markets. St. Louis and Boston, originally part of the launch, will come on line later in the year.
Participating supermarkets include Jewel Food Stores, Melrose Park, Ill., and Northlake, Ill.-based Dominick's Finer Foods, among others. Participating manufacturers include Bristol-Myers Squibb, Hunt-Wesson, 3M, Best Foods, Nabisco Foods Co., DowBrands, ConAgra Frozen Foods and Planters/Lifesavers.
Several manufacturers have tried scanner-verified promotions on their own in some markets. IRI, however, hopes to roll out its program nationwide within two years -- giving manufacturers the option of offering pay-for-performance promotions at any time in any market.
Sullivan said the program will give manufacturers a better handle on exactly what sold during a given promotion and how to more equitably distribute scarce promotional dollars.
"We'll collect the scanner data and verify it to make sure the promotional dollars paid out to retailers reflect actual movement," Sullivan said.
Information Resources will submit item-movement reports to manufacturers on a weekly basis. IRI also will figure how much money each retailer is due based on that information. Carolina Manufacturers' Service, the Winston-Salem, N.C.-based coupon processor, will process actual payments to retailers and handle reconciliations.
Gian Fulgoni, chairman of IRI, said that third-party verification of scanner data on promotional items will ease tensions between manufacturers and retailers over invoice deductions.
"Unauthorized deductions are a significant expense to manufacturers and a sore point with retailers," Fulgoni said. "We want to improve the level of trust and cooperation between manufacturers and retailers by acting as a third-party verification system just like the coupon clearinghouses do."
Manufacturers hope scanner-verified promotions will combat forward-buying and diverting and give retailers an incentive to make sure the promotions are successful.
"In the past, manufacturers paid more than they should have because of forward buying and diverting," said Carlene Thissen, president of Chicago-based Retail Systems Consulting.
Retailers, however, have mixed feelings on verifying promotions electronically at the point of sale. Many say they prefer to buy extra product during promotional periods, mark those goods up to regular price after the promotion ends and pocket the difference.
Manufacturers have upped the promotional allowances on scanner-verified programs to wean retailers off forward buying and entice them to participate in the initiative.
"The per case allowance is significantly higher on pay-for-performance promotions," Fulgoni said. "The manufacturers are willing to do that because they know they are only going to pay out on product that actually sells."
Information Resources collects item-movement data at the point of sale in more than 10,000 supermarkets nationwide via its Q-Scan network.
Thissen said that breath will allow IRI to speed the acceptance of pay-for-performance promotions.
"IRI can provide manufacturers access to a great deal of retailers," she said. "That will make the process a lot easier than if manufacturers tried to set up pay-for-performance programs individually with supermarkets."
Fulgoni said Catalina Information Resources, a joint venture between IRI and Catalina Marketing, is now pulling daily scan data reports from about 1,000 supermarkets. He said IRI will approach those retailers about using that data to update manufacturers daily on scanner-verified promotions.
Fulgoni anticipates retailers will be receptive. Besides giving manufacturers a truer picture of what sold when, IRI will be able to cut the amount of time it takes to reimburse retailers in half or more if the scan data were verified daily.
"There is a two-week turnaround period using weekly data. But we could probably pay out promotional allowances in a couple of days if we switched to daily data," he said.
