CLEVELAND -- "We only prosper if the retailer prospers," says Edward Fruchtenbaum, president and chief operating officer of American Greetings here, expressing the guiding principle of this category leader. While that may seem obvious, the maker of greetings cards, party goods and related merchandise puts a lot of thought and energy behind this simple philosophy. The secret ingredients in this win-win scenario? Retail partnerships and technology.
"But it's a different application of technology than
most people are doing," Fruchtenbaum explains. "Most people using technology right now are taking costs out of the back door and out of receiving. That is important. But you also have to use technology to build your sales revenue. "You have to build technology to build customer loyalty, to get more repeat sales, to get more cross-aisle sales and to maximize sales from every customer in the store. So our technology application is much broader."
The company learned of this need for technology firsthand through its sponsorship of the American Greetings Research Council, now in its third year. The council, which has nine retailer members, aims to identify and research the issues needed to develop a long-range, objective approach to marketing general merchandise and health and beauty care products in supermarkets. "One of the things we've been hearing loud and clear over last several years is the need for technology," says Randy Mason, senior vice president and general sales manager. "Most retailers don't yet have ability to do many [sophisticated] things. They look for suppliers who do have the ability. That's why American Greetings has placed a lot of emphasis on technology." In general, this emphasis falls into two areas: merchandising the store and planning store departments. "We basically put together an electronic tool kit for retailers that allows merchandisers to input data," Fruchtenbaum says. "We sort it by store, by store type, by time of year, and allow them to develop different merchandising plans, inventory plans and forecasting goals." This commitment to the success of retailers is not offered to everyone. American Greetings views its technical assistance as a value-added service for the retailers it is partnering with. "You can imagine how many requests we get from other retailers," says Mason. "We're very serious about this value-added service. But we want it for those people we are selling greeting cards to." He uses the example of H-E-B Grocery Co., the San Antonio-based operator of 138 supermarkets. American Greetings used a lot of its expertise in helping H-E-B open large card departments with eye-catching layouts and fixture organization. American Greetings also is developing an interactive kiosk for the retailer to use in party goods. It essentially will enable consumers to plan various functions, such as birthdays (see accompanying story on this page). The company's commitment to technology for retailers also extends to its own salespeople. "We were the first company to equip our part-time merchandisers with units so they can reorder," says Mason. "We are rolling out to salespeople laptops to enable them to determine sales opportunities for our accounts, how to move merchandise from one store to the next and how to maximize productivity." All of these efforts fall in line with Efficient Consumer Response practices; that is, streamlining operations and meeting consumer needs better. "Most of the talk about ECR has been on the cost side of business," says Fruchtenbaum. "We are systems-advanced, and probably only 10% of retailers can tie into our systems capabilities right now. We are well ahead of the cost side of the business. "But within the next two or three years, people are going to start to focus on the consumer side of business in terms of consumer satisfaction, in-stock positions, much quicker replenishment and an assortment tied to specific needs of consumers of a specific store. "A real advantage we have in ECR is that, in addition to controlling the costs of the business, we are positioned to take advantage of the consumer purchase side of the business. That is where the greatest benefits will be derived."
One of the ways the company also is meeting consumer needs is by tailoring its product mix to changing demographics and practices. There is a keen awareness of today's more discriminating shopper. "While we strategize globally, we compete locally," Fruchtenbaum explains. "We merchandise every store differently, based upon the different demographics around the store, store strategy, and then with the actual sales results of that store. It's the only way you can assure customer satisfaction where you have a very discerning and discriminating consumer. That is key for our business."
Here are some of the changes Fruchtenbaum says are affecting American Greetings' product mix: · An Aging Population: "We've always had a category called 'Get Well,' but we're entering an era where there will be a lot of people you are close to who aren't going to get well. So we will see big growth in a category called Care and Concern for people who won't get well, but you want to convey your sentiments to." · Minority Growth: "This year we launched the first Spanish line of cards. We have a black line called Baobab Tree."
· More Card Purchases by Men: "We are developing things that have more male appeal. One has been CreataCard [an in-store kiosk that allows shoppers make up their own cards]. Males are drawn to that technology and personalization." Fruchtenbaum has positioned American Greetings to capitalize quickly on niche marketing opportunities. The creative and manufacturing departments have been re-engineered so new products can be shipped to stores faster than ever before. "We've put in more sophisticated demographics services so we can identify the right mix with just the right assortment for the right store," he says. "We are far better positioned than anyone else to identify the specific niche markets that best meet the needs of any specific store in the country."
For many accounts, the traditional buyer-seller relationship has evolved into an "integrated" relationship. "The way the relationship is different now," Fruchtenbaum explains, "is that, in a chain, our advertising people will talk to their advertising and promotion people, and our merchandising people will talk to their store decor people. Sometimes we have product specialists calling on different buyers within a chain. Our systems people talk to their people. We will sometimes have five, six or seven people in contact with a chain.
"It's a far different kind of relationship," he continues. "We aren't selling anymore. We are advising and consulting as to how they can improve sales in the whole side of the store. Instead of calling them once in a while with a brochure and getting an order, we meet with them once or twice a year to put together marketing programs or strategic plans for the next 12 or 24 months. This requires a lot of commitment from both organizations. It's not the kind of thing either one company can do."
American Greetings enjoys this relationship with some 20 retailers in the food, drug and mass channels. Expectations are for this number to triple in the next five years. But it clearly isn't for everyone.
"The obstacle isn't so much technology," says Fruchtenbaum. "It is an attitude and willingness to go forward in a partnership. Whether or not you're up to speed on technology, there are lots of things you can do working together on marketing and merchandising programs to satisfy consumers." One of these things is marketing, or branding, the store itself. Retailers with an eye on the competitive future are now active in this area. "Most successful retailers in the years ahead will have carved out a unique image of their stores in consumers' minds," Mason points out. "They do have to differentiate themselves. We have put together a package of programs and services that we can develop for retailers in merchandising, signage and packaging which we make unique and exclusive to that retailer. "The people most successful in differentiating themselves will be those who we will have teams with," he continues. "They are the people willing to commit the time and effort to put it together." Mason says that before any of this happens, supermarket retailers must "take a position" in greeting cards; that is, stand for something, such as price (like Winn-Dixie) or assortments (like Wegmans). When there is a true partnership and when technology is first-rate, American Greetings is ready to concentrate on boosting business for retailers by helping them create for their stores a unique position in the marketplace. "We integrate all the programs together so there is one comprehensive statement or strategy that goes forward," Fruchtenbaum says. "Whatever we develop is exclusive to a chain. No one else in marketplace will have anything close to it."