FORT MYERS, Fla. -- The thorny issue of standardized price look-up codes had retailers and suppliers trading some sharp views during the Annual Produce Conference here.
The forum was a workshop billed "UPC/PLUs: Not Just for Checkers Anymore," and promised case studies to update the PLU system's "facets of implementation" as well as to offer an "awareness of future challenges."
The panel, which included two retailers and a grower, delivered what was billed. Then the floor was opened for questions, and the talk turned to a debate about the different nuggets of information that stickers carry, and whose nugget should be bigger.
Growers and shippers suggested that stickers should grant them an opportunity to push their brand names -- if they can find room on the sticker.
Retailers, however, said the brand name, if it fits at all, should be the smallest part of a standardized PLU sticker, the third most important after the four-digit code itself and the product's varietal name.
"No. 1, we want the number on the sticker," said Mike Ross, produce sales coordinator for Kroger Co., Cincinnati, who moderated the panel discussion.
"No. 2, we love the idea of having the variety on the sticker. To us, that is tremendous, because it's very difficult to get the message to the consumer what variety of orange or tangerine they're actually picking up," Ross said.
"If there's room to put your name on it, that's fine, too," he told suppliers. "We are concerned [about ending up with] huge stickers on products, because we do not want to distract from what we're trying to do, which is to sell products." From the audience, Dan Hamilton, vice president of produce
"We would like to have the PLU large so the cashier can read it through a plastic bag," Hamilton said. "We would like the description of the product, and last, the brand identification from the supplier."
Howard Nager, director of marketing for Del Monte Fresh Produce Co., Coral Gables, Fla., spoke in defense of branding. He told the retailers they needed to remember the "delicate balance" between themselves and the growers and shippers who supply them.
"Certainly, the retailer wants the PLU as big as possible. And I know, from many on the grower-shipper side, that we want our brand name on that sticker as big as possible," Nager said.
Bryan Silbermann, executive vice president for the Produce Marketing Association, Newark, Del., contributed some context to the debate, noting that once standard PLUs become established, growers and shippers will be able to track their individual products through different retail operations.
At that point, major brand marketers should be able to experiment with different sizes of sticker, or different types, to find out which works most effectively in conveying the brand message to consumers, he said.
"Now that you've got the basis for identifying the product, and what happens when you take different promotional approaches to marketing your product, you may go [to a retailer] and say 'Let's enlarge the sticker by 100%, put additional usage information on it and see what kind of response we get over a four-week period in nine of your stores,' " Silbermann said to the growers and shippers who were present. "That way, you could test consumer response."
That is a logical scenario, given the assumption that retailers will share the kind of information they can gather from a PLU system. Nager asked the retailers who in the supermarket hierarchy would decide how much PLU-derived information growers and shippers would have access to, and at what price.
"If there is a charge, it seems not too much of an advantage to the grower-shipper who is already making the investment, and now, on the other hand, also has to pay for the information," Nager said. His comment drew scattered applause from the audience.
Panelist Mark Hilton, manager of produce merchandising for 142-unit Harris Teeter, based in Charlotte, N.C., replied that his company would share information with its shippers.
Ross, the Kroger executive, responded differently. He suggested that growers not expect an industry consensus about the likelihood of retailers sharing information.
"If you have a true partnership with a retailer, you're going to get that information," Ross said. "Outside of that, it's going to be difficult."
Hilton commented that taking full advantage of the new information captured by using the standardized PLU system will prove difficult for anybody, including retailers. He said it is much more difficult than actually converting to the system.
"We've got to convert our internal monitoring systems to utilize information that we're capturing," he added. "That ties in very directly with category management."
The information, if used correctly, does have powerful potential. Hilton used apples as an example. Harris Teeter knew how many cases of apples were being shipped to the stores before the standardized codes were implemented. However, the chain couldn't effectively track sell-through on apples or make assumptions about shrink.
Now, Harris Teeter can tell how many apples it sells, and of which types, he said. With that much information, the company can track what displays are working best, and whether apples are priced correctly. Perhaps by lowering prices on certain types, the company can reduce shrink and still make money on the bottom line, he said.
The initial conversion, in terms of reprogramming computers and front-end registers, took only 13 man-hours, Hilton said. Training clerks at the front-end took more time.
Hilton said the stores took responsibility for training cashiers to use the standardized PLUs. Most retrained their cashiers as if they were newly hired, having them memorize the top 50 produce items.
Harris Teeter also provided each front-end register with an identification book that includes pictures. Each unit also now has two posters with PLU numbers, posted in break rooms.
To make the conversion easier at the front-end, Harris Teeter tied its old in-house system into the new standardized one, so both the old and the new codes appeared on the produce.
Hilton said Harris Teeter utilized both codes for about two months, before dropping the old in-house system, which in retrospect seemed too long a transition period.
With only four weeks logged so far on the new PLU system alone, the chain is still waiting for the evidence of the financial effect, he added.
Silbermann of PMA said chains usually run parallel systems for two or four weeks. However, he said, Ralphs Grocery Co., Compton, Calif., which switched over to standardized PLUs in January, did not use its old system with the new standardized one. "When Ralphs made the conversion in January, they went cold turkey right into it, and they had no problem," he said. Kroger's Ross said retailers must train cashiers carefully and consistently with the new codes, or they will get sloppy.
It is possible for cashiers to get used to one PLU code for apples, say, and use that code for every apple, regardless of its brand or actual PLU.
"We're probably doing as much, if not more, training now than we did prior to PLUs," he said. "If you get someone who's used to one PLU code, and they keep popping that code every time they see something red, that's a problem."