BOSTON -- The concept of Efficient Consumer Response was created with dry grocery as its focal point, but the dairy department can achieve benefits too.
So says Hope Mandel, senior corporate account manager of retailer services at Nielsen Market Research, Norwalk, Conn., who spoke on ECR in the dairy at a recent conference held here by the New England Dairy-Deli-Bakery Association.
ECR is the food industry's effort to improve the way products are distributed from suppliers to distributors and retailers as a way to bring better value to the consumer.
Mandel, who has met with representatives of various sectors of the dairy industry, including brokers, wholesalers, retailers and manufacturers, to talk about the supply chain, said one of the biggest concerns cited by retailers and wholesalers is the proliferation of product in the dairy case with no additional space to display it.
Another major concern, she said, is eliminating spoils, "the one area that is unique to dairy and not as prevalent in dry grocery."
Citing a study by Willard Bishop Consulting, Barrington, Ill., Mandel said unsaleables can be up to 2% of manufacturers' sales and up to 10% for retailers. While there are various strategies on how to handle spoils, Mandel said the industry should rethink how to eliminate the problem in the first place. That's where ECR can help, she said.
Retailers should work with manufacturers to create a shelf plan that eliminates and reduces out-of-stocks as well as overstocks -- which then become unsaleables, said Mandel. A good start would be to eliminate unnecessary or similar items, she said, pointing out that a study by the Food Marketing Institute on product duplication determined that if 10% to 15% of stockkeeping units are removed -- if they are the right ones -- the consumer won't notice and sales won't be affected.
There are several ways to identify which categories, or items within them, to eliminate, she said. "Take a look at the shelf after a busy period, before it's been restocked, and see if there are a lot of out-of-stocks on one hand, and if there are a lot of items that have not moved much," said Mandel. Then, she told the audience, "You are probably somewhat out of balance."
Characteristics of a product should help in deciding what to eliminate. In yogurt, the decision may rest on fat content vs. flavor. "If there are 15 strawberry items, you can probably eliminate some of them, even if they are faster movers than two blended banana items."
Before de-listing items, retailers need to take into account overall company strategies, such as efforts to offer the most variety in a market or to focus in on private label. Perhaps there are needs for larger sizes in areas with club competition.
