MANUFACTURER ALLIANCES GET HMR COOKING, SAY RETAILERS

ROSEANNE HARPER

LOS ANGELES -- Building alliances with product manufacturers is the prime ingredient in home-meal replacement, retailer panelists told attendees at the Washington-based Food Marketing Institute's MealSolutions '97 conference here.

The retailers were quick to acknowledge they can't do everything themselves and get the results that will keep customers coming back for more.

"We built alliances because our strength is selling food, not producing it," said Tom Brewer, vice president of deli-food service, for 94-unit Price Chopper Supermarkets, Schenectady, N.Y., one of the panelists.

He and the others told attendees at the Sept. 14 to 16 conference how they chose their suppliers and forged continuing relationships based on honesty, trust and common interest. They talked about the commitment required and emphasized that progress is slow when it comes to creating a successful HMR program. In fact, they pinpointed their own failures in the HMR arena and pointed to them as an important link in "an evolutionary process."

In addition to Brewer, panelists included Daniel Lescoe, vice president of merchandising at Big Y Supermarkets, Springfield, Mass.; Ed DeLuca, founder of Ed & Joan DeLuca Inc., a Middlebury, Conn., food manufacturer; Terry Roberts, managing partner at The Design Associates, Rochester, N.Y.; and John DuBois, president and owner of DuBois Foods, a Rochester, N.Y.-based food broker. Jim Riesenburger, managing partner at The Design Associates, moderated.

Finding out what customers prefer to eat and establishing a menu are crucial steps that must be taken prior to forming alliances with HMR suppliers, panelists said.

"We've done a lot of profiling of our customers. And that's not just demographics. It's looking at how people in your marketplace eat. One way to do it is go to diners. See what's on the menu, what their regular customers are eating. And you can run focus groups. We've done that," said Brewer.

Brewer also noted it's important to profile your own company early in the process to assess potential changes. He said a close look at systems, especially distribution and ordering systems, should come first.

"For a while, we weren't even sure we could do this. We had to build a whole new order and delivery system because we wanted delivery every day instead of twice a week. Without the changes, we couldn't do HMR. But we eventually accomplished it. Now we have the ability to turn orders around in less than 37 hours, on a daily basis," Brewer said.

Also, it's necessary to formulate a plan and a mission statement to take to the senior company executives or directors to get a "buy-in" for everything you want to do, he added.

On formulating a menu, the retailers said simplicity is a key to success.

Lescoe of Big Y said his company built its menu around its barbecued chicken, installing additions to that program, and adding pizza because statistically it's a favorite with consumers across the United States.

"We have no chefs so we sort of backed into the [HMR] program. We went out in our areas to see who made the best pizza and the best chickens. Sometimes we wandered into their kitchens, hoping to find what kind of sauce they were using," Lescoe said.

The menu comes first, the panelists agreed. Then it's time to link up with manufacturers to work out the supply details. In other words, the process begins with the consumer and what he or she currently wants to eat, not with what's available. But how do you find those suppliers who can give you what your customers want?

"We found there's no single answer to that. But at Big Y, it's been very simple. We look for someone with the same passion for quality that we have. The passion has to be there," said Lescoe.

"Don't just look for a manufacturer who'll deliver the goods, but someone who will help with the end results," he added, pointing out that a quality product is the driving force behind sales.

"We take our QA people as well as our operational and sales staff to the manufacturer's plant. Our [major] supplier, we found had a triple A rating for food safety. That makes you sleep better at night," Lescoe continued.

"If you don't get past the plant inspection, stop there. We look at the manufacturer's limitations, the potential, the flexibility, and we add all those things into the cost," he said, adding that Big Y thinks in terms of the value of goods instead of just the cost of them.

Brewer, too, talked about what to look for in a manufacturer's plant. "I sometimes get 'lost' on a plant tour [while our people are looking at other things]. I may be off reading the bulletin boards, which can be very telling, by the way. If you see handwritten memos about certain things, it makes you wonder what's going on in the plant in terms of procedures," he said.

DeLuca urged retailers to take their quality assurance and technical people to manufacturer's plants.

"Don't make the mistake of leaving them behind. They're going to look at things entirely differently than your sales and merchandising people will. They'll be looking at the manufacturer's criteria for shelf life, what the conditions are that assures it can be attained. They'll also check into the manufacturer's microbial studies and find out what recall procedures are in place," DeLuca said.

Terry Roberts said when she was at Wegmans Food Markets, Rochester, N.Y., the company sent 80 people to a manufacturer's facility when it made the decision to source chilled product. The Wegman contingent that visited the manufacturer ranged from store-level deli managers up through the top-level executives.

"That's necessary to make everybody feel part of the partnership and give them ownership of the product," Roberts said. Such action also sends a loud message that something special is happening and that everybody will have some responsibility for it, she added.

She also advised taking the manufacturer to the retail facilities so they can look at what modifications at store level might be called for. Adequate refrigeration and display space, for instance, should be planned out ahead of time, she said.

DeLuca emphasized the necessity for each party to understand the others' capabilities and limitations.

"Food safety is most important, but you also need to understand each others' degree of flexibility and to determine what the shelf life will be for example," DeLuca said. And he warned that complete honesty on both sides is crucial.

"You have to be very realistic in terms of what ingredients, processing and packaging are available. Often, people have expectations beyond where the industry actually is today," he added.

And Price Chopper's Brewer put it this way: "Remember that this is a courtship that could become a marriage. So you really need to lay things out on the table."

All parties must be committed to delivering a quality product to the consumer, DeLuca said. He urged retailers to review their food-safety procedures carefully. He pointed out that the weakest link in maintaining the cold chain is usually at store-level.

"The most important tool in the supermarket is the thermometer. Associates don't use them or they don't know how to use them. And if the thermometer is 10 degrees off, think what that can do to your food," DeLuca said.

Just like in the restaurant industry, suppliers and retailers need to keep in close contact when it comes to selling the product, too, panelists agreed.

"That's where a continuing alliance is necessary. When we get responses back through the deli people, we make changes. We redefine the products to drive sales forward," said DuBois.

DuBois, who identified his company as a specialist in developing partnerships between retailers and manufacturers, pointed out that the retailer and manufacturer need to commit themselves to a weekly cutting of products for tasting, to make sure they're what the customer wants.

His company has a toll-free number available to each unit of a chain so that any problem or perceived problem with a product can be addressed and inventory can be replenished quickly, he said.

"If any store calls, we'll get product to them or a response back to them with a four-hour period. And also, the more we let the consumer know how good our product is, the better off we are," DuBois said, adding that his company makes point-of-sale material -- including recipe cards, nutrition information, handouts and easel boards -- easily available.

DuBois' HMR staff also helps train deli-food service associates, he said.

"The associates will get a lot of questions from customers and we need to put the answers at their fingertips," DuBois added.

Roberts underscored the necessity of sampling product and that manufacturers and brokers can help out in that respect.

"You have to sell. If you just put samples out on a plate and let them set there, you might as well put out a plate of quarters because you're just giving money away," she said.

Creating an identity, too, can help sell the product, Brewer said, indicating that some of the manufacturers he deals with are now packing product under the Price Chopper label.

"We started out with hot food in 1993 and then went into chilled, bringing in product from Ed and others. But all of a sudden, we started looking like a box and can store [because there were so many different labels]. It would be easy for me to revert to that, so I knew we needed to establish an identity. That's when we developed "Ready Meals." The chain's prepared entrees and sides are now packed under the "Price Chopper Ready Meals" logo.

Also, this year, the chain has committed $1 million to advertising its food-service products, Brewer said. That program includes billboards in most of its marketing areas, radio spots, four-page shoppers, and full-page ads on the front of its weekly ad circulars.

Price Chopper also has full color photos in its food-service departments. "Just like in the QSRs [quick service restaurants]," Brewer said.

"We don't have marquees up and down the highway [like they do], so we had to do it another way," he said.

Sales are going well for Price Chopper and for Big Y, Brewer and Lescoe said. And they attribute some of that success to keeping things simple and also reacting quickly to failure.

"We've kept to four basic types of pizza and we do them very well. We display them in nice, Sbarro-type cases and when we've added products they've been related. For example, we added calzones, which use the same ingredients. There's no additional inventory," Lescoe said.

And Brewer stressed Price Chopper has concentrated on rotisserie chicken in a program dubbed "Roasters. The House of Chicken." Recently, the chain made an alliance with its chicken supplier to have the products premarinated to Price Choppers' specifications.

"Business jumped companywide when we did that because of the consistency it gave us," Brewer said. Previously each store had marinated its own roasters.

The two retailers said they have kept close watch to see how each of their programs does and have eliminated some.

"We tried a breakfast pizza that didn't do well. We've discontinued it," said Lescoe.

"And we opened a Chinese program and Coyote Joe's southwestern and have closed them both," Brewer said.

In the face of such failure, it's especially important to have a long-term commitment to succeed in HMR Brewer and Lescoe agreed. It may mean discarding programs, and it most definitely means constant tweaking and updating, but their long-term goal is to succeed in offering customers meal solutions, the retail food-service executives said.

"I can say it in just five words. You're committed or you fail. That's the way it is," Brewer said.