AT YOUR SERVICE 1995

JOHN KAROLEFSKI

IRVINE, Calif. -- Clint Owens, chairman and chief executive officer of PIA Merchandising Co. here, says he believes that the packaged goods business in the future will be dominated by a few very powerful retailers and brand marketers. "And there will be a few very large providers of service to help them execute priorities," he adds. He's now preparing for PIA -- founded more than a half-century ago -- to remain one of those key providers of in-store merchandising service. "We want to do the execution, but we also want to be a catalyst to develop smart plans that benefit both the manufacturer and the retailer," he says, outlining the strategy that he's used to build up PIA into a finely tuned organization consisting of 4,000 employees. It does business in over 22,000 supermarkets and about 2,500 drug stores, and is adding new services and product lines to keep growing. Three years ago, PIA was essentially a supermarket-only service provider. Now a third of its business is in nonfood stores. In three to five years, Owens predicts, more than 50% will be in non-supermarket business. One reason for this ratio is that other trade classes continue to be strong growth areas for most packaged goods marketers, he explains. Adding retail support will automatically boost business in those trade classes. Given the number of stockkeeping units they often carry -- 100,000 and higher -- there is a dire need to support the brand in the store, he says. Not that he's forgetting about supermarkets. In three years, PIA will continue to do everything in food stores that it's doing now, according to Owens. That includes resets, new store sets, remerchandising and the like. "But in some cases, our behavior's going to change. We're going to act and react toward targeted stores and clusters, for example. We are therefore going to do more tailored kinds of things that are specific to a category or to a client because we're going to know more about his product by zip code and, really, by store."

Owens envisions a changed industry when all the principles of Efficient Consumer Response take hold, such as when inventory reductions reach a low point and there's a true just-in-time management system. Professional service to maintain "shelf integrity" will be key. "Ultimately we're going to see schematics implemented and maintained at the store level," he says. "If you have people impacting the store negatively, the whole system will go out of balance." The driving force behind the growing need for service in supermarkets, he explains, is the retailer reducing labor costs for the basic maintenance of the store.

"The retailer continues to pull hours out of his system, while work is growing," explains Owens. "As the retailer more and more begins to realize that there's a shortfall in terms of available hours to get the work done, he's going to try to pressure the vendor community to step in and provide the hours. Eventually, more hours will come back into the system, albeit through a third party. "The manufacturer is filling that void for his own salvation to be sure that the products are there on the shelf and not sitting in the back room." There's no chance that PIA will miss seeing any slip-up. As well as having its people in stores all the time, PIA has executives literally working in the headquarters of every major supermarket retailer in the country. Owens points out that this trusting relationship enables PIA often to be "the conduit or the catalyst between the manufacturer and the retailer. Backing up PIA and its in-store work is a commitment to category management and an investment in technology. "It's critical," Owens states. "We are committed to being on the leading edge of technology, and we've invested accordingly. Every field person is equipped with computers and the software to manage their business." PIA has been developing the marketing part of its business by starting two companies in the last few years.The two new areas are: Telemarketing PIA formed a company called Ameritel in January of this year. It fills a complete sales role for manufacturers, targeting primarily smaller, rural independents that are otherwise not cost-effective to call on in person. "This is not solicitation at dinner time," Owens points out. "These are calls by appointment. The entire data base of that store's purchase history is in the computer as they call. They're selling promotions. They're offering allowances and paying allowances for merchandising support and distribution." Local Event Marketing Market Level Marketing, formed in 1993, aims to help the manufacturer use local market funds better. "We see so many of these nationally created events where companies will spend millions against a program that really never gets executed. It doesn't get sold in right to the retailer. It's a day late and a dollar short. "A marketing department's dream never gets transferred effectively and accountably to the sales department in a way that you get continuity, follow-through and execution at the retail level," Owens says. Looking to the future of packaged goods, Owens is confident that PIA will be one of the few, larger providers of service for the few, powerful trading partners that will dominate the business.