ECR: WILL CONSUMERS BENEFIT?

SN: What benefits does Efficient Consumer Response hold for consumers?

e end customer is not forgotten in the process of streamlining the industry's distribution systems, and we would hope that customers would end up benefiting from ECR. There are consumers at the end of the distribution chain with expectations of how things should be, and we can't design ECR programs that leave their influence out. It's still early on in the conversion to ECR, but it's important for companies to design programs that leave some flexibility, so there's room to meet some of the needs of the individual consumers at the end. OMERNICK: If distribution and inventory costs are reduced, the customer should get the benefit of fewer price increases. When we put in scanning years ago, it was not billed as a consumer issue, but one from which consumers would certainly benefit. Anytime you generate more efficiencies in your operation, the consumer will hopefully always be the ultimate beneficiary. If direct ordering means we have better in-stock conditions, then consumers will benefit. MOORE: If we can be more efficient and lower our costs, then consumers will benefit in the long run because prices will hold. If we can control costs, then we can control prices. One tricky thing about ECR, though, is the difficulty of eliminating items [in order] to be more efficient without alienating some customers that might buy those specific items in small quantities. How do we get the right mix to be efficient and to still serve the diverse needs of customers? I'm not sure of the answer. STEINBACH: It will probably be a long time until the consumer sees any results from ECR. Once manufacturers and distributors increase the efficiency of the distribution system, then consumers may realize not only lower prices but they may also see any other changes, such as improved scanning, better product selection and more frequent-shopper programs. GERLAND: No one really knows all the benefits that will result from ECR, but if product can be delivered to where customers can buy it at a cost savings, then of course it will be beneficial for customers. NOWAK: It's still too early to tell, since it's only been discussed for a year. It will take a lot more time for the industry to work things out and really analyze the results of ECR to see how the savings can be passed on to consumers. SCROGGINS: Consumers won't see any benefits from ECR for a while because it will take the industry too long to work the extra costs out of the system. Until they do, and until it's solidified, the savings won't show up at the consumer level. I think we're still quite a distance away from that, though when it eventually comes, we might see some products more readily available and perhaps some cost savings. HOSEY: It's really too early to tell, but it's possible consumers may not ever benefit. We're not far enough into this process to know what will happen at the consumer level. It's clear consumers will be the last ones to benefit from ECR. And I'm not sure the purpose of ECR is to lower consumer prices, and I'm not sure if there'll be enough of a change to lower prices. MATHEWS: We don't know yet whether consumers will reap benefits from ECR. If we can reduce overall costs in the total system and if the savings can be passed on, then certainly consumers will benefit. However, the benefits may not translate as reduced prices on each product, but as savings overall. SN: How else will technology impact the consumer?

OMERNICK: The big trend we see impacting consumers is technology, including data-based marketing that allows you to zero in on specific behavior. While the customer doesn't always have direct contact with these technologies, they will affect how we relate to them and they to us.

But along with cold technology comes the need for warm service.