GETTING INTO THE ECR CHALLENGE

BOB BAUER

ANAHEIM, Calif. -- Frozen food retailers and suppliers alike are chomping at the bit to garner their share of the huge savings promised by proponents of Efficient Consumer Response.

However, the frozens department presents unique challenges that may limit how extensively ECR can be applied.

"We're heavily into ECR in our stores. But frozen food has some logistics problems," said a frozen food executive from a major Midwest chain, who participated in a roundtable at the American Frozen Food Institute's Western Frozen Food Conference here. "We're still trying to determine how we can take advantage of some of the aspects of ECR that work in other departments."

The retailer said the biggest challenge in frozen is executing more cost-efficient displays. "It's not like grocery where you can order a full pallet and put everything on display in the aisle. We don't have the ability to take items off a pallet, and without much labor, put them on display."

Anne Lightburn, director of technology for the Food Marketing Institute, said although it's unlikely frozen departments will overcome their inherent display problems, other facets of ECR are certain to result in savings for frozens.

"Complete pallet loads on sale items and high-cube items won't be readily available, but good use of scan data could lead to the creation of mixed pallets," she told the group.

In addition, another facet of ECR, continuous replenishment, "is ideal for frozen category management," she said. "Frozen food personnel need to think about how limited their real estate is. Better category management can mean big savings and allow retailers to take advantage of the better margins frozens offer."

Lightburn said ECR could bring about changes in shipping methods. "Third-party warehousers could become distributors for many products. They could produce mixed pallets based on scan data from stores."

The ECR Joint Industry Project has identified four areas of cost savings: efficient assortment, efficient promotion, efficient replenishment and efficient product introduction. Lightburn said much of the initial focus is being placed on promotion and replenishment, because those two areas account for more than two-thirds of the projected $30 billion industrywide savings.

One supplier said "selling a four-part package could scare people away. If people start with one aspect at a time, I think the companies will embrace the ideas much more quickly."

"ECR isn't a one-size-fits-all strategy," Lightburn said.

She cited an example of 30 companies that, after incorporating CRP [continuous replenishment] into their operations, are reporting a decrease in deductions and a rise in turns.

Lightburn said manufacturers will likely bear the brunt of the early efforts associated with ECR savings.

One manufacturer agreed. "We'll at least look to cover the cost of bringing about the savings," he said, adding that manufacturers and retailers will have to work together. "In the long run we don't have winners and losers; we all benefit."