H-E-B EXPANDING CATEGORY MANAGEMENT

BRENDA LLOYD

ATLANTA (FNS) -- H-E-B Grocery Co. is forging far ahead in the areas of category management and information-driven buying and merchandising.

The chain is now relying on category managers to make nearly all key decisions about specific products, including buying, merchandising, pricing and advertising, and is using a vast array of advanced analytical tools to help them in making the right decisions.

Highlights of the chain's commitment to category management and information-technology solutions were outlined by Rita Wenthold, assistant controller at the San Antonio, Texas, chain. She spoke here last month at the Coupon Conference jointly sponsored by Carolina Manufacturer Services and Carolina Coupon Clearing, both based in Winston-Salem, N.C.

Other technology-driven initiatives now under way at the chain, Wenthold said, include:

· H-E-B is rolling out a scan-based payment system with many of its suppliers whereby the chain does not pay for products until they have been scanned and verified at the point-of-sale checkout.

· H-E-B is also intensifying its Efficient Consumer Response partnership efforts with suppliers to ensure that products move through its stores quickly and at the lowest cost. For example, 80% of grocery purchases are now transacted via electronic data interchange, and half of grocery volume is involved in a continuous replenishment program, she said.

All the changes taking place, Wenthold stressed, come as a result of H-E-B's commitment to category management and to ensuring an everyday low price strategy.

Category managers are involved in utilizing activity-based costing analysis for all items, tracking the amount of inventory on hand in-store and at the warehouse, determining display and advertising strategies, and making buying decisions, including adding and deleting items.

They also make recommendations about planogramming decisions, such as where new items should be placed and how much space should be devoted to each product section. "[The category managers] make all the decisions on that product," Wenthold said.

To ensure that the chain's category managers have the proper information on hand to make the right decisions, the chain also developed what it calls a category management information (CMI) system. The information-driven system, rolled out last year, contains detailed data on shelf-space availability both in-store and at the warehouse, manufacturer promotional programs, and ABC-driven product-specific cost and profit analyses.