SETTING THE STANDARD 1996

PAMELA BLAMEY

They are often being collectively dubbed the "power aisle."

But in an Efficient Consumer Response-driven world where the maxim "Information is Power" holds a lot of weight, fresh-food departments are still suffering from weakness, despite a lot of inspirational talk about category management.

The weakness comes from a lack of information, especially accurate data about what's selling, and what it's costing everyone up and down the line, according to retailers, industry representatives and category management specialists interviewed by SN.

Hard data is the necessary fuel for powering up full-fledged category management efforts. But it's not being mined by most supermarket operators, even though extraction tools -- such as standardized product codes and computerized data analysis -- are available, and in spite of the apparently widespread recognition that something needs to be done.

Dick Schulman, president of the consultancy Industry Systems Development Corp., Dix Hills, N.Y., and an authority on retail applications for technology, said the fact that information to support category management is still not up to par is a critical issue for all fresh categories.

"Everyone wants to know, 'How am I doing?' Compared to what? If you don't have the data, you'll never be able to answer that question," Schulman said. "And the only way it's going to happen is by the industry committing to the current standard [Universal Product Code] structure in all perishables departments. There is a standard for every perishable department, whether it's seafood or fresh meat or whatever.

"That is one of the first things that must be accomplished," said Schulman. It hasn't been accomplished yet because, among other obstacles, there is a lack of unity among retailers as to where their efforts should be concentrated, said other observers.

"Our sense from retail is that everyone recognizes it's something they need to get involved in, but there are varying definitions among retailers as to what true category management is," said Kevin Yost, executive director of channel marketing for the National Cattlemen's Beef Association in Chicago, which is preparing an industry report on the status of category management in retail meat departments, due out in the spring of 1997.

"Some things are being called category management that aren't really," said Bruce Axtman of Willard Bishop Consulting, Barrington, Ill., one of the leading participants in category management research. "With packaged salads, for example, you have some companies that are doing planogramming and calling it category management, while true category management involves a lot more, such as the analysis of market sales and profits data, more efficient ordering and distribution, etc.

"But generally, [fresh departments are] making progress," Axtman continued. "Produce is probably ahead, and there are logical reasons for that. There's a lot of focus on produce now, a lot of changes going on, and it's a little more manageable in some ways than meat or deli/bakery, where there's a lot of variable weight, you don't have uniformity of cuts, etc."

Other sources agreed that produce is probably the leader among fresh departments lurching towards category management, and they attributed that lead to strides made by suppliers and retailers to incorporate uniform product coding systems.

"It's the hottest topic in our membership when it comes to marketing-related issues," said Steve Ahlberg, vice president of member programs for the Produce Marketing Association, Newark, Del.

PMA is still trying to gauge the extent to which category management practices are being executed at retail, he said.

"Our best guess is that everybody, to a certain extent, is involved with category management. Those retailers who are on the standardized [price look-up] system have a better chance of implementing category management because they have access to more data. And we're seeing suppliers becoming much more interested in partnering in helping them manage the category," Ahlberg said.

Some of these suppliers, he added, are providing information retailers could not previously access, and that will help speed the process.

"I think within the next year, you'll see almost every major retailer is to some degree analyzing PLU information. They're going to have a fairly good grasp of what's moving through the department, simply because of the availability of information." And, he added, there's the extra impetus of knowing that the competition is doing the same.

Consolidations among produce suppliers will further aid in the cause, by weeding out companies that are not operating at this level of sophistication, Ahlberg predicted.

Savvy and solicitous suppliers have made a sizable contribution toward advancing category management practices in produce, noted Axtman.

"There's a lot of activity going on in produce from the retailer side, but there's also a great deal from some of the leading suppliers, grower/shippers, and also some activity on the commission side, like the Washington Apple Commission or the Florida Department of Citrus," Axtman said, referring to budding joint efforts to gather and process information. Such concerted efforts will lead to a leap in information systems for produce, he added.

Willard Bishop Consulting is also doing some entrepreneurial prospecting. "Recently we formed a relationship with EMS, Efficient Market Systems, so that we now offer sophisticated [sales and marketing] data for produce, through sources developed over a number of years," Axtman said. "With this relationship, we have actually developed a good national composite for produce."

Although not every retailer is adding to the data pool yet, the information that is available is "going to facilitate a lot more movement" into category management, he said. In other words, it's a good start.

There are valiant catch-up efforts underway from other fresh-food segments. "Our experience tells us that we're obviously in the very early stages," acknowledged Yost of NCBA.

"Meat departments today can and are practicing elements of category management, but they're only components. Some are doing some very sophisticated planogramming-type space management, but they must realize that that's not full category management. Ultimately, category management will ride completely only when we have market-level data.

"I think we're at an exciting crossroad right now. The major aggressive chains are looking at URMIS [Uniform Retail Meat Identity Standards, the meat industry's proposed product identification system], and at the same time they're reviewing their own codes. We know of some initiatives where they are making conversions, taking URMIS and making it work within their company," Yost said.

He acknowledged, however, that this is still a harrowing process. "Conversion is not easy, but the payback to retailers, and frankly to the entire supply chain, makes that conversion worthwhile."

Axtman also said the meat department is disadvantaged by a history of seat-of-the-pants operating. "Almost as a precursor in meat, you have to understand what's going in the back door, how it's being processed; you have to get a standardized practice of how that occurs -- and most people are finding this not as easy as it might seem.

"I think there's quite a bit of focus on developing a way to standardize the process of cuts and items and developing a cost structure around that," he added.

But the challenge of how to gather information about random-weight products also remains a conundrum in meat departments, despite many such industry discussions about it over the past few years.

"It's still a real problem, trying to establish the cost for the product," said Schulman, whose experience has given him exposure to field experiments across the spectrum. "It's easy with a case of peas -- there's no question about what the peas cost and what the profit is going to be. But [in fresh departments], they just don't have as good cost systems. I haven't met a meat executive yet who could tell me what a pound of sirloin packaged has cost him this week.

"Produce has made more progress than meat, seafood, bakery, etc., because there's a solid numbers reason for converting [to standardized coding]," he explained.

"You could buy melons with the number already marked on them, the cashier could just look for the number, and there were immediate financial advantages. For other departments, conversion has not really been tackled by many."

That might be because fresh departments are still last on the list when it comes to information gathering, suggested Al Kober, meat and seafood director for Clemens Markets, Kulpsville, Pa., who has worked with NCBA on category management efforts.

"We're getting better technology all the time as far as equipment goes, but most companies begin in grocery/dairy where they have UPC codes, and random weight is last," said Kober.

"Those companies that are progressive certainly have [incorporated random weight], like Ukrop's [Super Markets, Richmond, Va.] and Wegmans [Food Markets, Rochester, N.Y.], but the major chains are still a long way off. Some aren't even at the point where they can pull the data back [from the front end], so they know what they bought but not what they sold," the retailer said.

This is a problem running through the entire fresh aisle, Kober noted: No matter how good the data are or how streamlined the process of gathering them, they are useless unless department or category managers determine how to apply them in their best interests.

"I think it's the mentality of the buyers, the old way is to beat up the salesman to get the lowest price. But if you get the greatest deal, bring the product in and it's a dog, what good is it?"

Others said the attitude problem goes beyond buyers, to a persistent level of resistance on the part of managers, from the store to even the corporate boardroom.

"The biggest obstacle a lot of in-store bakery executives have is not themselves, but the store manager or upper management," said Peter Houstle, presi-