STANDARDIZED CODES ARE LABELED A MUST

DAVID ORGEL

DALLAS -- The meat and produce industries need to build on early gains in point-of-sale data capture if the promises of category management are to be realized.

That warning was delivered here by Robert DiPiazza, vice president of produce operations at Dominick's Finer Foods, Northlake, Ill., who stressed that the gains from converting to standardized data procedures for meat and produce far outweigh the costs involved. He spoke at a session held during the Joint Industry Conference on ECR.

"Category management is do-able in perishables, and in fact a few organizations are well on their way," DiPiazza said.

"There are data issues to be addressed before your meat and produce departments can implement category management. They take a small investment of time, and a commitment by corporate management. That investment will generate a high return. It will set the stage for your company to increase the sales and profits of your perishables departments."

DiPiazza focused on two areas:

Meat, for which new coding standards and computer applications can boost the bottom line.

Produce, for which standardized product lookup codes and universal product codes are holding much promise but still need wider adoption.

Complexity of product identification is a very serious issue in the meat and produce arenas, a problem that dictates the need for standardization, DiPiazza said.

"The data issue is uniquely complicated in meat," he pointed out. "Most supermarkets sell the same retail cut of meat in two different

grades and some also sell it with a brand name. Many codes are put on the fresh meat packages in the store. This requires a real focus on back-room discipline.

"To be useful, all scanning data must be summarized and associated with the subprimals [section of animal] from which they [the items] were cut. Combining the scanning data from the retail meat cuts is complicated. There are different subprimals that could have been used to produce the same retail cut."

Moreover, the absence of standardized numbers used in the meat industry makes it impossible to find syndicated data that details purchases by market area, DiPiazza noted. This means retailers cannot identify lost opportunities in merchandising.

The barriers to proper identification are about to be removed. Next month the National Live Stock and Meat Board, Chicago, will release an updated version of its standardized code for meat, called Uniform Retail Meat Identity Standards, DiPiazza said. The URMIS codes are explicit: they are assigned to each species and within each species. There are two ranges of numbers for each cut in order to differentiate between grades of meat.

The new manual is expected to include photographs of cuts, along with a recommended URMIS name and UPC code assigned to that cut.

The new code, which can be applied on labels in-store, will enable supermarkets to better track their sales and provide for industrywide research capabilities.

The URMIS standard is supported by an increasing number of software tools to improve meat manager decision making.

A PC application called Computer Assisted Retail Decision Support has been made available by the Meat Board to help meat merchandisers analyze buying opportunities. The application uses Microsoft Windows.

The Meat Board is also readying a computer merchandising application that assists in meat pricing at retail. Called "Value Based Meat Merchandising," the system links scanning history with current cost for every retail cut to help retailers develop a weekly pricing strategy and predict sales and profits.

This pricing application is about to be tested in controlled experiments with a few chains, and should be available to the industry by September.

The value-based program uses concepts similar to activity-based costing and direct product profit to develop pricing strategies. Case studies from four retail chains will be released at the Annual Meat Marketing Conference to be held April 2 to 4 in Atlanta. The conference is sponsored by the Food Marketing Institute, Washington; American Meat Institute, Arlington, Va.; National-American Wholesale Grocers' Association, Falls Church, Va., and National Grocers Association, Reston, Va..

During the conference, Meat Board representatives are also expected to discuss a new training program for retailers that is being formed with help from the University of Chicago. It is to be called the Meat Marketing and Technology Center.

In produce, DiPiazza urged adoption of the Produce Electronic Identification Board's standardized price lookup codes and universal product codes. Already more than 5,000 supermarkets have embraced the new standards, he said.

DiPiazza stressed that the growing variety in produce has complicated the job of checkers, but that retailers often address the problem in ways that add cost, inhibit sales and damage scan data and pricing integrity.

He noted that often store produce items are packaged to ensure proper credit at the checkout, a move that prevents shoppers from seeing the items and adds labor costs. Many stores rack up big costs through in-store labeling. Others cost-average different varieties, a move that compromises scan data. In some cases, produce items with good sales potential are avoided altogether because stores fear problems with identification. The problems extend beyond bulk produce into fixed-weight scannable items in packages, which often carry different UPC codes for each shipper, DiPiazza said.

A big advantage of standardized coding is that implementation costs are minimal, DiPiazza stressed. The produce codes, which occupy the 4000 series of the Uniform Code Council's Guideline Eleven Random Weight Codes, only take about 12 to 15 hours of data entry upon installation. There are printing costs to produce educational items for cashiers. Reduction in front-end productivity is minimal and short-lived.