TIME AND SPACE

BARBARA MURRAY

One measure of the increasing competition among the food channels is a greater importance attached to the ability to get new products on the shelf in a timely manner. Speed-to-shelf is one of the critical components where retailers see an advantage. According to a Food Distributors International study last year called "Whose Shelf Is It, Anyway?", it takes the big food chains 3.6 weeks to get an item on the shelf; drug chains, 4 weeks; mass, 4.1 weeks; and the independents, 7 weeks.

There are several approaches to improve these times, according to Bill Bishop, president of Willard Bishop Consulting, Barrington, Ill., which has conducted several studies on the issue. Some retailers take a S.W.A.T. team approach; others use scan data, he said.

Big dollars are at risk.

Independents lose an average of $115,000 in sales per store annually because of the time lag in their channel. And, spread over the whole independent retailer universe of about 10,000 stores, lost sales were calculated at $1.2 billion last year.

At this point, several initiatives are taking place in the big chain arena, as well as among independents, to improve speed-to-shelf.

Unified Western Grocers, Los Angeles, has formed a subsidiary called Vendorlink that aims "to get the manufacturer to bring us the item as quickly as the chains, and then give the retailers a planogram for the shelf, once it hits the store," said Dan Murphy, senior vice president, retail support services, UWG.

Although it is still in development, Vendorlink is being used by the Thriftway group in Portland, Ore., or about 45% of Unified's customers in the Pacific Northwest operating region.

SN has learned that Albertson's is piloting a new program called Smart Shelf, beginning this month, also in the Portland area. The program will guarantee that new items appear on the shelf within two weeks of the target date in every store. Safeway reportedly has the same goal, but has been unable so far to achieve it consistently, according to industry sources.

Executives at both Albertson's and Safeway could not be reached for comment.

In Louisiana, members of the cooperative supplied by Associated Grocers, Baton Rouge, have joined a program that also cuts time dramatically for new items to appear on the shelf.

"If a new item meets certain criteria, those items are sent out automatically; it's almost like a forced distribution," said one retailer member, Randy LeBlanc, vice president, grocery operations, for LeBlanc's Pay-Less Food Stores, Gonzalez, La., which has four stores.

"Part of what our co-op has done is increase the introductory allowance on those items, so, in essence, it prepays us for failures. We put the item on our shelf at the full-margin retail, and after a period of time, if it fails, then that increased allowance allows us to reduce it. For independents, the two big hang-ups have been speed-to-shelf and, also, what do we do with the failures.

"We've been in it three months, and I like it a lot," LeBlanc said. Two new items that worked well, he said, were Reynold's Aluminum No Stick Foil and a number of newer Kraft items, such as Easy Mac line extensions.

In Unified's Vendorlink program, a key item was the Clorox Ready Mop, a cleaning system that retails for $25. "We felt that if we weren't out immediately with that product, we would miss the sale, the related sales [and] the refills, too. As soon as they shipped it, it went to our stores," said Brett Wilson, manager of shelf management for Vendorlink.

"We surveyed competitors around our stores, and the items were on our shelves before the chains had them," Wilson said. Competitors include Albertson's, Fred Meyer and Safeway.

"Shelf management is critical to the way you advertise products," Wilson continued. "You have to know that the items you are advertising are on the shelf, and without the shelf management, you can't be confident of that. We are trying to put the right products on the shelf in a logical manner so that our customers can find them, and to make sure that the most profitable items are positioned at eye level."

What with the consolidation among sales agencies and retailers receiving less coverage in merchandising, it becomes more and more the store's job to get the item from the back room to the shelf.

Wilson says UWG's philosophy is to make its stores a profitable call for its vendor and broker partners. "Traditionally, the independent grocer has been a difficult call for the vendor sales community. With shelf management, we can streamline this process," he said.

Two Willard Bishop Consulting studies -- one for the National Association of Retail Service Merchandisers, which typically works for the retailer in the drug and mass channels to service and maintain difficult departments; and one for the Association of Sales and Marketing Companies, the broker community -- show that professional merchandising companies implemented a higher percentage of new product cut-ins than retailers could.

"Speed-to-shelf is one of the most important services that we supply our clients," said Jerry Chadwick, president of an Advantage Sales & Marketing division headquartered in Columbia, Md.

"Manufacturers have a great deal at stake on this. Going to market [aside from R&D] could run in the millions of dollars to handle things like slotting costs. If they are paying that much money up front, it's incumbent upon us to make sure it gets in front of the consumer."

He said that a stymied consumer, wandering the aisle with a manufacturer's coupon in hand but not finding the product on the shelf is "the worst-case scenario."

Usually when a product is introduced, it is preceded by FSI or media advertising. Industry observers say that, for the most part, FSI coupons are well-supported.

Although Chadwick said his sales agency makes sure product gets on the shelf 30 to 60 days prior to the start of a coupon or advertising, "Ironically, there have been times when it got there too quickly."

If there is too much time between shelf placement and the start of the media blitz, with nothing to tell the consumer about it, then the category manager looks at the movement and says, 'It's not selling."'

Although most manufacturers said they ship their products to everyone at the same time, this is not always the case. In one example, this spring Seeds of Change sent its new line of frozen organic entrees out first to two big players -- Whole Foods Markets and Super Target.

Whole Foods asked for it, said Stephen Badger, president, Seeds of Change, Vernon, Calif., "and there's nobody else in that audience," i.e., a national, natural foods retailer. The (40) Super Targets are primarily in urban areas, he said.

Back in February, SN noticed new Heinz ketchups with spicy flavors, called Ketchup Kick'rs, on a shelf in a Safeway in the Bay Area of California. These ketchups were in test market there, according to Robin Teets, senior communications manager, Heinz North America, but now they are national. Television advertising wasn't run until the product was available everywhere.

"It is more about the retailers and their distribution channels than it is of when we release products," Teets said. "We work with the retailers as much as possible to make everything flow smoothly. Usually we do test markets, from a few to several, then we attempt to go national. Everybody gets it at a certain point, but we ship based on what the retailers tell us they can do."

One aspect of speed-to-shelf is that most supermarket chains have a defined category review schedule. From the time they review, there are so many weeks to make a decision, so many weeks to get to the merchandising department, then to procurement, then on out to the store, as Chadwick explained.

"It's important for us to look at our clients' time lines, and line them up with the retailers' schedules. Sometimes, they don't match. We may miss a category review by a week or two," he said. Certain seasonal categories, like novelty ice cream, are reviewed only once a year, but most retailers are very consistent with it and well-versed. One chain does a canned fruit review at a different time from another chain, so the manufacturers must keep all this information in mind as they lay out their timetable.

Getting it into the computer system is also a challenge. "It sounds so simple, but it's often not," said Karen Connell, executive vice president of the Association of Sales and Marketing Companies, Washington.

"Everyone wants it to happen faster. But with all the consolidation [and the] many remodels and resets -- which is a good thing -- it takes personnel and time, so it's a challenge to balance it," she said.

"A manufacturer called the other day, saying, 'We think our items are stuck in the back room, can you help us figure it out?"' said Paul Weitzel, vice president at Willard Bishop Consulting.

"Sometimes, these new items are not even getting to the store. Finding the time to fit it onto the shelf is hard for a retailer."

As Weitzel sees it, all the trading partners have walked away from the shelf, and some retailers don't want suppliers or brokers in the stores. And, there are so many category management plans and review processes going on that retailers can't always respond to all the opportunities.

All supermarkets are trying to do a better job, Weitzel said, even though it is challenging with 20,000 new items being introduced every year, and there being a general reduction in the labor force. Category management created more work with less help, he said.

"I think we are finally seeing the industry sit up and say, 'We've got to reverse this thing."'