ESTEE SALES AIDED BY CENSUS DATA

LISA A. TIBBITTS

PARSIPPANY, N.J. -- Estee Corp. here has significantly improved sales by using census scanner data to revamp its product mix and tailor category merchandising to individual stores.

Estee used this data to rank products by sales performance, thus determining the best and worst sellers in each store.

"The challenge for us was to reposition products that were not selling with products that were selling," said Andrew Wertheim, Estee's vice president of marketing.

Sales conversion, first installed in all Jewel Food Stores' 208 locations more than a year ago, has produced a 70% sales increase for Estee, according to Wertheim. Estee products are on the shelves in all of Dominick's Finer Foods' 101 locations, where sales are up more than 140%. Sales at Lucky Stores in California are up 150% in the last 32 weeks, mainly due to increased distribution efforts.

Estee, based here, makes dietetic candies and other foods for people on medically directed diets. It is the first brand marketer to make broad use of InfoScan Census, a service from Information Resources Inc., Chicago. Census data is compiled from actual point-of-sale information on a micromarket, or store-by-store, basis, unlike sample-based data, which is accurate only on a large scale.

The system has also been installed in Delchamps, Tops, Kroger, Publix, Food Lion and Schnuck's, he said, with more chains planned. Wertheim said he expected Estee's overall sales figures to be up by 40% within the next three years.

"We're doing this by trading off the slower-moving items for the quicker-moving items. Just by doing this and retaining the same amount of shelf space, we're increasing the turn," he said.

Some of its best-selling products, such as salted pretzels, were not widely distributed. Once they hit the shelves, they sold very well, according to Wertheim. On the other hand, some products with good distribution did not move at all, thus dragging down the company's bottom line.

"What we found out was a lot of our best-selling products never hit the retail shelves and, at the same time, a lot of our products that were not selling were on the retailers' shelves," he explained.

The company then implemented its "sales conversion" program -- a two-pronged strategy that involved changing the mix of products in the category and increasing distribution at the same time. Estee created a tier system to determine individual products' importance to company sales. This allowed it to concentrate on the fast-selling cookies and chocolate bars, while cutting out such slow-moving items as the cake mixes and salad dressings.

"Tier 1 is, we have to have them on the shelf. Tier 2 is, they're important to our line but we're not focusing on them. Tier 3 is, let's find a way to get rid of them in a timely and logical way," Wertheim summarized.

Increasing distribution also figures prominently in sales conversion. After examining reports provided to Estee by IRI, Estee's sales representatives are able to approach retailers and present them with individualized marketing information, pointing out Estee's own slow-moving items along with other such products in the category.

"We were able to bring in our Tier 1 items and therefore trade off Tier 3 for Tier 1 items based upon [the store's] own information," Wertheim said. "While doing that, we said, 'Let us look at a whole category for you.' So chain by chain, salesmen make retailer calls and let them know [about sales conversion] and help them category-manage.

"By doing that, we're able to category-manage sections for the retailer and gain distribution by showing them some of our items that are not in all their stores and still increase their profits," he continued.

He noted that one of the factors leading to decreased sales in the dietary foods sections was category fragmentation and the duplication of products on store shelves.

"Instead of dedicating four places of shelf space to orange marmalades, do one or two and then get two other items, different types of items," he said.

Recognizing fragmentation within its own brand, Estee went to work on that. "By having six chocolate bars on the shelf instead of eight, we think that six chocolate bars will absorb all the volume," he commented.

Estee originally had "roughly 200" stockkeeping units and, using InfoScan Census data, discovered that approximately 40% of its line did not sell well in stores. "What that meant was, we were spending a lot of money on products that were not moving fast. They were going out of the factory, but they were not necessarily moving at retail," he said.

By the end of the year, Wertheim said Estee's current number of SKUs will be cut nearly in half. Of that new number, 67 are to be Tier 1 products demanding the most focused attention. The company eventually hopes to decrease its line further, bringing it down ultimately to about 75 items, but it is also introducing 18 new items.

Estee first installed the Infoscan system in supermarkets in late 1992, said Doug Parent, an account executive in IRI's Darien, Conn., office. He said data processors are installed directly in-store to sift through all the information provided by the scanner.

"We collect all the information for every single universal product code, for anything that moves across the scanner. Then what we did with Estee is, we custom-designed specific report formats that would allow them to identify, by store, which of their products were selling, as well as which of their products weren't selling," Parent said.

IRI works with Spectra Marketing Systems, a micromarketing software supplier, to provide InfoScan customers with geodemographic data for each store, such as the average age, income and minority or ethnic status of the population of its trading area, Parent said. A number of major manufacturers have now begun using InfoScan: Colgate-Palmolive, American Greetings, McNeil, Bristol Myers and Seagram Beverage Co., to name a few.

"I think the best portion of the program was, we took a hard look at ourselves," said Wertheim. "We weren't blaming our distributors or our retailers. So by looking at ourselves first, it enabled us to better gain their confidence and help us manage a section of the store that had been largely ignored because of the relatively slow velocity of the products."