CATEGORY MANAGEMENT URGED FOR WHOLESALERS

DAVID ORGEL

WASHINGTON -- Wholesalers need to forge ahead in category management despite special challenges for this sector, according to a panel presentation here at the Annual Business Conference of Food Distributors International, Falls Church, Va.

Category management has become an indispensable part of the industry's arsenal for improving results, and wholesalers have a lot to gain by working in concert with their independents, according to presentations by a group of executives representing different parts of the supply chain.

However, the diversity of the wholesalers' retail base makes for special hurdles in creating programs, executives added.

Leland Duke, vice president of category management for Minneapolis-based Supervalu, said, "At the start of the Efficient Consumer Response movement in the early 1990s, category management was a spoke on the ECR wheel. Now it has turned out to be the center of the wheel. All of a sudden you can't do ECR if you're not doing it through category management."

Duke urged wholesalers to move ahead on category management even if they don't feel they have the optimal data available for the program.

"Point-of-sale data is what we need to do proper category management," he began. "But most of us wholesalers have never been focusing on POS data. We have tracked warehouse data. But if we waited till we had all the right data, most of us wouldn't do category management. We can do a fine job using warehouse withdrawal data. Is it 100%? No. But warehouse withdrawal data is a good source of data to get started."

Duke urged wholesalers to be patient with their retailers in building a program. "We can't force category management on retailers," he said. "We must gain their trust and buy-in. Execution at retail is a partnership between wholesaler, retailer and the vendor/broker. It's not the big bat anymore. It's collaboration."

Marv Imus, president of the Paw Paw Shopping Center, based in Paw Paw, Mich., stressed that "we need to look at category management from the customer's eyes."

As an example, he noted that his store was considering pulling caviar from the shelves because of low sales. But an analysis found that six of the store's top 20 customers bought caviar in the last year. "We could lose customers without caviar," he said.

Warren Nock, vice president of wholesale distribution for Procter & Gamble, Cincinnati, stressed that category management is helping to rationalize the grocery aisles. "Center Store is where consumers are visiting, so there's a real opportunity to clear out the clutter," he said.

"Category management is more than just efficient assortment, he continued. "It's not just dropping out stockkeeping units. It's the right assortment that matters."

Ted File, senior vice president at Information Resources Inc., Chicago, said certain factors are limiting the implementation of category management at wholesale. "These include lack of top management commitment, low levels of PC literacy, absence of long-range planning and lack of training," he said. What will help to turn the situation around?

File urged wholesalers and retailers to compare and review goals, build trust levels on sharing of information and look to benchmarking to improve performance.