AN UNHEALTHY DELAY

JOEL ELSON

Even though the grocery industry has embraced the Efficient Consumer Response effort, the driver in the process, category management, has yet to be effectively applied to health and beauty care at most supermarket chains. As a result, supermarkets could find themselves at a further disadvantage in the market share battle for HBC and profitable new products that have switched from prescription to over-the-counter, as drug chains aggressively pursue category management and mass merchandisers continue to refine the process.

"Drug chains are very involved. Chains like CVS won't take a presentation anymore unless demographics are included," said Ted Gladson, president of Gladson & Associates, a Lisle, Ill.-based company that specializes in space management. Gladson's firm rates the progress supermarket chains have made in category management. To date, 50% are committed to the process, and 25% or less actually practice it, he said. "Our getting into HBC category management is possible off in the future," said Dave Lynam, nonfood buyer at Harding's Friendly Market, Plainwell, Mich. He noted, however, that the company relies on its wholesaler, Spartan Stores, Grand Rapids, Mich., for HBC section planograms. "We are in our infancy of just looking at category management, and are probably a year away from instituting it," said Mike Van Brocklin, nonfood supervisor at Scolari's Food & Drug Co., Sparks, Nev.

While not many supermarkets have begun the practice, most are thinking about it. Awareness of category management and its importance is high among all trade channels. Retailers rated category management as the most important trend on a par with margin erosion, according to a 1995 category management study by Cannondale Associates, Evanston, Ill. While awareness is high, most food retailers surveyed by SN admit to a lack of sophistication in executing the process, which includes space management, item selection, pricing, promotion and logistics -- all of which are aimed at satisfying the consumer. "The level of sophistication among food chains is less than 10%," said Gladson. "We sort of tiptoed into it with everything we've been able to read. We've not embraced category management fully," said Frank Puleo, director of nonperishables merchandising at Genuardi's Family Markets, Norristown, Pa.

In HBC, most haven't gotten much beyond traditional item tracking and velocity reports in managing their categories. "We aren't as sophisticated as some, as far as getting all the information," said John Susich, vice president of general merchandise at Hy-Vee Inc., West Des Moines, Iowa.

Some factors cited in the Cannondale report preventing successful execution of category management at retail are: lack of management commitment, inadequate MIS support, inadequate organization structure and weak relationships with manufacturers. Indeed, the study indicated the food channel wasn't getting much assistance from manufacturers in item optimization as other channels of trade. This is an important issue, especially when considering the number of new products introduced in HBC alone each year. "We began the process in HBC several years ago when we realized we couldn't carry everything," said Randall King, nonfood buyer at Byrd Food Stores, Burlington, N.C.

But the process goes far beyond improved variety and elimination of duplicated products. The goal of category management is to give customers what they want. "A major issue that goes to the heart of HBC category management is being able to capture and access data, and carry products based on store demographics," said Al Booth, assistant director of general merchandise and HBC at Jitney Jungle Stores of America, Jackson, Miss.

"The reason behind HBC category management is that it is the best way to look at our business and make consumer-based decisions," he added. "How do you get customers into your stores?" Gladson asked. "You have to reach out and find out who your customers are and why they aren't shopping your stores. Then you have to put in products that will attract them and hold them. That is how you will go forward and get sophisticated," he said. Here's what retailers had to say about the progress they've made in HBC category management.

Al Booth assistant director,

general merchandise and HBC Jitney Jungle Stores of America Jackson, Miss.

We're certainly working toward category management. We're beginning to review different software packages that would allow us to review scan data. Our goal will be to hone the mix, making it more responsive to what shoppers want.

Dave Lynam nonfood buyer

Harding's Friendly Markets Plainwell, Mich.

We're not heavily involved in HBC category management. There may be a need for it down the road, but at this point we don't have the time to put the system in place.

We are affiliated with Spartan Stores, which takes care of our needs. They track and recommend items, frequently providing us with HBC department planograms that reflect the best items to carry. Spartan is pretty much on the cutting edge, constantly updating their technology. Our HBC sales are very strong.

Mike Van Brocklin nonfood supervisor

Scolari's Food & Drug Co. Sparks, Nev.

We aren't into HBC category management yet, but we're looking at it. An internal steering committee is currently reviewing various software packages. The big benefit is being able to isolate each category, making sure that you have the right mix in each line. This way you aren't inundated with products that just take up space.

Category management can help retailers deal with manufacturers that come out with many sizes and flavors that aren't really needed.

Randall King nonfood buyer

Byrd Food Stores Burlington, N.C.

We started into HBC category management several years ago when we realized we couldn't carry every item that was being offered to us.

During the past five years, we've analyzed product movement and set the departments accordingly. The results are hard to gauge, but I'm sure our sales have increased since the dead items were weeded out. We try to work new items in, which is what drives the business. We've partnered with several different suppliers, including Colgate and P&G, which are the main ones. Some smaller manufacturers work with brokers that have the capability for helping with category management.

John Susich VP, general merchandise

Hy-Vee West Des Moines, Iowa

We've always used category management by adding items and taking others out and looking at movement. We make adjustments in our SKU mix on a routine basis

Our process, however, is really not sophisticated. We haven't hired category managers. We get a lot of information from suppliers. We are moving more and more into it to get a better SKU mix and better inventory at the warehouse. You need to do it for the entire category, but focus on faster-moving categories -- like analgesics, dental and others.

Frank Puleo director, nonperishables merchandising

Genuardi's Family Markets Norristown, Pa.

We moved into HBC category management to a slight degree about two years ago, using our own data. We plan to appoint a category management consultant. This will allow us to begin the process of managing the categories. We've been able to improve our HBC variety by reducing duplication and increasing variety, which has been tremendously successful.

We removed about 1,200 SKUs from the HBC category over the last couple of years. We were left with the better-selling items, which increased the HBC share of total store sales.

The program also strengthened consumer perception of our HBC variety. In opinion polls that we take each year, consumers told us that our HBC variety had increased, even though we discontinued items.