CHECK IT OUT 1994-04-18

John Karolefski

Imagine some future historian of the grocery industry opening a time capsule from the waning years of the 20th century. Inside are three objects: a box of Nabisco's SnackWell's fat-free chocolate cookies, a can of Sam's Choice cola and a piece of paper on which three letters are inscribed. The contents would tell the historian everything important there is to know about brand marketing through the supermarket trade circa 1994.

Take the cookies. A major packaged goods manufacturer parlays technical innovation into a highly successful new product that satisfies the taste and eliminates the guilt of health-conscious consumers. It's the classic story of a national-brand marketer creating a new category (fat-free cookies) and leaving the crumbs for the store-brand set to knock off. Of course, Sam's Choice cola represents today's steady growth and quality of private-label products. It also stands for the march of alternative channels of trade led by Wal-Mart. Finally, the piece of paper. The success of brand marketers and supermarkets in selling branded packaged goods to value-conscious consumers will hinge on an assortment of complex operating practices involving information technology, logistics and distribution. This broad-based initiative, of course, is called Efficient Consumer Response. It is better known by three letters: ECR.

One-third of the consumer packaged goods dollar today is spent outside the supermarket -- an all-time high. The traditional grocery industry is looking to ECR as the way to derail the Wal-Mart juggernaut and stop the bleeding of supermarket business into other channels of distribution. In delivering more value to consumers, national-brand marketers also hope to fend off store brands.

Can ECR do all this?

That remains to be seen. But the effort is off to a strong start judging from the proceedings at a Grocery Manufacturers of America conference earlier this month. Lee Shobe, the only top executive of a consumer products company to address the attendees, set the goal of ECR and described how his company is pursuing it. (See story, Page 1.) "The ECR emphasis on productivity will allow us to push back the rising costs of doing business. The focus on serving our consumer and customer will deliver value," he said. Among the many talks at the three-day conference, these points stood out as the keys to the success of ECR:

Technology and logistics need to be upgraded.

A strong commitment to new business practices must come from the top of an organization. A true partnership between trading partners is essential. It's been said that ECR is a journey, not a destination. But unless all trading partners invest in new systems, insist on change and join together, ECR is destined to become the road not taken. Its epitaph may well be those telling words from pop philosopher Yogi Berra: "The future ain't what it used to be."