CHECK IT OUT 1994-07-25

John Karolefski

It's the best of times, it's the worst of times. It's a time of tremendous change, driven by the need for efficiency. It's a time bursting with theories, schemes and legitimate techniques to achieve that efficiency. It's time to lose one's business, or to seize the day. For brokers, it's the time of their professional lives. Ever since Wal-Mart said it could do without brokers, there has been a cloud over them. Would other large chains, seeking efficiency, follow the Wal-Mart lead? Unfortunately, recent industry trends have not exactly been good news for brokers:

· Emergence of Warehouse Clubs -- This business is typically handled directly between manufacturer and club operator. The broker has been left out of the equation. · Industry Consolidation -- The fewer customers and suppliers there are to buy and sell branded products, the fewer brokers are needed to connect these two points. This, in itself, leads to consolidation among brokers. · New Payment Methods -- A test of compensation methods by L&F Products, based on scan data rather than case volume sold to the retailer, has caused concern.

· Efficient Consumer Response -- An often-asked question has been, "Where do brokers fit into ECR?"

The answer is that ECR may be the key to their future. Such widespread change in the way of doing business typically brings opportunity, and that's what brokers have on their hands. In the broadest sense, this opportunity falls into two areas: information and logistics. Progressive brokers are taking advantage of the advances in technology to become a more effective source of information. For example, daily store-specific scan data will allow brokers to do their job for manufactures with more precision.

"Once a broker is equipped with the right information, then we can begin to deliver on the ECR promise of the right products, the right store, for the right consumer," said Tom Christal, a San Antonio-based broker, speaking earlier this year at MarkeTechnics, the Food Marketing Institute's annual convention. Brokers can play a role in logistics, too -- for example, coordinating less-than-truckload shipments. Pezrow Cos. is planning to test the idea later this year (details are contained in the Page 1 story by Managing Editor James Tenser). Pezrow will be the first of several brokers to try to unbundle the Catch-22 of ECR logistics: Continuous replenishment calls for more deliveries, which lead to more less-than-truckload shipments. "Our goal is to reduce or eliminate all less-than-truckload deliveries for our principals," said Michael Geary, Pezrow's chief operating officer. That's one road for brokers to follow in the tumultuous 1990s. There will be other paths in technology and logistics to follow as they chart their course. Nothing less than business survival is the final destination.