SUPPLIER-RETAILER CHANGES EXPECTED

JOHN KAROLEFSKI

PALM BEACH, Fla. -- A top Johnson & Johnson executive said major restructuring and "right-sizing" among packaged goods suppliers in the last year will affect how they work with retailers.

"How suppliers interact with retailers of all sizes is in a state of flux. The opportunity to find a way these two partners can work together for mutual benefit is at hand," said Jerry Gilbert, vice president of consumer sector customer relations for the company, which is based in New Brunswick, N.J.

He spoke here at the annual meeting of the National Association of Chain Drug Stores last month. The gathering, attended largely by chain drug retailers and their suppliers, also drew dozens of retail executives from the food and mass channels of distribution. According to Gilbert, major suppliers' sales forces are changing in size, nature, scope and duties. "Huge sales forces may soon disappear," he said. "Appearing will be compact multi-disciplinary teams, spearheaded by a highly-capable national accounts group."

Gilbert said such teams would be harder to create, but more productive than today's structures. "All of us are seeking to drive sales and market share, and we are trying to do this in a slow economy at best," he said. "This means we have an opportunity to be more creative and more imaginative in developing innovative products and services for our customers. "Our focus should be on how we can create a competitive advantage for each other in the marketplace," he said. Gilbert acknowledged the sophistication of today's retailer in all formats and classes of trade. "This new retailer is smarter, more sensitive to marketing issues and more eager to use technology in making management decisions," he said. "They are seeking to break with the past and create a new kind of mix and a new kind of store."

Gilbert said the variety of retailers and formats are changing. He offered an update on each:

· Deep Discount Drug Stores -- "The jury is still out."

· Conventional and Super Drug Stores -- "They have met the test of time."

· Supermarkets -- The nonfood sections are redefining their role in preparation for Rx-to-OTC products. The expectation is that food is getting stronger in nonfood, and it continues a penetration into pharmacy."

· Mass Merchandisers -- "The industry is dominated by three mega-giants which are initiating a whole series of merchandising experiments. They have been leaders in systems and logistics costs. They have done this through leading-edge technology and greater partnering with suppliers."