By Warren Thayer, Editor, Refrigerated & Frozen Foods Retailer, and Contributing Editor, Private Label Buyer
Everybody wants to get the right products on the right shelf at the right time, with the right merchandising support. It's just that nobody wants to pay to get it done.
The net result is that everybody loses, says Mark Baum, partner and CPG practice lead at Chicago-based DiamondCluster International, the global management consulting firm, and once head of the National Food Brokers Association.
The role of the broker (or sales agent, if you prefer) continues to expand, and some observers say agents are stretched so thin that store-level execution is being compromised, which hurts the retailer, supplier, sales agent and consumer.
As Baum sees it, there simply aren't enough resources available to do these jobs as well as they should be, particularly in supermarkets. This leads to out-of-stocks, missed merchandising opportunities, and a diminished experience for the shopper.
But nobody can seem to agree upon specifically what type of in-store work should be a priority, and just how resources should be allocated fairly. Not that long ago, the manufacturer and agency were able to deploy retail sales and merchandising teams as they saw fit. Their mission was to make sure that the plan presented at chain headquarters was executed at store level.
That worked, Baum says, until retailers' category management abilities grew and they began demanding more frequent category updates and resets. Rebannering caused by acquisitions added fuel to this fire, along with more frequent store remodels and new store openings.
With the accelerating turnover of store employees -- many of whom are part-time and lack experience -- the pressure has increased on sales agents to take on more and more tasks. The problem is, Baum says, that many of the store maintenance tasks are not high priority to the suppliers who pay the sales agents. Retailers are taking the available resources from the manufacturers and using the sales agent as they see fit.
Some retailers are using third-party services, rather than sales agencies, to perform these functions. They then charge the manufacturer for the in-store work. Baum doesn't see this as the ideal solution, either.
"Problems with speed to shelf and out-of-stocks are worse today than ever," he says. "It's time for all the players to take a holistic look at the issue. Let's make a comprehensive list of activities to be performed, and determine who is best suited to perform them and how to best allocate those available resources. Also, let's make private label suppliers and DSD providers part of the discussion in order to make a complete wall-to-wall assessment of requirements and potential solutions."
The next step, from a management standpoint, would be to develop standards for the programs and fix responsibility and accountability for all tasks, he notes. Under this scenario, the retailer would have someone at the store level to work with suppliers and agents on agreed-upon programs.
Baum believes supermarket chains putting ever-increasing demands on sales agents are only hurting themselves. "They're positioning themselves as a higher-cost channel to do business with, when other channels are growing more quickly," he points out.
Baum has 10 suggestions for improvement:
- Make efficient and effective resource allocation a priority at your chain.
- Recognize the costs, in out-of-stocks and missed merchandising opportunities, of poor allocation of resources.
- Create a comprehensive list of activities to be performed.
- Determine who is best suited to perform each activity.
- Allocate available resources effectively, efficiently and fairly.
- Include private label and DSD providers in the planning.
- Develop standards for programs, and fix accountability for all tasks.
- Have someone at store level work with suppliers and agents on agreed-upon programs.
- Communicate programs carefully and completely to store managers, so they know when promotions are coming, where POS materials are, etc.
- Negotiate rigorously, but in the spirit of collaboration.
Condensed from Refrigerated & Frozen Foods Retailer. For the full story, click here.
Moderator's Comment: It's a tough issue that's not being faced squarely. Which of Baum's suggestions will be the most difficult to implement, and why?