If you want to start an argument between a brand manager and a supermarket buyer, ask them who they blame if sales are lost because products are out of stock or promotional material is not erected in store.
The grocery multiples insist they try their best to ensure store managers follow head-office directives. Yet brand managers’ frustration can reach boiling point if they see empty shelves during busy trading times or hear that merchandising packs have been ignored and left unopened.
Step forward IGD, the information and research source for the grocery industry, which has agreed to referee the debate over on-shelf availability. From the end of February it will conduct a quarterly survey providing the supermarkets and brands with definitive information on the availability of 200 products across 20 categories.
The top 350 supermarket stores across the Tesco, Asda, Sainsbury’s, Safeway, Co-op and Somerfield chains will be visited and the results fed back to the ten retail and ten manufacturing companies that make up the Efficient Consumer Response (ECR UK) initiative, which is managed by IGD. The co-chairmen of ECR (UK) are Safeway supply director Mark Aylwin and Procter & Gamble UK logistics director Chris Poole.
IGD chief executive Joanne Denney-Finch believes the survey will create an industry benchmark for stock availability. “At the moment retailers and suppliers conduct their own surveys. This new service will add value,” she says.
The inspection will be conducted by field marketing company the FDS Group. Managing director James Moyies says compliance issues are dominating conversation within the retail industry. “We need strong data to demonstrate the true picture within stores. Head-office staff within the grocery multiples have been unaware of the problems at store level when agreeing deals with suppliers,” he says.
Speed is of the essence
The IGD study will help to find holes in the system, but it will not address one of the main concerns expressed by brands, which is the speed at which any audited information regarding compliance is being fed back to them.
Toby Knightley-Day, managing director of third-party auditing company TKD Europe, says only 35 to 50 per cent of retailers run promotions correctly. “Brands need to receive data quickly so they can do something constructive with it. If a promotion is only scheduled to run for a week, by the time the information has been received it can be too late to react.”
TKD has developed an in-store monitoring system called Livewire, which uses SMS technology to feed back non-compliance details to a supplier and the retailer within 60 seconds. The company concentrates on the grocery and leisure sectors and can visit more than 4,000 outlets a week.
The Livewire system produces what TKD calls “Business Triggers”, which inform the relevant person in the supply chain where there is a problem so that action can be taken as quickly as possible.
The field marketing companies agree that the speed of data reporting is crucial to the service they offer. Some agencies have introduced telephone hotlines which a field rep can call if they visit a store and see a problem which must be resolved immediately. “Clients are not interested in bad news stories about how many stores failed to comply once a promotion has finished. You have to be able to take action in the field,” says Gail Tunesi, managing director of PMI field marketing.
CPM, the UK’s biggest field marketing company, has a dedicated grocery team comprising 154 field advisors who ensure compliance at the top four supermarket chains on behalf of clients such as Kraft Foods, GSK and Centura Foods. Managing director Mike Hughes says this team has helped improve overall compliance levels from 63 per cent to 95 per cent, and he claims clients can see an increase in sales of up to 50 per cent if compliance errors are corrected. CPM uses a real-time Web-reporting tool called Prism and manufacturers can access the Web portal at any time using a password.
“The challenge is to work with retailers so they realise the benefits of ensuring compliance. It will generate sales. Non-compliance can often arise from poor communication or over-complex messages from head office,” says Hughes.
The supermarkets are quick to defend their record on compliance and argue they are reacting to supplier dissatisfaction.
Safety first for Safeway
Safeway, for instance, has operated its Check and Correct service for brands for several years. The team of field reps visit the top 250 Safeway stores within the first week of any promotion. In the second week the data on compliance is put on a secure website for suppliers and staff at the chain’s head office.
Although brands would like to see this information made available sooner, Safeway claims that in 2003, compliance levels at its stores rose from 60 per cent to about 80 per cent because of the work of the Check and Correct team.
The reluctance of either party to accept responsibility for poor compliance makes it difficult to judge who should pay to ensure problems with stock availability and promotional material are avoided. The brand is paying to have its promotional material erected in the UK’s top supermarkets, so its marketing team would argue it is not unreasonable for the grocer to ensure suppliers receive the service they are paying for. In reality the onus is on the manufacturer to find additional field marketing funds to guarantee they do not lose out.
“Congestion is becoming a bigger issue for retailers, so there are more restrictions regarding what point of purchase material can be sited in store,” says Tanya Sergant, managing director of Arc Field Marketing.
Various auditing techniques can be employed to solve compliance issues and it is essential any data collected in store is analysed quickly to ensure a campaign does not suffer. “It is not just about box shifting. Each store must be analysed to evaluate product performance against other outlets,” says David Louis, managing director of field marketing company Blue Water.
The science of compliance
Another field marketing company championing the merits of clients investing more in auditing is LoewyBe. Managing director Sharon Richie says her brand ambassadors are increasingly being asked to carry out a customer relationship management role while in store, which means compliance is vital.
“You have to take a strategic approach and learn from the data you gather on compliance to enhance the performance of the brand. Clients must look at the stores which did perform and perhaps only target these next time,” she says. LoewyBe uses hand-held PDA units which send information in real time to a website.
Manufacturers pay supermarkets thousands of pounds to secure key positions in store and get their promotional material in place before a campaign goes live.
They do not always get what they pay for, which means the only way to ensure compliance and maximise the return on their investment is to pay for the services of a field marketing agency. The buying power wielded by the multiple retailers means this is one argument the supplier is unlikely to win.