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WHAT'S IN STORE?

There's been a lot of talk about the relationship between manufacturers and retailers, and the "power shift" that has occurred. Years ago, manufacturers controlled the product and consequently controlled the retailers. Manufacturers told retailers how each new product had sold or would sell. Retailers accepted products because they didn't know whether the product was good or not. Then scanning came

There's been a lot of talk about the relationship between manufacturers and retailers, and the "power shift" that has occurred. Years ago, manufacturers controlled the product and consequently controlled the retailers. Manufacturers told retailers how each new product had sold or would sell. Retailers accepted products because they didn't know whether the product was good or not. Then scanning came along, and the retailers started knowing -- a lot. The retailers started telling manufacturers how each new product had sold or would sell. The power shifted.

With electronic marketing data (also known as frequent-shopper data), this power might just balance out. With frequent-shopper programs, retailers have data that manufacturers really want; that is, exact purchase behavior of specific consumers. This includes who bought your product, what else they bought at the same time, what they bought over time, how they have responded to promotions, their age, how many children they have, and where they live. What retailers don't have are the time, ability and systems to use this information effectively themselves. They need the things manufacturers have: marketing ability and marketing systems.

Once they realize how much manufacturers can help them, they might come around to sharing more of the consumer-specific data. It will probably require something that doesn't exist currently, however. That's a system to help manufacturers use frequency data. Such systems exist on the retail side, but I don't see much in the manufacturer arena.

Manufacturers have a lot of systems for database marketing. The latest Donnelley Marketing study says 11% of marketers have spent more than 10 years collecting information, and 36% have spent three to five years. Twenty-six percent of marketers have over 10 million names. But to my knowledge, most of these systems aren't designed to deal with frequent shopper data. If they were, manufacturers could partner with retailers in the same way they partner with them on category management.

With category management, manufacturers acquire scanner and causal data about their categories, and they purchase or lease systems on which to analyze that data. Then these manufacturers go in to their retailer customers and help them use the information. The first dominant manufacturers who go to retailers with good data and good category management skills often become the preferred partners for each category. Some manufacturers today actually have an entire person assigned to a specific retailer, with office space at the retailer location.

In the future, the same relationships may exist with electronic marketing/frequent-shopper data. Remember, manufacturers have marketing abilities, while most retailers are stronger in merchandising than in marketing. Retailers will benefit greatly by frequent-shopper partnerships.

With frequency data, similar relationships to those in category management would occur, but in a slightly different scenario. Frequent-shopper data could be used to "feed" category management systems, but the potential is broader in nature. Frequent-shopper partnering between manufacturers and retailers could benefit both sides of the grocery industry significantly. All we need are some manufacturer systems that can do it, and more efforts at partnering to use this important source of information.

Carlene A. Thissen is president of Retail Systems Consulting, Naples, Fla.