CHICAGO -- Frequent shelf resets and store remodels -- coupled with limited labor to execute them -- have created disorganization in supermarkets around the country. And the time has come to improve the situation, says a new study from the Association of Sales and Marketing Cos.
The study, titled "Getting It Right at Retail: Understanding the Costs and Activities Needed to Improve In-store Conditions," documents a significant increase in the demand for retail work because of resets, remodels and new stores. Category management has driven most of this work, the report notes. Other factors include a surge in new items, a growing emphasis on meal- and other solution-selling, and remodels due to mergers and acquisitions.
Key findings of the study, conducted by Willard Bishop Consulting, Barrington, Ill., over the last several months, were presented here recently at the annual Business Forum of the ASMC, the Reston, Va.-based trade group for sales agents, or brokers.
"The analysis required by category management is currently the focal point of much activity. The extraordinary work required to perform the analysis and develop these plans does not take into account the resources required to implement those plans," said Mark Baum, who was named president and chief executive officer of the ASMC, effective Jan. 1, 2000. He will succeed Bob Schwarze, who will become senior vice chairman. Baum and Bill Bishop, whose consultancy authored the study, presented the results.
"No one intentionally allowed store conditions to deteriorate," said Bishop. "In an effort to do more of certain work, however, we've not gotten to some of the things important to the consumer."
Baum listed three objectives of the study:
(1) Document the total systemwide cost to implement all the activities executed at retail. (2) Determine how labor is now used, both for routine coverage (contracted by manufacturers and carried out by their sales agencies), and non-routine activities (such as resetting and remodeling of stores).
(3) Identify and recommend some of the better and more efficient business practices emerging to make the reset/remodel process more efficient and fair for all trading partners.
The report suggested several steps to improve retail implementation. Planning, for example, can be improved by establishing a reset coordinator, agreeing upfront to total labor requirements and building an accountability system. Choosing slow periods to reset stores and standardizing schematics can also improve execution, the report noted. Brokers, while representing about 55% of industry sales, carry out about 75% of reset and remodel work, the study noted. All other segments of the retail industry perform a percentage of reset/remodel work smaller than their estimated share of sales.
"Clearly, there is a need to better understand the cost of carrying out various retail activities before trading partners can make the most informed and best decisions regarding the prioritization of these services and the allocation of the available resources," said Baum.
The study also determined that the need for retail work has skyrocketed, and that an industrywide shortage of labor has only exacerbated the situation.
"The findings from this research very clearly identify many opportunities to better understand and improve the retail-implementation process. There is no single-source solution or one right way to improve the process," said Baum.