Retailers and suppliers are looking for new ways to maximize the potential of general merchandise, health and beauty care, and pharmacy.
Many say they get much of the help they need from the conferences and research projects of the General Merchandise Distributors Council, Colorado Springs, Colo.
For this roundtable discussion, SN contacted six executives representing a broad swath of GMDC's membership: a wholesaler, a supermarket retailer, a former supermarket retailer who just last month joined a supplier company, a drug chain retailer, a large manufacturer and a smaller manufacturer. It was conducted by phone and e-mail, and subsequently edited into this format.
The result is a discussion that begins with the key opportunities in the GM and HBC areas, and then moves into the subject of how GMDC helps them face these challenges. Participating in the roundtable are:
Larry Ishii, general manager, general merchandise and health and beauty care, Unified Western Grocers, Commerce, Calif.
Jim Wonderly, vice president, merchandising, American Sales Co., Lancaster, N.Y., a division of Ahold USA, Chantilly, Va.
Bob Berman, vice president, buying and merchandising, May's Drug Stores, Tulsa, Okla.
George Fiscus, formerly vice president, general merchandise, Bashas', Chandler, Ariz., and now director of grocery and drug sales, Delta Entertainment, Los Angeles.
Lou Martire, vice president, trade development, Energizer Battery Co., St. Louis.
Brian Bradley, president and chief operating officer, Lander Co., Englewood, N.J.
SN: What is the biggest challenge in GM, HBC or pharmacy?
ISHII: The biggest challenge from a wholesaler's standpoint is to get our customers to work cooperatively together on promotional activity. If they can act more cohesively, they will become more meaningful in our business relationships with the suppliers, and more meaningful to our company in selling the product and making changes to our operations. The bottom line is to be more competitive with the chains. But to do so, we must become more meaningful business partners with our suppliers to get better deals, stronger promotional offers, and increased support from the manufacturers. GMDC is an important part of that process from the standpoint of communications with manufacturers.
BERMAN: The biggest challenge in the drug store industry is converting the traffic that we have coming in for pharmacy to buy general merchandise and HBC products. Our market is one of the first outside of Arkansas where Wal-Mart had a full complement of stores, as well as some of the first Sam's Clubs and Neighborhood Markets. The same shoppers that are in all those Wal-Mart stores probably weekly are the customers we have coming for their prescriptions once every week or two. So we have to appeal to them, not just with price, but also with selection. We need some hook for them to shop the rest of our store, and not just the pharmacy where we are providing a service that they are happy with. MARTIRE: As I see it the biggest challenge is getting new GM/HBC products presented and accepted by the trade, and then onto the shelf as quickly as possible. New product introductions are the lifeblood of the industry. They provide added revenue to the retailer/wholesaler, as well as excitement to each category. Consumers want new and exciting. This increases the shopping experience and grows the market basket.
BRADLEY: The biggest challenge in HBC continues to be store- and shelf-level execution of the retailer's go-to-market strategies. This challenge is especially timely when considering the huge market share stakes up for grabs in the recent RX-to-OTC launches in the 24-hour, non-sedating allergy category. From my vantage point, most retailers executed against this launch in excellent fashion, which demonstrates great coordination between the supplier, retailer and store operations.
SN: What is the biggest untapped opportunity?
ISHII: The biggest untapped opportunity in dealing with independent operators is working more closely with them, without the retailers giving up their own identities as who they are and how they go to market. Independent operators are a very important part of the food supply chain, and I think they always will be. But if we can work more collectively on promotional activities, major new item rollouts and things like that, we will all become much more effective from sales' standpoint, as well as adding profitability to our bottom line.
MARTIRE: There are such a vast number of opportunities for each category, but one that touches all categories is the opportunity to reduce costs through better supply chain management. While many retailers and wholesalers and suppliers talk the talk, many don't walk the walk. Cost containment involves commitment and investment from both sides of the desk.
BRADLEY: The biggest opportunity is to grow incremental sales by taking the time to think innovatively and outside the box, while maximizing the tried and true strategies. This opportunity abounds for both the retailer and supplier community, and it's certainly easier said than done due to time constraints and other factors.
BERMAN: The one we are going after the hardest is the import area. We feel like we can provide a point of difference there from the mass competitors. We can have lower price points with high margins in these categories. In other words, where Wal-Mart may start at $9.99 on a gift item, we can start at $2.99 with a smaller piece, but a similar product. The dollar stores are near every one of our stores, and they are nibbling at the low end of our sales. But we usually have something in each category that would compare well to a dollar store, whether it be general merchandise or HBC. For example, a dollar selection of shampoos, or dollar greeting cards, or a number of the other dollar categories.
SN: How does GMDC fit into your marketing strategies?
ISHII: There's no question that GMDC fits into our marketing strategies. The most obvious area is new products. Frequently we will see new products at GMDC, and very often we will find new vendors with new items. But there also is the ability to get to the right people to focus on issues that we might have, and more quickly and effectively work toward resolving those issues. These issues might relate to marketing, promotional activity, promotional funding or other support for promotional activity, or it might involve building a promotion around a new item introduction. So GMDC provides the vehicle that helps us greatly in accomplishing all of that. Much of that we could do in our own offices with one-on-one meetings, but GMDC is a more efficient vehicle. We can get a lot more done by using the GMDC conferences to assist us in the management of our marketing and our procurement.
WONDERLY: GMDC is an organization that strengthens our relationships with suppliers through its annual meetings.
BERMAN: To me, the real key to the program is getting that one-to-one contact with manufacturers. It is getting harder and harder to get quality time in front of each manufacturer and this is a good format that enables us to do that without wasting any time. It's a limited number of days and a limited amount of time per meeting. You get a lot done. Another key is making sure that the manufacturer and retailer follow up with each other. A good meeting is only as good as the follow-up work that comes afterward. That's another critical factor for both sides. In general merchandise, we are broadening our supplier base with vendors that aren't doing that much with us, or even those that never are going to be huge for us, but are valuable additions in building our business.
MARTIRE: Energizer doesn't necessarily view the GM conference as a place to have a line review. Actually, GMDC is a more a senior level conference to discuss strategic issues and opportunities than tactical issues. This gives us a chance to review whether we understand the retailer/wholesalers' business plan and how we can be more effective in helping them achieve their goals. So often we find that we had been pushing in the wrong direction. This gets back to communications being the key to resolving all problems.
BRADLEY: GMDC is a key weapon of our marketing strategy as it affords us the opportunity to interact with a broad base of retailer executives over a compressed time -- a busy few days. There's no question that GMDC is a very productive time for our company and we literally have to psyche ourselves up prior to the conference, knowing that we'll have two full days of meeting and lots of follow-up to ensure we maximize all opportunities.
SN: How well do the GMDC conferences meet your needs?
MARTIRE: GMDC always meets and often exceeds our needs. Energizer recognizes what GMDC is and isn't. It's a senior level strategic planning meeting. It also gives us a chance to set up follow-up meetings to discuss new products and tactical plans. Again, it's not what a line review. With good pre-meeting planning, GMDC will exceed anyone's expectations.
BRADLEY: I've been attending GMDC conferences for 13 years both as a representative of a large consumer packaged goods company and in my current role with a smaller HBC supplier. GMDC has always provided a maximum return on investment and it truly is the most productive trade event we attend. From a small company perspective, having the opportunity to pitch your program to an average of 40 retailers over a two-day span is worth its weight in gold. Add in the many benefits of the Educational Foundation and the tremendous technological support, anchored by CCCnet, and you have a great spend of time and resources for small and large companies alike.
FISCUS: GMDC has been a very valued partner in my past as a retailer. The organization is key in my plans as I move to the manufacturer group. This is a terrific group of retailers and an unequaled opportunity to communicate vehicles for mutual sales growth.
WONDERLY: The GMDC conferences are an effective vehicle to bring our merchandising associates and suppliers together in a time-saving format. The GM conference does not have an equal on the show circuit. The ability to have contact with a broad scope of GM vendors, all in one location, has been beneficial for us.
ISHII: GMDC is the best conference or show that we go to. There's no question about that. One of the biggest reasons for that is the format. But the more important reason for that is focus. Everybody who goes there, retailers and vendors, has the same focus. We know why we are there, we know we have to get down to business, because we know it is for a very short time, and everybody takes the follow-up very seriously. That's what makes GMDC so good.
BERMAN: We find it to be an excellent format. We like having a table to work at and to hold our meetings. In our case, a number of members of the consortium that we belong to [Chain Drug Consortium, Boca Raton, Fla.] also attend. So we can have meetings about buying an item in bulk for that entire group of stores. If there is an opportunity to buy a truckload of something, and I can only use part of that, by having the rest of our group in attendance, we will have brief meetings during the show and make those decisions on the spot.
SN: How has GMDC's new policy on paying travel expenses for retailers and wholesalers affected your experience of the conferences?
WONDERLY: With the changes, our only investment is time. Since the conferences are a productive use of our time, it makes the decision to attend them an easy one.
BERMAN: We are happy with that change. I feel that GMDC needed to do that to be competitive. But I am seeing a number of new chains and a number of new manufacturers coming in because of the added participation of the chains. So I think it was the right move at the right time. Most of the chains have money to spend on business travel, but we all like to save a little money, and that makes it easier to justify to your bosses that not only is it a quality show, but it is not going to cost very much either.
ISHII: The changes on the expense side of attending GMDC really haven't affected what we get out of GMDC, or what our objectives are when we go to GMDC. It's terrific for the retailer and it plays an important role in helping to encourage greater attendance on the part of the buyers in general. But the format is the format and the focus is the focus, and whoever pays for it really doesn't change anything. Now obviously it was a very significant expense that we no longer have, which is very, very nice. And it no doubt encourages greater attendance from the buyers' side. Overall, it strengthens the event. GMDC was already excellent -- the schedule is set and the manufacturers are assured that they have appointments locked in, and they know who their appointments will be with. Now when you add to that the increased participation on the part of buyers, that just makes GMDC all the more effective for a manufacturer to participate. But for Unified specifically, it doesn't change what our objectives are. We have always been very seriously committed to GMDC.
FISCUS: The recent move to shorten the HBC conference will make the time spent attending more efficient. This was a prime example of the organization being responsive to the requests of its membership. As a retailer, the creation of the retail/wholesale [travel expense] package created an incredible ROI for the investment of our time.
MARTIRE: GMDC's new model of paying for retailer/wholesalers to attend has greatly enhanced Energizer's experience. Anytime you can amass more decision makers in one venue, for three days, productivity goes up and ROI goes up.
BRADLEY: The recent investments GMDC instituted, particularly paying for the retailers' airfare and lodging, has ensured that GMDC will continue to hold the most productive trade events of the year. As a result of these enhancements, GMDC has experienced record-breaking increases in retailer enrollments, which will benefit both the large and smaller GM/HBC supplier companies. For smaller entities, like Lander Co., the access to more, and sometimes large, national retailers is invaluable.