CHICAGO -- Certified Grocers Midwest, Hodgkins, Ill., has increased warehouse sales by $180 million over the last 32 months through its Vision 2000 Strategic Marketing Plan, according to Elwood Winn, president and chief executive officer.
Moreover, it has increased retail sales by more than $300 million through the plan, whose goal is to maximize sales and marketing productivity, he said at a conference here.
Now the cooperative is building on those successes. It has completed its 1996 marketing plans, which involve analyzing consumer demographics with new computer software, developing a preferred shopper card and placing more emphasis on perishables -- all firsts for CGM, Winn said.
In addition to increasing wholesale and retail sales, Winn explained that the co-op had been able to boost market share, increase cooperation between itself and its members and maximize relationships with the vendor community.
CGM services some 600 retail stores, equally divided between members and nonmembers. CGM members operate under the Certi-Saver Supermarkets banner.
Winn said CGM developed its marketing plan after realizing it was losing market share to its two main competitors, Jewel Food Stores, Melrose Park, Ill., and Dominick's Finer Foods, Northlake, Ill.
He made his remarks at a KPMG Peat Marwick conference for food industry executives that was called "Recipe for Change."
"We saw ourselves declining precipitously," Winn told the audience. "So we decided that in order to ensure our future, we had to increase our sales. We felt that if we could develop a greater awareness of our Certi-Saver franchise in the marketplace, that we would drive the volume of each store and by doing so, provide for our long-term viability."
CGM convinced about 100 of its members to participate in the coordinated promotional effort that was at the heart of the Strategic Marketing Plan. This consisted of developing a Certi-Saver logo, installing new signs in-store and out, redesigning its roto, and advertising on radio and television. The most crucial parts of the
plan involved expanding the use of point-of-purchase materials and developing strong merchandising techniques.
Since that time, the organization has increased market share from 10.3% to 12.2% and Winn said he hopes that figure will increase by one-half point by the end of the year. Some 200 members who account for as much as 95% of CGM's volume are now participating.
The co-op plans to continue using the same basic plan next year but it will expand it and add some new twists. The crux of next year's strategy is "Contract With The Consumer," the co-op's plan to help it better meet the needs of its consumers by conducting shopper surveys in-store and analyzing demographic data with its new software package from Market Metrics, Lancaster, Pa.
Moreover, the co-op is developing a preferred shopper card and conducting a pilot program with 50 stores that involves pulling and analyzing scan data. Perishables marketing, particularly prepared foods, is also an important part of the plan.
"In 1996, we will be paying extra special attention to the arena of prepared foods," Winn said, explaining that the consuming public must be made to realize "that our units are convenient and we can produce in-home or kitchen-quality food for them to take out."
Winn said he is very proud of CGM's efforts to improve relationships with vendors, adding "it's probably one of the first attempts at a very, very serious partnership in the wholesaling business."
The co-op is keeping vendors advised of its marketing plans and making changes in its buying and promotional practices. It mailed its 1996 calendar -- a detailed list of its upcoming plans -- to all vendors. Highlighted on the calendar are 20 weeks of advertising, 12 rotos and eight themed events such as summer's "Celebrate the Sun" and winter's "Celebrate the Holidays."
Winn said his organization is continuing with its practice of involving vendors in promotional events such as these and calling upon manufacturers' direct sales forces and brokered forces to help retailers prepare their in-store presentations.
He said the closer working relationships with vendors were an important part of CGM's program formulation.
"After all, we intended to provide a very, very strong commitment to our vendor investor partners who were subsidizing the program with their promotional dollars. We needed to produce incremental cases for what we hoped would be incremental funds," Winn said.
"[The vendors] felt that one key way to increase their return on marketing investment was to market through the store to the consumer. They wanted the goods on the floor and out the door and they didn't want us as distributors to be buying in on an off-invoice allowance a three-month supply and then not hearing from us for 90 days."
CGM has identified 15 manufacturers representing 30% of its grocery volume that have adopted more progressive trade practices over the past year, such as eliminating off-invoice allowances and moving to a fixed fund based on case earnings.
"In today's activity-based costing environment, I'm trying to reduce or remove what I call incidents of friction in my relationships with my key partners. I think CGM as a wholesaler may be better positioned than most in already having substantially lowered this friction level in its relationships with vendors," he said.
