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News & Solutions Category Management ReportSuccessful category management in ethnic foods requires grocers to be on target, industry insiders say: on target with their assortments, on target with their merchandising and on target with their marketing.Although those requirements may sound similar to other categories, those who spoke with SN said each of them is more difficult to achieve in the area

News & Solutions Category Management Report

Successful category management in ethnic foods requires grocers to be on target, industry insiders say: on target with their assortments, on target with their merchandising and on target with their marketing.

Although those requirements may sound similar to other categories, those who spoke with SN said each of them is more difficult to achieve in the area of ethnic foods, primarily because the targets are not always as clear as in other categories. The right product

mix, for example, varies from store to store more than in any other category. Pinpointing promotional efforts can also be more challenging.

As a result, category management in the ethnic foods area is lagging behind other areas of the store. Citing reasons such as the lack of clear-cut definitions of ethnic categories and the overall lack of large suppliers with whom to partner, retailers have opted to focus first on other categories.

"We haven't really touched that area," said a buyer at a Midwestern chain. "Quite frankly, it's a little daunting. There are a lot of variables to deal with there that aren't present in other categories."

Brian Harris, chairman of The Partnering Group, Playa Del Rey, Calif., said the first decision for a retailer is whether to make ethnic foods part of other categories or to treat them as a category in and of themselves. The majority of grocers are viewing most ethnic foods as an integral part of broader categories, he said.

The next decision is how to manage ethnic foods.

"Most retailers would say [ethnic foods] are unique enough and have characteristics that require a different sort of attention to get visibility, and that you really need some sort of expertise to be deployed against them," said Harris, a recognized authority in category management. "So, rather than have all those products category-managed by a separate category manager for ethnic foods, you would have an ethnic foods marketing specialist who would then not be a category manager so to speak, but would be a resource to the category managers."

That specialist should become an integral part in managing categories containing ethnic products, Harris said.

"You still give it all to one person, but you have this expert out there who then provides expertise, category manager by category manager, to make sure ethnic foods don't get lost."

However, Harris added, grocers must be careful that the role of each category is no secret. "There has to be terrific communication between the specialty food category manager and the category manager of the other categories so you don't promote the specialty foods and take it out of the mainstream products."

A category manager with a chain perceived by many to be a trailblazer in category management said his chain uses the approach Harris outlined.

"It takes someone really focused on ethnic products to be able to provide the guidance needed across so many categories. Since that is his or her primary focus, they are going to know a lot more about it than individual category managers might learn. We would have a tendency to focus almost exclusively on mainstream products."

The category manager added that Mexican and Chinese foods usually have their own section in his stores. "So many of those products are so mainstream now, it would be foolish to do anything but that. But even within those sections, there is a bit of the unknown because we're trying to introduce more of those products to the consumers so that we can expand those categories."

A prime concern among retailers contacted by SN is measuring the success of ethnic food marketing.

"You're bringing in these new items that you're hoping will become mainstream-type items like salsa has become," said the Midwestern retailer. "The thing is, that takes time. You're not going to have great sales right away, but in category management you're supposed to have only the most profitable mix on the shelves. That's a real problem and it's one of the reasons we've started with other categories first."

Harris of The Partnering Group said the difficulty in managing ethnic foods comes from the relative lack of knowledge of consumer needs and wants. "When a new cereal comes in, we can pretty much say 'that's a kid's cereal' or 'that's an adult cereal.' We can actually put it into something that's already established," he said.

"When something comes along that's ethnic, it's a little more difficult because, generally speaking, the consumer knowledge tends to be less. Ethnic products by nature tend to appeal to a narrower base than a full mass market."

A lot of specialty products, he added, are marketed by smaller suppliers. "Those suppliers are not necessarily the companies that can either afford to or have a history of walking in with information that helps the retailer position those products more efficiently from a consumer knowledge point of view."

It is, however, becoming easier to measure the success of ethnic -- and other -- products, and in a more timely fashion. Today's technology can provide retailers with store-by-store breakdowns of sales of all scanned products.

"That has helped tie category management into ethnic marketing," said Mike Hess, senior vice president of Information Resources Inc., Chicago. Hess said the availability of individual store data is akin to a microscope: it allows chains to look at the parts of their operation instead of looking at it only as a whole.

"Two of the big trends today are ethnic marketing and category management. There is a way to synthesize the two," he said. "Step 1 is to determine the demographic makeup of the neighborhoods the stores are in. Step 2 is to pick a product category that has an ethnic slant to it. The smart thing to do is to figure out a revised recommendation about what kinds of products should have more facings and which should have fewer."

Once that is done, individual store scanning data can be used to tweak the offerings on the shelf to ensure each store has the right mix of products for its unique customer base.

"Sometimes shelf sets are the same across the market. That makes no sense," Hess said.

Having the right mix in ethnic foods, Hess stated, is more important than in most categories.

"If you go into cake mixes and come up with the right shelf set, I think you'll increase sales by a few percentage points. But the fact is, you're not going to improve it by a whole lot because you're probably pretty close to having the right mix up there [already]. However, in an ethnic base, you have much more leverage. You could make some wholesale changes that could dramatically improve sales, especially if the chain is no where close to being optimized.

"Ethnic gives you more of an opportunity to hit a home run because there are a lot of stores out there that are set up for an Anglo shelf set even though they're in an ethnic area."

The myriad of new information available has resulted in more effective promotion of ethnic products. It has also helped stores market all the products in their stores to ethnic groups.

Safeway, Oakland, Calif., publishes bilingual circulars in its northern California marketing area. Advertising in ethnic newspapers has also become a common practice among retailers nationwide.

An executive at A&P, Montvale, N.J., told SN A&P has achieved a "great deal of success" through better targeting of its advertising. "We know which areas have high populations of which ethnic groups and we tailor our efforts to get the most we can from our advertising dollars."