NEW ORLEANS -- Referring to industry efforts to reduce costs and become more efficient, Jack Futterman, chairman and chief executive officer of Pathmark Stores, said industry members should never forget their "ultimate goal is to sell merchandise."
Futterman spoke here during the opening session of the National Association of Chain Drug Stores' Marketplace Conference, June 19 to 22. He was appointed NACDS chairman of the board in April at this year's NACDS annual meeting.
This year's eighth marketing conference again was a record-breaker, attracting more than 3,500 people. Both retailer and manufacturer representation was up 10% from the prior year, with more than 450 chain stores represented and 2,900 associate member executives registered. There were 650 exhibitors on the 250,000-square-foot exhibit hall floor at the Ernest N. Morial Convention Center.
Among supermarket chains participating were: Albertson's, King Soopers, Pathmark, Seaway Food Town, Smith's Food & Drug, Smitty's Super Valu, Wakefern Food Corp. and Vons.
In his address to chain drug retailers and health and beauty care executives, Futterman said he was happy to see that "some of us are still being called salesmen and some of us are still called buyers."
Industry initiatives such as Efficient Consumer Response and category management not only require a different approach to doing business, but also require a transition in sales and buying functions. It requires sales to take
on marketing and analytic functions, and retail buyers to make the transition to category managers.
However, Futterman told the gathering, "We should never relegate ourselves to being just cost engineers or computer print-out managers." He said that in going through the ECR process retailers and manufacturers "should never lose sight of the fact that we need to understand and respond to the real customer -- the consumer who buys the supplier's products in our stores."
Although the NACDS is part of the Inter-Industry Task Force on ECR, the drug class of trade appears to be lagging behind the food channel in its ECR efforts.
During a question-and-answer period following an NACDS education session on category management given by James Huguet Jr., chairman of Neo Inc., a sales consulting company based in Shelton, Conn., Huguet and audience members seemed hard-pressed to come up with chain drug stores that have initiated an ECR program. Only CVS, a drug chain based in Woonsocket, R.I., was mentioned as having recently completed a reorganization that would begin to initiate ECR and category management practices. Huguet said H-E-B Grocery Co., Schnuck Markets and Dominick's Finer Foods were leaders in category management in the food industry.
Futterman told NACDS members it was more important than ever "to strengthen the front-end [store operation]" since chain drug stores continue to suffer an erosion of gross margins in the pharmacy department.
If the drug trade channel appears to be lagging behind other channels in its ECR and category management programs, it is not lagging behind in health and beauty care sales, according to a report that followed Futterman's remarks.
"H&BA and the Chain Drug Store -- Myths and Realities" was presented by Ken Gurin, vice president of marketing at Towne Oller & Associates, New York, and David Pinto, editor of Chain Drug Review.
The report made a case for drug retailers being the dominant channel for HBC sales. It compared drug and food store sales using Towne-Oller and Information Resources statistics.
The report examined overall HBC sales, sales of the top gaining HBC segments over the last three years, new product sales and sales of prescription to over-the-counter items.
Conclusions were that, despite the erosion of nonfood sales to mass merchandisers and the strength of supermarkets in nonfood, drug stores remain the dominant channel for HBC sales.
For the 53 weeks ended Jan. 4, 1994, drug store share of HBC sales was 42.5% compared with food stores at 32.7% and mass merchants at 24.8%, according to IRI/Info Scan data.
Statistics also showed that chain drug stores consistently outperformed other retail segments in key growth areas.
In the top five gaining segments for the year ended Dec. 31, 1993, drug stores outperformed food stores and dominated sales in the herbal supplement, vitamin E supplement, blood glucose measuring strip and eye ointment segments.
Over the past three years, new HBC items generated over $2.6 billion in drug stores.
Drug store success exceeded food stores' for the majority of leading new item categories last year. The report also concluded that the chain drug industry is well positioned to continue to capitalize on current and future opportunities in health care cost containment, increased consumer self-treatment and major prescription-to-OTC switches.
