GRAND RAPIDS, Mich. -- Frozen food promotions have gained a fresh sense of importance, and urgency, at Spartan Stores here since mass merchandisers started casting for supermarket sales in the cooperative wholesaler's market area.
rtan's response was to circle the wagons, to "bond with our customers against Super Kmart and Wal-Mart" and achieve synergies by forming advertising and promotion groups. The wholesaler then went to its customer base to learn their individual needs, and fused those collective and individual elements into a sixfold corporate merchandising and promotion strategy.
The wholesaler orchestrated CLOUT, a cooperative advertising agreement among its members, for which Spartan negotiates buys and then creates promotions with the approval of a nine-member
retail committee. Sommavilla said 429 stores are involved in the CLOUT program.
For frozens, the concept means a consistent presence in advertising and promotion, week in and week out, and through several vehicles.
"In a 15-item package, frozen has three key items a week, and sometimes four or five, depending on how our buyers do," he said.
Spartan also backs up frozens with television ads. Sommavilla said one of four weekly items mentioned in the commercials is from the department.
In addition, the frozens department picks up five to 10 in-ad coupons a month. Spartan supplies slicks and redemption services to its retail members. The company also coordinates a monthly cooperative promotion program. A pay-for-performance system is funneled through Spartan so that retailers are paid upon completion of an ad commitment, he said.
Other promotion tools include quarterly circulars and a series of APB (Another Price Break) specials, each of which supports frozens regularly.
The promotional peak is Spartan's "March Is Frozen Food Month" event, centered this past season on a four-page broadsheet that included 50 coupons, which Sommavilla said represented a $25 value in the frozens aisle. Spartan teamed up with manufacturers and broker representatives to spur retail involvement, creating a presell program that landed a free 17-foot freezer for each retailer buying 600 cases or more in a presell agreement.
"The brokers got 147 stores' prebooked orders, which means the program was quite effective, given that we are an 'at will' wholesaler," he said.
Spartan's role as a funding conduit for frozens promotion is pervasive, with 98% of monies passing through its corporate events. "The benefits of that are lower out-of-stocks and increased turns," he explained. That could change, however, as the firm works through a re-engineering project "to become more of a distribution company," he said.
"We may be doing less controlling of funds. Right now we see ourselves as a source of data for our retailers. Right now they need help to move funds through."
Spartan provides much more than promotion funds to support its retailers' frozens merchandising. Its frozens business is growing, Sommavilla added, having topped 8.6 million cases in 1993, almost 2.5 million more than in 1990. Sommavilla said Spartan's level of service is driving its success.
Helping tune the product mix is a major growing role. The wholesaler handles 1,200 stockkeeping units at the warehouse, with 8,800 pallet locations in a 100,000-square-foot freezer facility. It regularly schedules category reviews; it reviewed juice four times last year, for example. Spartan plans to do more category reviews. "The benefit is reduced SKUs at wholesale, and reduction of retail labor."
In Sommavilla's view, the future challenge is more sophisticated category management.
"We are not on the leading edge of category management -- we have not defined it yet. It's hard to do without point-of-sale data. We do work on avoiding duplication," he said, adding that Spartan is requiring branded vendors these days to have yearly strategic plans for their lines.
Its focus on the mix also extends to private label. "We've got strong private label, cross-merchandised with branded. But the key is still the branded event," he said. "As manufacturers spend money on these, it is foolish for wholesalers and retailers not to participate."
Until a year ago, however, Spartan stayed away from new product promotions. "But with Wal-Marts around, we are now very aggressive on that," he said. "Again, the key to execution is the broker linked closely to the manufacturer. We partner with those that know the category and that drive the business."
The wholesaler is also "extremely aggressive" in pulling together modular pallets, with mixed products on full pallets. "It reduces handling costs, forces product into retailers' hands, reduces out-of-stocks and gets better sales," he said. According to Sommavilla, using modular pallets increases warehouse efficiency by more than 20%.
The next step for Spartan is a frozens schematic program, which it is developing with two of its biggest customers. As Sommavilla explained it, the company will provide recommended maximum and minimum sets for every category.
"The mechanics of it is to provide a complete set of options for specific categories," Sommavilla said. For entrees, Spartan will develop sets to accommodate seven doors to three doors, depending on a retailer's size and needs.
The ultimate goal is to fully manage the categories, "but from the wholesaler's perspective, it's difficult to know what you have out there," he noted. "We have got a long way to go with our customers."
