The increasing adaptation of new technologies by sales agencies is making it easier for product manufacturers to see shelf conditions in real time and address conditions such as out-of-stocks.
From the regional, independent brokers to the large national firms, investments in systems that provide real-time views onto retailers' shelves and help the sales agencies communicate more seamlessly are helping product manufacturers better manage their launches, which should result in better retail performance.
“One thing technology is doing is increasing visibility,” said Vince Willis, chief executive officer, Driveline Holdings, a retail merchandising services company based in Malvern, Pa. “Whether it's for the retailer or the manufacturer — and whether it's pictures, whether it's planograms that can be viewed much more efficiently, or exception reporting — the Holy Grail of being able to have the benefit of centralized procurement management and to be able to actually have eyes looking at things remotely in the stores is something that is coming pretty quickly down the path and has been helpful to us.”
Communications among store merchandisers, sales agencies, product manufacturers and retailers historically involved a time-consuming, paper-based system in which periodic report cards provided details about how well new-product launches and other promotions were being executed at the store level.
Increasingly, however, electronic reporting systems are reducing the time between when a problem is detected at the store level and when it is addressed by the necessary parties.
Acosta Sales and Marketing, Jacksonville, Fla., in the last 12-18 months has rolled out a new proprietary database called iQubed that facilitates access by the sales agency's manufacturer clients to daily report cards. Using a Web-based system, major clients can see in real time how their products are performing at the shelf level.
“Our clients can go into that on a 24/7 basis, and literally during a new-item launch they can look across 20,000 grocery stores and on a daily basis get information about where they are on a distribution basis, and where they are not,” said Brian King, chief strategy officer.
The rollout of the iQubed (pronounced “eye-cubed”) database followed a revamp of Acosta's strategy several years ago in which its sales representatives in the field began calling on retailers more frequently to assess conditions, tag shelves and focus on better execution of new-product launches on behalf of its manufacturer clients. Acosta's agents now spend four hours per call with each retailer, checking up on all of the products Acosta represents in that location every week rather than hitting stores to cover a single product on a monthly basis.
The new system has increased productivity at the store level, King said, because of less “drive time” between store visits, and has also reduced the time it takes to cut in new products. The previous expectation was to have 80% of an all-commodity volume (ACV) rolled out within eight weeks of a launch, but that has been cut to four weeks, he said.
He said Acosta surveyed its clients to determine what the most important elements of its service were, and new-product launches rose to the top of the list.
“Our retail reps have a handheld that is scripted on a per-store basis, and the No. 1 priority that we log into those scripts is new-item cut-ins,” he said. “So they know for a particular new item, for a particular client, when the ship date is, and they know when it is available, so they will go in and work with store management to make sure it is ordered, make sure the product is there, make sure they create the space, and put the tag up. If the product is still not there, they follow up every week to make sure that item is on the shelf.”
The more frequent store visits, combined with the use of the new database and handheld reporting systems in the stores, bring the system close to a real-time view of in-store conditions, King said.
“This allows us to work with our clients hand in hand in addressing issues in real time, as opposed to a monthly report that says, ‘We're behind,’” King explained. “On a very sensitive launch, the manufacturer has the same visibility we have, and collaboratively we can address the issues as they arise, in a kind of real-time response, rather than looking at reports. This brings manufacturers much more into the process of co-managing it rather than relying solely on Acosta, and then waiting for them to tell us how we did.”
Although not all of Acosta's clients have the same real-time visibility, all are benefiting from the iQubed database in one way or another, King said.
“I think there has been a major industry challenge in the lack of information flow between the manufacturer and the third-party broker,” he said.
In the current system, when products are sold in at the headquarters level, they are logged into the database so that the entire process of ordering, cutting into the planogram, shelf tagging, reporting and follow-up can be scheduled and viewed by individual store reps.
The system helps overcome what King said is the biggest challenge: follow-through at the store level by retailers that have agreed to purchase new products but for some reason have not introduced the product on their shelves. By scheduling upcoming new-product introductions electronically, Acosta can help ensure that individual store locations are getting the product from their warehouse and actually displaying it.
Paul Weitzel, vice president of Willard Bishop, Barrington, Ill., said one of the key issues in new-product introductions is the use of broker manpower to get the products cut in on a timely basis.
“Brokers are spending a lot of their resources executing all these resets and remodels at the retail level, and sometimes the new-product cut-ins can get lost,” he said. “If they don't do that, sometimes those items just sit in the back room.”
Connectivity is the key impetus behind a technology rollout at a regional sales agency in Arizona as well.
Phoenix-based Co-Sales, which has recently expanded by adding divisions in Northern and Southern California, has taken its CRC system, which is used by many brokers in reporting retail conditions, and made it accessible via the Internet from all of its far-flung offices.
The company is also able to update its manufacturer clients about store conditions more rapidly and with a more thorough report for the Western region, according to Barbara Usher, executive vice president.
“Now we are able to give our manufacturers a roll-up of what's going on at retail in our entire Western region for all of that particular product,” she said. “That's probably our biggest thing right now — that reporting at retail, and being able to give our manufacturers access to that information on a daily basis, and updating it each day with what was reported the previous day.”
Co-Sales sends email reports to its clients on the shelf conditions, rather than offering Web-based access.
The system was set up to prioritize certain objectives, such as auditing new items on the shelf, monitoring speed-to-shelf, checking distribution, and checking the status of shippers and display modules.
Although not all of the company's regional offices represent the same product lines, some products are represented in multiple markets and having the common network across all the different offices allows the company to see differences in distribution from one market to the next, Usher explained.
“We're able to see the new items in distribution, and able to see where that distribution is much sooner,” she said. “If we have a situation where they have an inventory problem at a particular chain, and they haven't got the new product on the shelf yet, they can identify that a lot sooner, address it at the headquarters level, and get product sent out to the store.”
The system has been helpful in monitoring product voids where the company needs to focus its attention, she said.
“Voids filled have increased, or at least we can monitor what we're filling, so we can at least put a number to it,” she said.
“That's information the manufacturers want to see, because if the products aren't on the shelf, then none of us are happy,” she said. “We're able to share with our manufacturers what we're achieving at retail, and also target problem areas and be able to fix them.”
Both Usher and King of Acosta pointed out that giving manufacturers ready access to shelf-condition data helps not only in pointing out the areas that need correction, but it can also help demonstrate the areas where the sales agency has performed well, and in some cases been able to generate increased sales through in-store merchandising activity.
“Manufacturers are very excited about being able to see some hard facts coming back from retail,” Usher said. “As an example, in the fourth quarter, we used our reporting system on a lot of our holiday items to monitor what we were selling at the store level. There's the old concept that you can't sell at retail any more, but we were able to show that we kind of blew that out the window with things that we did like fliers at the store.”
The most recent of Co-Sales' regional market divisions to come online have just begun reporting using the common platform in the last 60 days, she said.
In addition to its divisions in Northern and Southern California, C-Sales also has regional offices in the Pacific Northwest, Salt Lake City, Denver and Phoenix.
Don Cox, chief executive officer, said the needs of independent supermarkets in the West have fueled the company's expansion in those markets, and the expansion has necessitated the technological upgrades that allow for better reporting visibility at the corporate level.
“The national brokers do not have wholesalers or their independent groups on their call cycle to call on, so this has been very successful for us in opening up these new markets,” he said, noting that one Western wholesaler told him that $10 billion in sales in his region don't get the attention of the national brokers. “It's been an outstanding piece of business for us.”
DEBATE OVER HANDHELDS
Co-Sales has not yet invested in handheld technology, but the company has been considering it, Usher said.
“It's not something we have totally ruled out, but we are going to proceed as we have been doing, where our people report via the Web,” she said. “They don't actually take technology into the store.”
Leaving the retail reps with their hands free to perform other functions, such as tagging and stocking, makes more sense, she said. “As much as possible, we like to have the retail merchandisers with their hands on the shelf the majority of the time, yet we still want to know what's going on and the status of their reports.”
Ben Fischer, president of Crossmark Sales Agency, Plano, Texas, said his company has also had some questions over the use of handhelds in the stores.
“We've been using handhelds for 10 years,” he said. “Sometimes the screens are too small, and [the field reps] have a lot of information to navigate. Plus, the lighting in the stores is not always that good, so handhelds are not always the best thing.”
He said his company's 14 retail service teams use a variety of platforms based on individual clients' needs, and file reports at the end of each business day either using handheld devices, laptop computers that they bring with them to the stores or desktop computers at their homes.
Rather than using electronic devices in the stores, many field agents have found it easier to print out the data they need at home before visiting the store, and bringing the paper materials with them to check on shelf conditions.
Crossmark continues to use some handheld devices, and in fact is the subject of a case study written up by Microsoft that touts the success of Crossmark's use of iPAQ Windows Mobile-powered Pocket PCs from Hewlett-Packard. The sales agency has deployed about 1,000 of the devices, which are loaded with Crossmark's proprietary sales software, SalesTrak, and other applications.
According to the case study, the systems have enabled Crossmark's clients to see shelf information more quickly and thus make better business decisions. “All our clients have access to the reports in a 24-hour period,” said Fischer. “Some clients, for some things, want to see them every day, but very few clients want to see things that often. New-product rollouts are probably the exception, however — there are some cases where you do want to see the reports every day so you can react to how things are going.”
He added that Crossmark also gets store-level scan data from the retailers' POS systems that further reinforce retail shelf-condition reports.
“Not only to we have the verification of the rep that [filed] it on Tuesday, we have the verification of the sale on Thursday. You can't hide that.”
Independent brokerage Johnson O'Hare, Billerica, Mass., recently began using handheld devices, which can be used for retail reporting, downloading planograms, sending email and other functions, according to Wayne Diamond, vice president, technology operations. Handhelds have been rolled out to about 30 field reps at the company.
Like many sales agencies, Johnson O'Hare uses the CRC reporting system for store-level sales data.
“We can work with this system any number of ways — it can be done with handhelds, can be done with laptops or desktops — you may just want to take the information home and key it in through the Internet,” Diamond said.
He said Johnson O'Hare has not yet decided whether to make reports on in-store conditions viewable by the company's manufacturer clients via the Web.
“We're deciding whether or not to do that,” he said. “That is the capability we have, and that was the plan when we rolled this out. Right now we're trying to decide if it's better to hand the information off to them through the account manager.”
Diamond sees the creation of a virtual office as the company's most important technological innovation. The virtual office allows its regional offices to function as though they are part of the main office, which is making the company more efficient, he said.
In addition to the use of infoaccess.net, a Web-based reporting system that allows reps to place orders from anywhere they have an Internet connection, Johnson O'Hare also has recently gone to a voice-over Internet protocol that also helps create a virtual office by allowing phones to function over the Internet.
“I think that's the most new and exciting thing that is happening,” he said. “We can all be working in different places, but really we're together at the same place.”
As far as marketing tools, the company has been using NetBench for some time — it's a system that populates product-sales data from Information Resources Inc. into preformed templates that reps can take with them on sales calls.
Chip O'Hare, president of Johnson O'Hare and chairman of the Independent Food Brokers Association, said the key to execution at the store level is having well-trained people there to execute in the stores, and suggested that some technology is only as good as the people in the field.
“We call it trophy technology,” he said. “You've got to be able to have the people who know how to use it, and that's the place where a lot of brokers, large and small, are falling down. You can have great stuff, but if you can't get it to the other folks, what good is it? We use technology, and we get the job done with it, and we compete very well with brokers that have great technology but never take it off the shelf.”
Usher of Co-Sales agreed that sales agencies need to analyze how much payback actually accrues from technology investments.
“The biggest problem with technology is that if you get too much, you can't use it all, or the reports are so cumbersome that nobody reads them, then you are defeating your purpose,” she said. “So we try to achieve a balance in technology with reports that can really drive the business vs. just running reports for the sake of running reports.”
Tech Drives Changes in Store Merchandising
MALVERNE, Pa. — Driveline Holdings, a retail merchandising services company based here, sees technology driving changes in that area of the food distribution business.
“The whole space in terms of retail execution services seems to be evolving even more this year than it typically does, which is a pretty high-paced standard, and I think some of that is being driven by technology,” said Vince Willis, chairman and chief executive officer. “We're definitely using technology to be able to increase the speed of our responsiveness. When you have that connectivity with your workers, you are able to deploy that workforce in a much more efficient manner and a much shorter response time. It is something we see happening in the project world.”
He said the merchandising services industry is finally entering an era of end-to-end paperless systems, in which work is transmitted by the firm's clients electronically, is scheduled electronically, and is sent to the company's workforce electronically. Then, when the work is completed in the store, it gets reported and billed electronically as well.
Driveline was assembled from a network of service agencies, including Storecast Merchandising Corp., Archway Merchandising and others. In incorporating these businesses, Willis said Driveline “cherry-picked” the best technologies from each and worked them into its own systems.
The company writes all of its own software, however.
“We have our own IT group, and we have a very effective group,” Willis said.
He said current software in the retail merchandising space incorporates shelf work, sales support, consumer education, store employee education, as well as project execution and reporting, “all in one package.”
“With that kind of capability, the view of the data and the ability to use the data to tell you where the opportunities are has never been better,” he said.