Retail Pressures Bring Closer Relationships

When it comes to P-O-P development, strategic thinking is a must, says Debbie Yurgen, director of trade marketing for Cleveland-based Imperial Home Decor Group. But even under the best of circumstances, she admits, friction can develop: "The retailer understands his customer best, but who knows our category of products better than we do? Marrying those different skills and outlooks becomes a balancing act. If you ultimate focus is on the consumer and the display's shoppability within the channel, it's likely you'll only need to 'tweak' the final display design. You cannot start with a vision that is your own and totally independent of the environment you're trying to sell to."The challenge today is greater than ever before. Retailers' growing desire for clean, obstruction-free aisles cuts down on the possibilities for placing displays. The consolidation in key retail channels with "category-killer" chains (most notably in the toy, home-improvement, electronics and mass merchant channels) means more sales come from fewer corporate buyers -- making those buyers even more important.But retailers do recognize the power of P-O-P and its bottom-line impact on sales, as busy customers continue making more purchase decisions in the aisle and as technology tracks sales more closely and more immediately. Meanwhile, with co-op dollars and slotting allowances becoming more required, marketers realize that the display space they're helping to subsidize must pay off as effectively as possible. "The end result of an improved relationship is that manufacturer and retailer both win, with increased sales resulting for both," says Yurgen."When we create a category-management program, for instance, it's a collaborative effort. It requires trust. They have to believe us when we say we're not taking over their store.""It's becoming much more important to create a P-O-P strategy at the same time as you plan the product and its overall retail and supply-chain strategy," says Roger D. Blackwell, professor of marketing at the Ohio State University and a retail consultant. "It's vital to consider everything -- the display's message, its size and shape, and the ultimate location within the store -- before any strategizing begins."As consumers become busier, Blackwell says, they are less swayed by image and more focused on specific messages that meet their needs. That focus is shifting the balance of power, and it will continue. "Marketers are learning that it's not retailer vs. retailer that defines competition today -- it's supply chain vs. supply chain," he explains. "The manufacturer who tries to go it alone today will not be as successful as the one who works with other members of his supply chain to make it easier for the customer to shop."Consultant Kare Anderson, head of Compelling Communications Group, San Francisco, agrees: "I think the main problem in how P-O-P is used today comes from marketers and P-O-P makers just pushing products instead of gaining a deeper understanding of how they can be more involved in planning the retail setting," she says. "They're more worried about individual projects and the cost of customizing rather than the need to partner with the others in the chain early on."Kraft Foods embraces the partnership approach. "We have a much more collaborative process today," says Wendy Kritt, director of consumer promotions for the Northfield, Ill.-based food company. "Tailoring our displays to a retailer today has become a matter of understanding who the consumer is that we're trying to reach. We marry that with who the retailer is reaching and how we can work together."These approaches are both top-down, with Kraft creating national promotions and special events tailored to each retailer, and bottom-up, with Kraft salespeople working with each retailer to find specific opportunity windows to create a local Kraft calendar of sales events. Only then do the two partners discuss the actual promotional message to be used, based on the company's modular array of racks and displays."Our goal is to reach a 52-week program with continuous programs," Kritt says. "We know that that is really unrealistic. But if we start there and work back, we ensure we are meeting all the retailers' needs."American Greetings also uses modular fixtures and many planogram options, says Ray Young, director of retail design for the Cleveland-based stationery products company. That's been driven by the sheer volume of SKUs needed in card departments. "We've had to become category managers," he says. "Our salespeople who stock racks and work with the retailers have become vital to knowing how we should develop our P-O-P."That means that before plans begin, design criteria are solicited from the company's marketing group, account executives, field salespeople, part-time merchandisers, third-party merchandisers and the retailer's personnel. "Our goal is to intimately know what the retailer wants and what their marketing plan is, as well as what our merchandising force needs in the field," says Young.If nothing else, that often means customizing pieces to fit a retailer's needs. "As retail options consolidate, each chain wants to project its own image, to make itself as much a brand as the products they stock," explains consultant Milton Merl of Milton Merl & Associates Inc., New York. "Taking in someone else's advertising on a display is becoming less and less acceptable."Tony Mineart, manager of retail sales at the Washington Post, agrees with that. "We used to build fixtures to put the display and the Post's name in front of the consumer. Creating a unique look and getting our name out there were paramount. Now, our attitude has changed. We find we need to create a more effective display, which puts our product before the customer in a user-friendly environment that's congruent with the retailer's landscape."Displays today, Merl says, must have signs that match and support a store's planograms, segmentation of categories, communication approach, promotions strategy and design themes. All that, and they can't clutter the department, either. Failing to meet any of these needs usually means one thing, Merl says: Your display doesn't go up."The majority of retailers will tell you, if they're honest, that 75 percent of P-O-P materials they receive never see the floor," Merl says. "Only account-specific or need-specific items get up. Marketers have to focus on specific retailer benefits and productivity because those are the retailers' goals. Anything in P-O-P that reduces labor costs and produces better sales per square foot will get their attention." That includes display-ready pallets, on-shelf rack modules and improved package graphics to encourage cut-case programs. "Retailers want to take the labor cost off their floor and put it back into the factory."Kodak has been trying to balance those needs for some time, according to Kristi Marchbanks, vice president and general manager for the Kodak Retail Services Division, Atlanta. "As retailers have overbuilt and seen their margins shrink, there's been a bigger squeeze on labor," she says. "Retailers recognize us as an industry leader, and they look to us for expertise on trends and what customers are buying -- but they also see us as free labor to stock their shelves."Many retailers state that saving space is a priority, and some marketers are looking to partner -- even with competitors -- in order to achieve that goal. "We're looking at ways to make our displays more compact and partner with other products," says Eric Wynn, assistant circulation manager at The Dallas Morning News. For instance, the publisher has had discussions with Frito-Lay on the possibility of creating co-branded displays, combining chips and daily newspapers in one upfront rack. "That would allow us to hold the position better and be more cost-effective with a bigger display."To please some major mass merchants, Wynn's company tried working with USA Today and a consortium of metro newspapers to create combined racks that would be consistent from market to market. "We want to work together as an industry to present a case for why we should be prominently positioned," he says. But that initial effort, begun in October 1997, fell apart because there were too many agendas to coordinate.The history of that effort illustrates the problems facing marketers. An initial partnering project with Target Stores created a fixture in the store's colors for use nationwide, Mineart says. But when Target executives visited stores in different markets, they saw that, depending on which newspapers were involved, the displays became messy and used different formats. Target canceled the program nationwide, throwing out all newspapers."Working with retailers today definitely is a two-way street," Mineart says. "Target is a good example of how it shouldn't work, but how it often does. It's a shame, because that's a customer base that's congruent with our own readership. There's an opportunity to do something, either singly or as an industry, but we haven't found the right fixture that's consistent across the country and provides what they're looking for."Gaining that feedback can be difficult, even when both the marketer and the retailer agree on the goals. Each retailer may have three or four departments involved in deciding what goes into a store, what message it conveys and at what price it will be put there. And each store manager may -- or may not -- have the authority to change the plan for an individual store. Marketers, too, may have in-house executives, an advertising agency, a promotions agency, field-staff personnel and a P-O-P company involved in the process. There are a lot of contact points to handle.Husqvarna has tried to solve that by soliciting ideas from its retailers during the year, says Pam Gianpicolo, marketing assistant for the Charlotte, N.C.-based maker of chain saws and other tool products. The company mails a newsletter to retailers twice a year, which includes a card to offer suggestions, complaints or comments on P-O-P materials and other marketing activities. An outside service company also contacts about 100 retailers each month to discuss topics such as P-O-P usage and easier product ordering."We work closely with the retailers who will let us," Gianpicolo says. "The dealers who are forward-thinking and long-term strategizers do think about whether displays will fit into their stores and how we can improve them. We expect those are the retailers who'll be in business 10 years from now. Unfortunately, a lot of dealers don't realize all that's involved in an effective merchandising program.""The term is overused, but we're definitely focused on establishing more marketing alliances," says the Post's Mineart. "There is more cooperation overall than there was in the past. Retailers all have their covenants, and you can't breach those or you're out. But overall, they're more willing to work with you as long as you blend with their landscape."Jay Agosta, general manager of retail store development at TruServ, the True Value hardware co-operative, agrees that there is more cooperation. But he also knows who has the ultimate upper hand: "Often marketers create a 'great' P-O-P display, but they don't give any thought, for instance, to what goes onto the back of the header, which our customers can see in the adjacent aisle. We try to offer suggestions and explain why it doesn't work for us. Often, they'll say they won't change it for us. That's their right, but we don't have to use it, either."

Retail Pressures Bring Closer Relationships

P2PI MEMBERS

JOIN P2PI

Business Topic

Company

P2PI MEMBERS

JOIN P2PI

Related Articles

Business Topic

Company