Measuring at Retail

The case for case ready meats has been

debated on many occasions over the past decade. Proponents have said case ready will save labor and help even out stocking, while opponents have pointed to its higher product costs and contended that consumers will never accept beef in that form despite what they've gotten used to in chicken and are starting to buy in pork.

Experiments with the pre-packaged products have been conducted, some successful, others far from it.

But now ground beef has finally been put to the test, both in the case and in the consumer's mind. A study conducted by Wirthlin Worldwide (Chicago) and sponsored by Cryovac Division-Sealed Air Corp. (Duncan, S.C.) in cooperation with the National Cattlemen's Beef Association (Washington, D.C.) revealed that case ready ground beef had a positive effect on the economics of the meat case and pleased consumers.

Wirthlin Worldwide teamed up with Fred Meyer, Inc. (Portland, Ore.) to do a controlled experiment on the effects of case ready ground beef. Fifteen Fred Meyer stores in the Portland area were chosen. The ground beef program in 10 of them was switched almost completely to case ready. Only the 80 percent lean was merchandised using a combination of case ready and store packaged product. This was done so that the stores could use their shop trim in the 80 percent lean mixture. The products were merchandised using the same case set as before the test.

The remaining five stores continued to sell store-packaged ground beef in the same manner that they always had. These were the control stores, whose sales and shrink were compared to those of the 10 units selling case ready. The stores were comparable in size, merchandise and traffic. Even though the case ready products cost slightly more than traditional ground beef, Fred Meyer choose to keep their prices the same as the traditional packages to avoid influencing retail movement.

The case ready ground beef, which was provided by Interstate Meat Distributors (Clackamus, Ore.), was packaged using high-oxygen modified atmosphere packaging (MAP) that consisted of a Cryovac Barrier Foam Tray and Cryovac Lid-550 lidstock.

While the MAP products were in Fred Meyer's meat case Wirthlin conducted a consumer opinion study to gauge shopper reactions to the packaging and the products, trying to ascertain if, as many opponents have argued, consumers did indeed detect a difference in the color of the meat and whether they would be willing to purchase the products.

"We decided to find out how true that statement was, that customers would not buy case ready, especially given the new packaging options out there," Dr. Sheila Mckay Courington, a senior research executive at Wirthlin, told those attending the Annual Meat Marketing Conference in April, where the study was first reviewed. "We let shoppers see the case ready ground beef in the stores and then saw how they reacted to it."

According to the study, the Portland consumers seemed to like what they saw. The majority (58 percent) of the 401 shoppers who were interviewed three weeks after the MAP products were introduced said they preferred the packages over traditional ground beef packages. Another 22 percent of the shoppers didn't have a preference, leaving only 20 percent who preferred the traditional packs.

When asked why they preferred the MAP packages, consumers said that they thought the packages were less likely to leak, made a better presentation, seemed more durable, allowed them to see more of the product, were probably easier to freeze the product in and appeared fresher. Almost all the shoppers (93 percent) thought the color of the ground beef in the MAP was extremely appealing, and the same percentage said the product appeared fresh.

"We know from previous research that color and freshness in ground beef are critical, and they liked what this package did in ground beef," remarked Courington. "Seventy-nine percent said that they would like to see this package on other meat. The final conclusion is that this package is well liked, and almost 80 percent would like to see this on other meats."

Two big stumbling blocks to case ready products have been retailers' insistence that consumers would not accept the product and their concern that earlier problems with the appearance and color of the beef would scare consumers off. Shopper reaction to the new packaging in the test stores seems to indicate that both those objections have been alleviated.

The ultimate test of consumer confidence in a product is whether consumers will buy it. Wirthlin reported that during the 10-day period for which results were reported store sales of MAP products were equal to or higher than sales of conventional products.

How does MAP affect the dynamics of the meat case apart from sales? The study reported results of store audits done five times a day to document the physical changes in the meat case that may have an effect on profitability. When compared to the traditional ground beef cases in the control stores, the cases with the MAP product were 30 percent fuller during peak shopping hours.



An incidental finding was that other parts of the meat case also had better in-stock positions as a result of the case ready ground beef program. The audits revealed that the display containing seven-bone chuck roasts, which were singled out as important by Fred Meyer, had an improved in-stock position in the test stores. The roasts had nothing to do with the test, and the improvement was attributed to additional time the department's staff gained by having the case ready products.

"This clearly points out that not only did you help that [ground beef] category but you helped the in-stock position in other categories," says Cryovac's national retail coordinator, Bill Keucker. "Ultimately, that may be one of the keys, that you're able to use that saved labor elsewhere. You don't have to be looking at labor reduction [with case ready], you could be harvesting the benefits of that labor elsewhere.

"Another real key is that there are always things that retailers would like to be doing, or they may be feeling pressure to do more value-added or HMR programs and don't have the hours to do it. This study shows that now you have the hours, while increasing your profitability in a core category."

One of the variables most draining on net profitability in the meat department has always been shrink. The study looked at the effects of the case ready ground beef program on shrink in that category. Shrink, defined as markdowns plus discards, was found to be significantly reduced for ground beef in the test stores versus the control stores. The amount of reduction varied greatly with the individual grinds, ranging from a high of 89 percent shrink reduction in 70 percent lean ground beef to a low of 29 percent shrink reduction in the 80 percent lean grind. Taken as a whole, the ground beef category averaged a 63 percent reduction in shrink using MAP.

This resulted in substantial savings to the retailer. Using an industry standard of 10 percent ground beef shrink, Wirthlin estimated that a store selling 350 pounds a day at a price of $1.89 would sustain $66 a day, or $24,090 a year, in shrink. Shrink reduction from the case ready program would save $42 a day or $15,330 a year, according to the estimate. A 100-store chain would save over $1.5 million a year by reducing shrink in the ground beef program.

Wirthlin then translated the shrink reduction into incremental profits. Using the same 350-pound-a-day sales figure, the firm estimated a 3.8 percent improvement in net margin. This indicated $13 a day in incremental profit for a single store, or $4,745 a year, and $474,500 annually for a 100-store chain.



"The increase in profit dollars is smaller than the savings dollars because MAP product is more expensive," remarks Courington. "However, what you save in materials, shrink and labor more than makes up for it."

When the shrink study was done, the price of the ground beef in both the test and control stores was kept at its everyday level. Since then, the researchers have continued to follow both sets of stores' meat cases on an ongoing basis. This included manipulating the ground beef merchandising in the same manner as if an experiment weren't going on. In other words, the different types of ground beef were put on special or taken off special just as they normally would be.

"When one product was featured at a hot feature price, the shrink improvement, which was 63 percent at the regular price for the total ground beef category, was improved by 76 percent, so it's even more dramatic," says Keucker. "When we look at the dynamics of the meat case, that would make a lot of sense to us because of the short shelf life of the product. When your on-feature mix changes so radically toward that feature, the shrink control on the non-feature part of the category is pretty key. It is true that shrink is reduced in a feature week, we know that. But here the difference is more dramatic.

"One thing that is very significant is to look at shrink components. Probably the most significant shrink component on the ground beef program is your percentage of pounds sold on a markdown. We tried to come up with the relative importance of the shrink components?markdowns versus discards. We found that the percentage of product that had to be marked down to be sold was reduced by 66 percent. That's significant in this category for another reason: Ground beef is usually a fairly low substitutable item with consumers. If they are going to buy ground beef, they are going to buy ground beef. If they are not buying ground beef on markdowns, they are probably buying it at full price."

It should be pointed out that the results of these consumer and instore studies cannot really be projected to the whole realm of case ready ground beef. Results will probably differ with the exact case ready process that is being utilized.

Keucker notes that the degree of consumer acceptance of the final packaged meats is critical. The MAP process studied in this research had a very high degree of consumer acceptance. If that had been lower or the shelf life shorter, the shrink improvement and profitability estimates would probably have been reduced.