real Fresh Data

Perishables marketers are about to get an assist with category management: two new services spun off from industry heavyweights Information Resources, Inc. and Willard Bishop Consulting.

IRI spinoff FreshLook Marketing Group, Chicago, plans to enhance its sales-tracking service for random-weight perishables including produce, meat, deli items, and bakery. The Perishables Group, also in Chicago, split from Bishop to expand category management consulting beyond produce into deli, meats, and bakery.

Category management is relatively new to the $100 billion-to-$120 billion perishables industry, and growing fast. With perishable sales growing as much as 5 percent per year in all segments and consolidation exacerbating competition, grocers are eager for any edge.

"One retailer told me, 'I wish we started category management five years ago,'" says FreshLook VP of sales and marketing Ed Mackowiak. " 'Tide won't shrink, but apples will?and I can differentiate myself with apples.'"

Perishables Group president Bruce Axtman concurs. "Perishables are of growing importance to retailers' business, because of consumer trends [such as] eating fresh and meal solutions," he says. "Perishables are making the transition from being a commodity to being a consumer-based segment, shifting from push to a pull strategy. The old category management business models suited to dry grocery aren't the best for perishables."

Both new ventures were started by industry veterans. FreshLook opened in June under president Mark Degner, who headed up perishables tracking at IRI. Perishables Group launched in June, too, with Bishop veteran Axtman at the helm.

Using IRI scanner data from 12,000 stores to analyze sales, pricing, and distribution of perishables, FreshLook analyzes the exclusive, market-level data by region, store size, or product segment. Moreover, FreshLook has better quality control, aggregation, and accuracy than the service did under IRI, Degner says. "Clients will see the difference, but they won't realize it."

FreshLook has added a handful of chains (a total of 2,000 stores) this summer, including Raley's, Jitney Jungle, and Penn Traffic. This fall, the company plans to add feature coding so marketers can track results of feature pricing, then eventually will add baseline measures to compare baseline sales to incremental volume.

Stores are using FreshLook reports to benchmark their perishable sales against same-size stores. The data allows grocers to drill down through product categories to a specific item, such as apples or deli ham. "Retailers had been measuring themselves against the competition by looking at individual stores," Degner says. "Now they can have a benchmark per category."

Vendors, who fund most of the research, are scrambling for a toehold as category captains. Top- and second-tier players can use FreshLook data to measure penetration and compare sales by chain and by geographic region. Marketers can measure the effectiveness of pricing, display activity, and media support.

The Chilean Fresh Fruit Association is importing category management into the U.S. after some success in Europe. The association has spent three years building its marketing research, and is now at the stage of tracking store-level performance to report back?and make marketing recommendations?to retailers.

The group started using scanner-based sales data in 1999 (via IRI) to test TV and radio ads during the peak winter months of January through March. TV boosted sales significantly (radio less so), so the association expanded TV to 11 markets and radio to 25 markets this year. It used FreshLook data to analyze results in 15 markets.

"We're trying to get a bigger picture of how the categories of grapes and stone fruits are performing in those 15 markets," says executive VP Curtis Granger, who had already presented 2000 results to one retailer by early August. "Grocers are very interested. They have all the data internally, but they don't have the time to crunch it."

Still, FreshLook's big picture isn't detailed enough for Granger's liking. "We need to get down to the store level?space allocation, promotional performance, maximizing our financial return," he says.

Midwestern stores, for example, don't sell as well as same-size stores on either coast. "Is that because we aren't pulling hard enough with promotion, or those retailers just haven't had any perspective on what their sales potential really is? [FreshLook] has been set up as an evaluation tool. Now it can do some good for building category management programs."

IRI began tracking perishables sales eight years ago, but it was a small niche in IRI's packaged goods business. IRI maintains a minority share and one seat on FreshLook's board.



Bishop's Baby

Perishables Group also plans to expand category management services, now that it has left the nest of Willard Bishop Consulting. The spinoff opened its doors June 15 with Bishop clients including Sara Lee (deli meats), Rich Products (bakery), and 40 produce marketers including Chiquita, Driscoll's, and the Washington Apple Commission.

The company also is working with retailers "to help them work with the right suppliers," says Axtman, who sees Perishables Group as a conduit between retailers and suppliers. "We can customize category management programs to be better-suited to perishables, where the supply chain, data, and experience is very different from dry grocery."

Perishables Group has an alliance with Bishop to use its staff and data, especially for multi- category and total-store initiatives. It uses data from EMS, MTD on deli, and Nielsen Canada, and is negotiating with FreshLook.

Axtman, who headed up the perishables business at Bishop, has brought a handful of industry veterans on board. They include executive VP of West Coast operations Steve Lutz, who had been president and CEO of the Washington Apple Commission; account manager Kathleen Triou from the California Almond Board; and VP of technology Tim Tanguay, who founded Knowledge Management Resource, which handled some data management for Bishop.

Perishables Group has a three-step growth plan, Axtman says. First, it has formalized partnerships with existing clients, giving them some exclusivity. Second, it's persuading a number of companies to step up from basic trade activities to category management. Lastly, Perishables Group is looking beyond its existing geography?mostly California produce companies?to other regions such as Texas, and other product categories including meat.

The company is also negotiating an alliance to spiff up its meat expertise. "We want a total perishables perspective," Axtman says. "In four or five years, we'll be talking about 'fresh' rather than departments."

While produce marketers are a little further along with category management, deli, bakery, and meat are catching up, Axtman says, adding that bigger isn't necessarily better in category management.

Regional powerhouses?especially in deli?hold strong niches in select markets. Since category management is so new to perimeter departments, "all the players start at ground zero," Mackowiak says. "It's sort of a jump ball."

The best offense may be good research.