First AWMA Buyer’s Program a Huge Success
By Traci Carneal
Nearly 100 distributor buyers attended the first-ever Buyer’s Program Wednesday hosted by the AWMA. The program, held at the Las Vegas Hilton – location of the 2006 REAL DEAL EXPO – offered buyers tips on how they can help retail customers manage their inventory levels more effectively, attract consumers, merchandise categories, and increase profits.
The all-day seminar was facilitated by well-known industry guru Kit Dietz, president of Dietz Consulting. Dietz basically told buyers that "there a lot of under-performing SKUs and space in the store and in your warehouse, and there are big opportunities to optimize assortment by partnering with leading manufacturers" by leveraging their:
- Consumer Connections
- Brand Strength
- Marketing Resources
- Created Demand
- Category Management Resources
"You are increasingly in competition with other channels for the convenience-oriented consumer," said Dietz. "The opportunity to rationalize assortment has to start with consumers in mind. Helping your customers carry the right SKUs will drive sales and profit growth."
Steve Vasquez, director, customer service & sales compliance, trade marketing & distribution, Philip Morris, shared with attendees the results of PM research that looked at shopper behavior and tobacco purchases.
"Cigarette smokers have the highest level of loyalty of all brand loyal products. Ninety-four percent of adult smokers remain committed to their brand," Vasquez told the buyers in attendance. This is crucial, he noted, because brand loyal smokers would leave a store that didn’t have their brand, thus losing other sales potential. "As distributors you can help retailers manage their cigarette inventories and top selling brands." He said top premium brands represent 3 percent of SKUs, but 55 percent of sales volume.
Vasquez also emphasized the importance of PM’s We Card program to discourage minors from purchasing cigarettes. He said the company’s new merchandiser rack features this program predominantly.
Steve Sandman, vice president national accounts for Altadis U.S.A., discussed potential in the cigar category. He highlighted the fact that flavored cigars and singles remain big forces in the category; that new flavored cigars and sales of singles combine to drive sales increases; the need to bring new smokers to retail; that singles carry the highest margins of any tobacco item; and that 22 of the top 50 products are singles or new flavors. Sandman suggested distributors take the following actions:
- Maximize inventory turns utilizing better management as opposed to limiting items stocked in warehouse – it’s a growth category!
- Develop a New Item "AutoDrop" program for rapid speed-to-market and monitor re-orders off this customer base to gauge future sales potential.
- Buy wisely! Cigars are like any other commodity in the warehouse; they are not a hedge-fund for day traders!
- Educate salespeople on the category using a talking-point sheet so they can talk it up to retailers.
Rick Meyer of Kraft Foods Global, Inc. discussed the building block foundation for grabbing consumers and increasing revenue. The blocks are People, Frequency (of trips), and $ per trip. He said keys to growing revenue are increasing household penetration; introducing new items; offering fresh food, continuity programs and promotions; and EDLP on milk and bread.
Meyer stressed the importance of catering to women shoppers – a group of consumers with a lot of potential that is often overlooked.
Randy Berg, manager of category development for The Hershey Company, urged distributors to help retailers understand the concept of brand blocking. "We know that frequent purchasers have favorite brands. Let’s give these consumers the choice of the top five brands all in one place. For example, putting the gums & mints right above the chocolate…that way we don’t miss out on the gum or mint sale when the consumer goes looking for a chocolate bar," he noted.
Berg also highlighted the importance of bringing new items to the store as soon as possible, especially as 21 percent of consumers will walk away if they don’t find the item they want.
"Placement of the candy product is also paramount. Fifty-three percent of candy purchases are impulse buys. Twenty-eight percent of shoppers intentionally walk down the candy aisle; 9 percent are those who stop and shop. We need to make it easy for them to find the product," Berg said. Plus, consumers need to be enticed with signs that urge them to "Buy this new item!" he added.
Edward M. Chrupcala, director, category development and strategy for U.S. Smokeless Tobacco Company, told buyers that although smokeless products take up a small amount of space in the c-store, it’s one of the fastest growing categories. He also shared retailer perspectives on what is important to them. For example, they want solutions that help them grow the category; they want to know how a product supports their category strategies and how it should be arranged on the shelf to impact overall assortment approach; and tactic recommendations that are category-based, not brand-based.
"Remember, gross profit dollars is the most important measure for most retailers," he said.
