(Feb. 13) CHICAGO — Produce items that sell briskly in one store may not catch on at a store across the street.

It’s a problem category-management specialists have faced for years.

Now, the Chicago-based Perishables Group is coming up with an answer that it hopes will help stir sales all along the supply line.

A partnership announced Feb. 11 between the Perishables Group and ACNielsen U.S. will provide a breadth of category-management information that retailers and produce shippers in the U.S. have never seen.

Powered by ACNielsen point-of-sale scanner data, the information will provide produce department suppliers and retailers with a comprehensive report on the fresh market from 30,000 census stores from all major retailers in all major markets. Previously, information was available from no more than 3,000 stores and covered only specific geographic regions.

The only exception is Bentonville, Ark.-based Wal-Mart Stores Inc., which does not divulge its sales to any scanning services.

The system will help retailers of all sizes, said Steve Lutz, executive vice president of the Perishables Group.

“When we’re working with a specific chain, we can work down to the individual store, down to individual geographies, ZIP codes and demographic profiles,” he said.

Thanks to bar codes, sales of packaged items — including those on produce department shelves — have been relatively easy to track.

BULK UP

Bulk items, on the other hand, present a different problem.

The new system, Lutz said, allows suppliers to work with retailers on a local level that old category-management systems never before allowed.

“This allows organizations to focus on what the consumer wants, but the data allows you to track performance opportunities down to individual stores,” Lutz said. “One the surface, we have one homogenous market. This allows you to (reach) niche markets that can be as small as one store and shows you how to track performance of products in that one store.

“You can see why stores that are similar in size and demographics have vast differences in performance. You can document assortment issues, pricing issues and merchandising issues that affect the success or failure that those stores are having with different items.”

Older category-management systems had to rely on data from whole markets or regions, Lutz said.

Shippers will find the information valuable in dealing with the needs of individual stores, he added.

“It’s of interest to a shipper who wants to work with one retailer in one market and be able to sort that retailer’s stores because he’s putting product in those stores,” Lutz said. “This elevates your ability to put the right product at the right price at the right time in front of consumers. It overrides the notion of all things being equal to all people, which is 180 degrees from where the packaged-goods manufacturers are at.”

A WAY TO RELATE

The program won’t change the relationships between some shippers and their retail customers. For others, the changes will be dramatic.

“For some groups, nothing changes because their model doesn’t embrace this type of tool,” Lutz said. “But, you’ll find retailers now have tight relationships with suppliers that are based on services provided by those suppliers.”

In older models, an apple shipper, for example, cared only about apples. That climate has changed, thanks to consolidation, Lutz said.

“In the environment today, the major apple shippers are not just apple shippers anymore. They ship pears and cherries, too. They’re involved in stone fruits. So, this notion of having a narrow focus on one item is gone.”

The alliance will eventually provide the first total store performance measurements for clients, said Rob Holland, senior vice-president of retail business solutions for ACNielsen.

“ACNielsen’s traditional vendor customer base has been (packaged-goods) manufacturers, so this gives us an opportunity to leverage and bring to the perishable side many of our strengths with virtually every retailer across the U.S.,” Holland said.

The partnership will focus first on the produce department, and then roll out to all perishables departments — including dairy, deli, bakery and meat — by 2005.

“In a lot of these cases, we’re hopeful that good data will bring to light opportunities for apples and cherries and how these items can work together,” said Keith Mathews, general manager of the Selah, Wash., office of L&M Cos., Raleigh, N.C., one of several fruit shippers who have been working with the Perishables Group on category management since the Washington Apple Commission phased out that aspect of its work.

DATA MATTERS

The Perishables Group will apply its own software to standardize ACNielsen’s point-of-sale data for standard UPC and random weight products by retail account, enabling clients to analyze product distribution, movement, market share, price, promotion effectiveness and other market-sensitive information about fresh product sales, said Bruce Axtman, president and chief executive officer of the company.

ACNielsen has been gathering data since Jan. 1, Axtman said, and the information will be available to clients by the end of February.

Axtman said the information will enable retailers for the first time to compare information on different departments possibly develop comprehensive strategies.

He added that the information would help retailers know what the customer wants, not only in packaged goods but also how that information will maximize potential for sales in the produce department.

“It’s such a key element in how consumers shop,” he said.

The system will streamline communication along the supply line, as well, Axtman said.

“In utilizing this data and customizing our tools, we can help grower-shippers, retailers, distributors, commodity boards more effectively understand and manage the overall supply-chain value for any given commodity,” he said.

The system also is capable of working across national boundaries, as well, since the Perishables Group and ACNielsen Canada launched a similar service in 2002 to analyze fresh produce sales in Canada.

The system in the U.S. differs little from its Canadian counterpart, except for its scope, Lutz said.

“The U.S. market is a quantum leap in terms of the size, as compared to Canada,” he said. “Plus, you have so many more players here that aren’t involved in the Canadian market. There, you have a handful of retailers that dominate the market share. You still have a much more fragmented business base in the U.S., and the market complexities are greater.”

But, Axtman said, having systems operational in both countries will enhance its effectiveness across the continent, perhaps, someday, into Mexico.

“So, we do have the ability, from that perspective, to take almost a North American view,” he said. “We do not have a lot of information out of Mexico. We might, at some point, in the future. But for U.S. and Canada, we can put together a very good perspective from a North American standpoint.”