A cooperation for desirability
The joint planning process also includes product distribution and category marketing. In this connection, category managers like Reiner Schmitz receive support from manufacturers as well as from their own in-house teams. “We enhance brands’ attractiveness and make them desirable to customers by means of specific targeted measures such as free gifts. Last but not least, we have to offer mark-ups which pay off for the reseller,” says Erdinger sales executive Josef Westermeier. “In this way, manufacturers help retailers to attract customers to their stores, boost sales and ensure shop-floor profitability.”
Price is not the only important factor which shapes customers’ opinions of products: quality also plays a major role. Resellers have a great responsibility here too because storing and selling food requires a sensitive approach. For example, beer must not be exposed to excessive temperature fluctuations when it is transported and stored to ensure that its quality does not deteriorate before it reaches the store – and therefore the customer. “The glass bottles protect the beer from light and the store managers make sure it is stored in a cool place,” explains Reiner Schmitz. Lengthy storage also damages the product: “The fresher the beer, the better it tastes – and the better it sells too,” adds Schmitz. It pays for resellers to have good merchandise management systems in place which optimally coordinate the stock of inventory, where the products are stored and how long items are stored for.
To make the necessary processes as efficient as possible and conserve resources, METRO GROUP introduced the concept of procurement logistics back in the mid-1990s. The idea behind this is that the reseller organises and manages the whole flow of goods from the supplier to the store. External logistics providers use their existing network to transport the merchandise. This enables deliveries to be pooled, which improves the vehicles’ capacity utilisation, minimises empty trips and reduces idle times. As a rule, temporary storage is no longer needed for the goods, which further reduces costs. On top of all this, fewer deliveries are made to the loading ramps because trucks no longer call at stores to deliver a single pallet – something which was common practice in the past.
The logistical challenge posed by the German system of deposits on drinks containers should not be underestimated. It is true that the introduction of refundable deposits on disposable containers in 2003 stabilised volumes in the reusable segment and led to environmentally unfriendly drinks cans playing a vastly reduced role. However, setting up a nationwide collection system for used containers was a costly undertaking for the retail and wholesale sector. HDE, the German Retail Federation, estimates that companies have now invested over €1 billion. The scheme means that resellers are not just responsible for collecting both disposable and reusable drinks containers from their customers and refunding the deposit paid – they also have to coordinate returning the empty containers to the manufacturers or delivering them to recycling firms. Nevertheless, it is worth investing in making the system as simple as possible because high return rates are associated with repeat business. Most customers invest their refunded deposits in new purchases. This is another example which shows that: “For all of the processes’ complexity, there is one simple truth,” says Angela Pilkmann. “We will only succeed if we place our customers’ needs and expectations at the heart of everything we do.”
Source: METRO GROUP