Efficient Consumer Response: winning in a consumer-led future

ECR Europe’s co-chairs, Gianni Ciserani, president western Europe, Procter & Gamble international operations, and Dick Boer, COO at Ahold Europe, shared how the joint supply chain initiative is benefiting shoppers in a consumer-driven environment at the Consumer Goods Forum’s Global Summit 2010.

Ciserani said consumers are becoming more focused on value but the drivers of value can change.

Traditionally, value has been a function of performance over price or performance plus brand image over price. Today, the equation is more complex and value is viewed as a function of experience and trust over opportunity cost, he said.

“Trusting a brand is different to using a brand and the image of the brand. Trust takes time to build and is very easy to lose if you disappoint your consumers,” he said.

The other big change is that price has become a relative concept, said Ciserani. Customers will increasingly make trade offs in their choices. In Procter & Gamble’s world, this could be between buying Pampers or going to the hairdressers, he said.

Faced with an increasing number of choices, shoppers are making more decisions in store versus at home such as ‘Is that brand I want in stock? Can I find what I want?

Cisarani said ECR programmes have focused on keeping products available and reported a 5% reduction in out of stocks has been achieved.

Helping consumers locate product in store is the next target for ECR, he said. Ciserani said consumers wanted fewer, clearer and smaller assortments.

In a recent study on air fresheners, the display was simplified with a 20% reduction in range and customers invited to give feedback. While shoppers appreciated an improvement, they felt there was still too much choice.

“We should have been even more aggressive,” said Ciserani. “There is more and more evidence that ‘easier to find’ drives better satisfaction and more closure rates,” he said.

ECR can play a role, by working jointly to give the consumer what he or she wants – a response.

Ciserani reported that in stores, which had adopted ECR practices the ranging was better and it was easier for shoppers to find the brands they wanted.

Boer went on to highlight ECR’s response in the area of sustainability. He said greater pressures on natural resources, environment and society meant there was no choice but for sustainable consumption and production by everyone: companies, consumers, government and NGOs.

Boer said the grocery industry has a relatively low carbon footprint but it could help customers to make sustainable choices. Technology and innovation can drive better demand forecasting, he said, leading to waste reduction and more food for the world.

ECR can also play a role in transport, he said and highlighted savings made in the UK from retailers and manufacturers working together to reduce emissions.

Boer stressed it was about efficient load fills and not sending back empty trucks.

“If we had glass trucks, people would be shouting at us, ‘what are you doing?’” he said.

Sustainable packaging is another area of focus, he said, and will improve the value chain.

Boer stressed it was key for retailers and manufacturers to work together to grow the market and revealed how Ahold company, Albert Heijn, has collaborated with Unilever in the Netherlands to grow sales to families with children in a football-oriented campaign featuring a fuzzy mascot called Beesie.

According to Boer, in the first five months the initiative has resulted in sales growth for Unilever products at Albert Heijn ahead of the market.

As well as considering the net generation of digital consumers, Boer reminded delegates not to forget the need for convenience in working with a world with older people and to take responsibility for the world.

“It’s up to us to make the future work,” he said.