Chains to Vendors: Serve Us Better

ORLANDO, Fla. -- Faced with continued pressure by discounters, chain drugstore buyers are demanding better service from manufacturers -- and they are not accepting any excuses for not getting it.<BR><BR>That was the message at the Cosmetics Buyers...

ORLANDO, Fla. — Faced with continued pressure by discounters, chain drugstore buyers are demanding better service from manufacturers — and they are not accepting any excuses for not getting it.

That was the message at the Cosmetics Buyers Forum, held here last weekend in conjunction with the Fall Conference & Expo by Chain Drug Marketing Associates, a chain drug association.

The 60 cosmetics and fragrance buyers attending the four-day event, which ended Sunday, represented more than 7,200 drug, discount and food stores.

During the last two years, drugstore chains have been desperately trying to keep their market share in cosmetics and fragrances from yielding to the encroachment of discounters and other competitors.

At last weekend’s meeting, a predominantly drugstore-oriented crowd of retailers voiced a variety of complaints to manufacturers:

Poor service to chain headquarters and stores.

Difficulty in obtaining money from manufacturers for returned goods.

Problems coping with a flood of new product introductions and integrating them into store planograms.

The need to curtail pilferage.

Although most sessions were restricted to retailers, a meeting on Friday morning was opened to manufacturers, leading to a lively exchange with retailers.

With drugstore chains like PayLess, Harco and Genovese participating, retailers traded ideas with executives from about 50 vendors, including Procter & Gamble Co., Revlon Inc. and Coty Inc.

Buyers conjured a list of some of the worst practices exhibited by vendors, most of them involving poor service. Complaints included frequently changing sales representatives, infrequent sales calls and a reluctance by vendors to take return merchandise.

Drugstore retailers also charged that vendors are devoting too much effort to building sales with discounters. The competitive situation was aggravated by what drugstore buyers see as a lack of attention by manufacturers.

“With one, we haven’t had a rep in six months,” said one of the buyers. Another said she had a series of different representatives in the last five months.

Manufacturers admitted to some service shortfalls and vowed to make more of an effort. “I think everyone realizes as an industry we’ve undergone reorganization and downsizing,” said Harry Hart, senior vice president of corporate trade development for Revlon.

Buyers called for a backup system, in which a second, well-versed person would always be available if the primary contact was not.

“We had a situation with Del Laboratories, and we were able to reach a backup person who handled everything,” Sheri Ralston, buyer for PayLess in Wilsonville, Ore., told the forum.

Other buyers suggested installing an 800 number that can be called for immediate help. Dale L’Amoureux, cosmetics buyer at Ames Department Stores, described how her chain requires vendors to fill out a fact sheet containing all pertinent information. The sheet is available to everyone throughout the chain.

Retailers and vendors also tackled the thorny problem of new launches and returns on discontinued or slowly moving goods.

“We need returns handled quickly,” urged Penny Wade, category manager for Harco Drug Inc. in Tuscaloosa, Ala.

Buyers complained that damaged goods can be tied up for months awaiting proper signatures for credit. The retailers and manufacturers agreed that stores and their vendors should come to terms on the disposition of damaged goods within 45 days.

Returns on merchandise that doesn’t sell, especially from promotional displays, was another hot issue. Retailers said an alarming 50 percent of promotional merchandise doesn’t move. They agreed that 60 to 90 days is all the time they can afford to keep goods in stock and tie up inventory on promotional goods.

“We need continual change to make it exciting so it is out [of the store] in 90 days,” said one of the retailers.

Ralston from PayLess said she was encouraged to see point-of-purchase support, such as on-counter cards and information booklets, behind promotions such as Revlon’s Exotica color special.

“That really helped its movement,” she added.

Buyers also suggested some kind of clearance program with the cost of markdowns being shared by vendors and retailers, but they did not elaborate.

Another major point of discussion involved the need to tag products with antitheft devices to prevent pilferage.

Source tagging — having vendors install some kind of security device at the production plant — carries an estimated cost of 4 to 11 cents per item, which some manufactures consider a minor investment. Most vendors attending the meeting said they are planning to install such equipment at their plants.

“But for now we don’t want to source tag for a chain that doesn’t use an electronic surveillance system and then have the item go off when the customer goes into another store with a security device,” said Steven Manenti, executive vice president of BioCosmetics Research Labs of Long Island City, N.Y.

The frequency of resetting planograms, a map of the positioning of every product on the shelves, was also addressed. Buyers asked manufacturers to give at least six months notice about new or discontinued items so they can prepare their departments.

Ralston suggested retailers remain flexible about adding new stockkeeping units.

“Retailers who can’t make more changes might want to look at outside programs to do so,” she said, referring to the time and effort it takes to reset departments. She also was alluding to companies that specialize in setting up stores.

Buyers did not restrict their comments about manufacturers to complaints. They singled out three large vendors for exhibiting good business practices, such as showing flexibility in making smaller-sized shipments to stores and providing hefty advertising support.

The firms cited were Coty and Revlon, both based in New York, and Maybelline of Memphis, Tenn.

Four smaller firms were applauded for similar efforts: Fragrance Impressions, Bridgeport, Conn.; Physician’s Formula, Los Angeles; Pavion, Nyack, N.Y., and Bonne Bell, Lakewood, Ohio.

Smaller firms said they appreciated the opportunity to hear what chains expect from them.

“We need to know how a small company can better utilize its limited resources,” said Roger Main, executive vice president of Cabot Laboratories of New York.

Retailers suggested inexpensive programs such as trial sizes or gift- with-purchase promotions with extra items attached. Physician’s Formula, for example, built sales by offering trial sizes of new items, buyers said. Another firm attached a free brush to its product.

“For all lines, we find that temporary price reductions really bring shoppers back to the [peg] wall,” added Peggy Williams, buyer for Snyder Drug Stores Inc. of Minnetonka, Minn.

Buyers also warned vendors that the computer age has arrived. P&G has armed its salesmen with laptop computers, for example, enabling them to keep track of inventory flow. In addition, Revlon told the group it is in the process of distributing laptops to its employees.

Retailers said the computerization will lead to an important goal of the cosmetics business — vendor-managed inventories. Under this system, manufacturers have the responsibility of insuring adequate stocking levels and determining which items must be eliminated when new products are launched.

Retailers said computers have already added to the efficiency of the cosmetics department.

“Our P&G rep is very computer-knowledgeable,” said L’Amoureux of Ames. “He has all of his information loaded on a computer, and we never have a question with his paperwork.”

To help retailers understand the psyche of today’s beauty customer, John B. Devine Jr., business development manager for P&G, presented highlights of a major research study. P&G polled 4,000 shoppers by mail to find out where and why they buy cosmetics.

The customers included those who shop in department stores, mass outlets and catalogs.

“A lot of the decision is based on taking risk out of the selection,” Devine said. For now, with limited service and few testers, that has been difficult for the mass market to do.

P&G has enacted plans to make the mass environment more comfortable to shop through its new Max Factor sampling kit as well as a new fixture called Beauty Lab.

According to Devine, Beauty Lab organizes products in a way that makes it easier for consumers to find what they want. There is also a wealth of product pamphlets built into the fixture to teach customers how to pick the right item.

P&G expects to install more than 3,000 Beauty Labs by next June.