ECR Europe: when we make customers happy

„We have achieved a revolutionary breakthrough in co-operation between manufacturers and retailers. Instead of focusing on confrontation, we have begun to work together”- said Peter Braback-Lemathe, co-chairman of ECR Europe, following the conference. Over 2,000 decision makers from the FMCG sector attended the ECR conference held in Berlin, where sustainable growth was the main topic discussed by the 95 presenters. – We have begun long term thinking. We have worked out a three year schedule with realistic objectives –emphasised Mr. Braback-Lemathe. The name of this program is: „Jointly Agreed Growth” (JAG). Overall consumption by households in the 27 EU member states reached EUR 6.6 trillion last year. Growth was 4 per cent in terms of value. Positive expectations are based on the fact that total savings of households in the EUR zone amounted to EUR 768 billion in 2006, which was three-four times more than in the US or Japan. The JAG system has been worked out by the workgroups of ECR with experts from McKinsey. The JAG system is comprehensive, covering all fields of common interest from category management to the analysis of consumer expectations. Under the new system, new products can be developed jointly. According to Dirk Boer, co-chairman of ECR Europe and vice president of Ahold, they are looking for new mechanisms to generate added demand. This not only means innovation, but rationalisation as well. Problems like the rising costs of food production, rising energy prices, the shortage of water and the effects of climate change have also been discussed. While the key word in the 1990’s was shareholder’s interests, sustainable growth has become the priority today. Peter Braback-Letmathe who had spent ten years as the president and CEO of Nestlé pointed out that consumers require information about the ingredients in their food and about the way it is produced. Ecological consciousness is playing an increasing role in consumer decisions. A responsible attitude is expected of manufacturers by consumers. The main conclusion of the presentation held by Kasper Rorsted, president and CEO of Henkel, was that ecological consciousness is profitable. – Though price is an increasingly important consideration for consumers, corporate image does make a difference – he said. Both water consumption and CO emission has been reduced by 15 per cent by Henkel during the past five years, while their energy consumption has been reduced by 21 per cent. Their profit has grown by 61 per cent in the same period. The European president of Unilever, Kees van den Graf used an example to demonstrate their efforts: Our objective is that all teas sold in Europe should have a quality certificate by 2010 and the same for all Lipton teas sold in the world by 2015. Better service is also a method of providing added value for customers. AH is introducing self service cash registers in its supermarkets. There are already some units where 40 per cent of total sales are generated by self-service cash registers. They are also experimenting with a system, where consumers use their cell phones for scanning prices and payment. AH began to lose customers in the first years of the decade, because it was regarded as too expensive. They were forced to do something to lure customers back to their stores. They have launched a project, where managers were required to spend time with families doing their shopping and free time, observing their habits. As a result, a new product category was developed with different packages composed of healthy foods for a family meal and all selling for EUR 8. According to Dick Boer, predicting what customers will buy is becoming increasingly difficult. Instead of focusing on attempting to influence their behaviour, AH is trying to adapt to their behaviour by replacing sold items as quickly as possible. This makes Out Of Stock management even harder, especially as 50 per cent of their assortment is composed of fresh products.