Fulfilling needs

As both a brand promise and a memorable jingle, 'More than you came for' seems like a surefire winner for The Bay. But for this Toronto shopper, a disappointing in-store experience during the holiday season turned the slick slogan into a broken promise.

As both a brand promise and a memorable jingle, ‘More than you came for’ seems like a surefire winner for The Bay. But for this Toronto shopper, a disappointing in-store experience during the holiday season turned the slick slogan into a broken promise.

I had spotted ‘the perfect silk turtleneck’ in a flyer and driven for half an hour to my nearest Bay, intending to snap up the $49 sweater in all four illustrated colours if it fit and flattered.

After a hectic search for parking in the crowded lot, I roamed around the clothing department for more than 10 minutes without finding either the sweater or a salesperson.

Then, when I finally did nab someone wearing a Bay nametag, the sales associate blithely pointed out the extremely fine print on the flyer. It listed the stores – including the one I spent so much time trying to patronize – at which the sweater was not available. Fuming about never trusting a Bay flyer again, I stomped out with my money still in my purse and a bad attitude about shopping at The Bay in the future.

Brand strategist Mark Thomas, managing principal with Toronto’s Thomas & Associates, which has helped orgs such as Johnson & Johnson, Pfizer and Amazon.ca improve supply chain effectiveness, says it’s a good example of how not to treat customers – first enticing them with marketing prowess to want what you’re selling and then disappointing or even angering them when they try to buy it.

The Bay did not respond to strategy’s requests for comment. But several other major Canadian companies including Grand & Toy, Procter & Gamble and Sears Canada, proudly described their recent efforts to align brand promises with fulfilment realities by – as Thomas phrases it – ‘breaking down the barriers between the departmental silos of marketing, logistics and supply chain.’

He says failing to adequately stock advertised items is happening less often these days because of the realization that ‘marketing is central to a company’s strategy, and logistics is central to the execution of that strategy.’

Bret Kinsella agrees, and says fulfilment is now a top concern among the Fortune 500 companies he is working with south of the border. The supply chain technology consultant, whose company, Odin Technologies, is headquartered in Oak Ridge, N.C., has worked with companies in the U.S., Europe and Latin America, including General Motors, Compaq, and Accenture.

‘Market research around customer loyalty has a lengthy history,’ Kinsella explains. ‘But for a long time, the role of fulfilment in the customer experience, and its ability to drive revenue and enhance the brand, wasn’t figured into the marketing equation.

‘Before it was all about: Is the product better, is it faster, is it cheaper? Now – partly because of globalization and the rise in products with shorter life cycles – more sophisticated supply chain practices are being put into place, and more thought is being given to the end-user experience.’

Sears Canada is one retailer that is big on making and keeping promises, says Toronto-based director of corporate communications Vince Power. ‘What we’ve worked on very intensely over the last decade is assuring that we fulfil what we call a promise date for our trickiest merchandise, which is basically items like furniture and appliances.

‘So the logistical side of it and how that marries up with marketing is: You put out a flyer that says: ‘Buy this living room set and save $100.’ But now there’s a promise date that has to be met.’

So Sears’ computerized fulfilment system then kicks in, notifying the closest of its five distribution centres – in Calgary, Regina, Montreal and Belleville and Vaughan, Ont. – to ship the customer’s order, ideally within 48 hours, for either home delivery or pick-up at one of its 2,200 outlets. Power says the same arrangement pertains to catalogue orders ‘whether the customer lives as close as Belleville or as far away as Yellowknife.’

What it takes to make this process work smoothly, he adds, are routine weekly meetings of several departments, including logistics and marketing, plus automatic daily electronic notification of all involved whenever a promise date is not met. ‘That way, we can figure out what caused the problem and rectify it. So we don’t have to measure customer satisfaction [regarding delivery] because the computer tells us how we’re doing.’

Toronto-based Procter & Gamble Canada has also been working hard to keep the ‘out of stock’ signs off shelves. Spokesperson Win Sakdinan says ‘we’re really focused on winning at what we call the two moments of truth. The second is when consumers use our products. The first is when the consumer is in a store making the decision whether to buy a P&G product or one from a competitor.’

At this point in the purchase process, says Sakdinan: ‘The number-one source of frustration, not only for the shopper but for the manufacturer and the retailer,’ occurs when advertised items are not available. That’s why, when the resources at P&G’s longtime distribution centre in Hamilton were becoming overwhelmed by increased demand, the company invested $70 million in a new, state-of-the-art facility. Located in Brantford, Ont., near shipping routes, the 775,000 sq. ft. building opened last June.

With back-up from this infrastructure, Sakdinan says P&G works not only internally with staff in charge of product supply and logistics – to ensure ‘promotional and marketing activity matches the product supply’ – but very closely with retailers. ‘Together we analyze shopper buying patterns and needs so that, for example, our supply chain [can supply more] Pampers for a store that attracts a large number of mothers.’

He adds: ‘It’s not just about marketing, it’s about managing a brand and supporting it through all measures, including logistics.

‘If I launch a new brand, like Tide Cold Water, and we’re doing heavy advertising on TV, PR activities, in-store activity, we have to ensure that our retailers are stocked efficiently – and not only that, but there is efficient and effective merchandising through end-cap displays, proper featuring, flyer support. So the logistics department is really tied in to make sure that when an account exec says to one of our top retail partners that we’re going to run this promotion behind this marketing, [we can supply] the products.’

Meanwhile, Canadian retailer Grand & Toy recently completed a

two-year redesign of its 66 stores, says the company’s Toronto-based marketing VP, Peg Hunter. With an average investment of $150,000 per store, it concluded a month ago.The 124-year-old retail chain, which virtually owned the office supplies sector until the Staples-Business Depot chain arrived in Canada a decade ago, needed to ‘find our place within the office supply business and through research with customers, we determined that that was a convenience-oriented strategy.’

This led to changes in store layout, including wider aisles, remerchandised categories – for example all computer products are found in one area – and fewer SKUs, which G&T is now ‘able to manage all the way back through the supply chain.

‘Our strategy from a merchandising standpoint is to offer our customers those most-requested and most-required products so they can get in and out of our stores quickly.’

What made this possible, says Hunter, was ‘a significant investment from a systems standpoint, as well as in the everyday working relationship between marketing and logistics [personnel].’

G&T is measuring results via same-store sales, customer satisfaction and profitability. So far, Hunter says, results ‘are really pleasing…based on both a rising average basket and same-store profits in the rejuvenated stores, compared with those for the stores we haven’t changed.’

All of the above are encouraging signs to Halifax-based Dalhousie University marketing logistics professor Mary Brooks, who says: ‘Fewer companies are leaving sales on the table because they’ve let their customers down.

‘In the past, I could have given you a whole list of companies that were doing this poorly. But today they know that fulfilling customer expectations is where the rubber meets the road. And if you’re not doing it well, there’s a Chinese company…that will.’

Kinsella tells brand strategists and their organizational colleagues to always remember that ‘logistics and fulfilment operations have a tremendous impact on customer experience, and customer experience then impacts both word-of-mouth referrals and repurchase.

‘But that all starts after a customer has responded to a marketing message and decided they want to actually make a purchase commitment. Then, when they attempt to do so, that is one of the most fragile points in the customer relationship, because that’s when you either fulfil your marketing promise or you fail to fulfil it.’

Let’s be smart. I’ll trade you

Co-operation helps automaker deal with the distribution conundrumIt may be a far cry from toilet paper and paper clips to luxury automobiles. But Toronto-based JoAnne Caza, marketing director for Mercedes-Benz Canada, says that clever strategizing was called for last year, when its Smart car, which had been projected to sell 1,200 units by the end of 2005, sold 4,800.
She says the appetite for the tiny vehicle, whetted by an innovative marketing campaign, could only be satisfied by equally creative fulfilment strategies. And the only way of rustling up the 4,000-plus Smart cars sold so far was daily liaison between head office and dealers across the country, who agreed to swap stock back and forth.

‘Whenever a customer somewhere in the East wanted a certain model that a dealer in, say, Vancouver could part with,’ says Caza, ‘they would quickly get it down here on a train. And then other dealers would be willing to reciprocate.’

Mercedes-Benz isn’t the only car company making progress. U.S.-based supply chain consultant Bret Kinsella says that in general the industry has led the charge in getting product to consumers in an efficient manner. He adds: ‘It used to be that if people wanted certain features on a car, they were willing to wait a couple of months. But that’s no longer true and the vehicle industry has become phenomenal in meeting their demands.’