By Leon Nicholas and David Zahn

With sweat breaking on your brow, you look again in disbelief at the distribution report for the new item your company has recently launched. How is it possible to achieve only 50% distribution of a new product just a few months after obtaining authorization for the item at virtually all of your customer accounts?

No doubt, you've shipped your cases, and POP has been sent out. Months of hard work, and millions in R&D–not to mention a massive budget of trade and consumer advertising–can all be sacrificed at the altar of execution.

How could this have happened, and who is to blame?

By retracing your steps you know that dozens of meetings took place with retail category managers, as you wove a tale of incremental sales and profits that would pour in from your new item. It promised to increase traffic, boost sagging sales and margins, and drive higher rings, revitalizing the category through innovation. The trade was excited, and with orders in hand, you were envisioning how you might spend your bonus. So what went wrong?

In many chains, product is forced-out from the distribution center, or warehouse, to the stores, but the kids on the night crews don't recognize it as a product they regularly stock, so most throw the case into back rooms. Brokers arrive to see if the new product has been cut in and have to fish the cases out from the multitudes of dented cans destined for reclamation centers. Recently, a new SKU of canned ravioli met this unintended fate at a Southeast retailer. The result: the item never made it to shelves in any stores.

Often when brokers arrive at a store to confirm that a new item has been properly merchandised, they find the item is not only missing from the "shelf-set," but there is no tag placed on the shelf with an empty space to denote where it should go. This results when retailers who can wield power like any other land baron when it comes to valuable real estate, refuse to allow brokers to "reserve space" with tags, for fear that unforeseen delays will lead to "gaps" with no revenue being generated from that location. (Plus, retailers strive to avoid the negative appearance of being "out of stock" on items).

Some stores, often the smaller ones, do not automatically get new items from a warehouse. They must manually order the entries (assuming they know they are available). Unfortunately, stores often hold off ordering new items until they sell existing supplies of the item being discontinued.

One unnamed mass merchandiser goes so far as to forbid brokers to cut in new items shipped to stores, claiming it's a corporate policy that only authorized store personnel may do so since every sales force rep says that his new product has been authorized for eye-level with four facings. Of course, these same managers often don't have copies of the planogram/don't know what's being discontinued. So regardless, they have to call the buyer to get direction. Needless to say, it's not a priority for them, especially with store personnel cutbacks.

Lastly, it is not uncommon for store managers not to like their broker rep. If the rep had promised baseball tickets, but in the end they fell through, the rep's reputation was toast.

The following three initiatives can help many a worried brand manager to overcome several inefficiencies referenced above.

Communication. Execution is too important to leave unmanaged. Through a regularly distributed report, headquarters can notify stores of new products that are in the distribution center to be forced out or ordered by the stores. Brokers' sales forces should receive this same weekly notice from retail hq's so they are "in the loop" on getting the product to shelf.

Data and technology. The information to maintain planogram integrity exists at many retail head offices, yet stores rarely are given access to it. As a result, execution in-store can be left to uninformed, if well-intentioned, store employees or by self-serving brokers. The availability of Web technology can be applied to ensure seamless communication between hq and stores. E-mail can be used to communicate critical new item details, with links to a Web site showing new products in a planogram, configured to each store or cluster. Brokers should be given access to Web sites at stores so that all parties are operating off the same platform and that open voids can be identified.

Alignment. Providing incentives to all parties on the level of in-store presence, not just selling to the chains, is critical. Additionally, the retailer's head office and operations personnel must be aligned on the importance of quickly and accurately incorporating new SKUs into the set to create excitement, reinforce a store's image and maintain any competitive advantage. With incentives aligned, discontinued items wouldn't remain on shelves for long, and trading partners can avoid situations where new items pile up, get lost or never make it to back rooms.

These recommendations are only a starting point in closing the gap between success and failure of new products. Significant sales dollars are simply lost when executional concerns are not accounted for. The industry spends too many billions on new items to fall short at the finish line.

Leon Nicholas is a vice president at Information Resources, Inc., and a former retail manager. David Zahn is a managing partner at Clow Zahn Associates, a sales consulting and training firm in Westport, Conn., focused on the packaged goods industry.

Copyrighted 2001 ASM Communications, Inc. Used with permission.