Efficient Consumer Response Initiatives in 1990s

When one refers to International Retail business, the comparison is mainly referring to the European and US markets. ECR or Efficient Consumer Response initiatives in the 1990s changed the face of the International Retailing business in Europe as well as US.

The studies covering the entire supply chain from suppliers to the end consumer were carried out in both the regions and solutions were designed. However the way that the regions reacted to adapting the supply chain solutions and the rate of absorption as well as change was different between the two geographies.

Europe took to ECR implementation whole heartedly and benefitted through innovation. Tesco and Sainsbury who were one of the earliest adaptors of ECR managed to save several hundred millions of pounds by reworking their supply chain solutions and re-engineering the entire process as well as strategy from procurement, manufacturing to logistics and retail store outlets.

Overall the ECR implementation was embraced effectively by UK, France and German Companies. ECR process reduced the overall inventory holding to 25 days, while in the US the inventory holding remained as high as 61 days stocks. Overall the response from US was poor as compared to Europe. The reasons could be attributed to the fact that both Europe and US are very different markets and the trading environments too are varied. The grocery trade is highly concentrated in Europe while in the US it is fragmented. Secondly the fashion industry in Europe is well developed and mature in terms of fashion designers as well as labels while in the US the industry is not highly structured. When it comes to sourcing and the equation with manufacturers, both the markets function in different ways. US on the other hand tends to be more advanced in marketing and sales promotional activities as well as consumer relationship management activities which is not adapted aggressively by the European markets.

Further comparison of Europe and US retail market brings out the differences in terms of local culture as well as consumer choices too. US market tends to have larger spread of area for the stores while in Europe there are restrictions with reference to the location as well as the size of the stores. US stores are more flexible in the stores operations and timings while in Europe the store timings are strictly followed giving lesser choice to consumers. Studies and surveys have also brought out the fact that the consumer behaviours in both the regions are different. The US citizens generally seem to buy groceries and shop for food items in bulk. They tend to hold inventories in the garage or basement which could explain the reason for higher inventory build up in the supply chains. Europeans on the other hand do not have the right kind of large format stores that encourage such bulk buying and hence the trends are different.

The need for supply chain solutions vary between Europe and US. Europe consists of several formats of retail trade outlets from super markets, mega stores to super stores and hyper markets. US generally have super market and large format stores that stocks and sells all items under one roof. European network of super markets and stores as well as the manufacturers and supplier locations being spread all over, the supply chain solution has evolved around the concept of building Regional Distribution Centres which warehouse in bulk and distribute to the stores on call basis or as per schedule. In the US, the supplies are predominantly based on import and the local supplies are affected to the large format stores directly.

In all respects we find that the European markets and consumers are different from the US markets and consumers. Therefore both the regions have had their unique ways of evolving and responding to market conditions as far as the supply chain solutions and ECR initiatives are concerned.