Efficient Consumer Response: a Preliminary Comparison of U.s. and European Experiences

Within the domain of Electronic Commerce, Efficient Consumer Response (ECR) is a grocery industry management strategy designed to make the industry more efficient and responsive to consumers' needs. Although ECR originated in the US, the concept has been adopted in Europe, Australia and, slowly, in other regions. This paper discusses the concept of ECR and its development, and then examines the status of ECR implementation in the US and Europe. A cross-regional comparison of the two is presented, based on the ECR tracking surveys conducted by Kurt Salmon Associates in the US and Europe. The paper concludes with some suggestions regarding possible extensions to this preliminary comparative work. 1. ELECTRONIC COMMERCE WITHIN THE GROCERY SUPPLY CHAIN ECR Efficient Consumer Response (ECR) came into existence in the US as a direct response by the grocery industry to threats from alternative store formats/types – such as discount stores, convenience stores (for example, 7Eleven, which started the trend of opening early and closing late at night), deep discount drug stores (retail pharmacies which also sell low-price consumer items), hypermarkets/ supercentres, and the rather quaintlynamed “category killers” which offer specialised, limited-line discount goods (such as toys or sports goods). These alternatives to the supermarket began to take market share away from the major supermarket chains in the late 1980s and early 1990s (Synder 1994). The pressures from competitors in this variety of alternative store formats then forced the United States grocery industry to re-examine its supply chain and, as a result of the study, a new initiative known as ECR was introduced (Tripplet 1994). The term “Efficient Consumer Response” came into general usage at the Food Market Institute Conference in January 1993 in the United States (Robins 1994). ECR is a grocery industry supply chain management strategy aimed at eliminating inefficiencies, and excessive or non-value-added costs within the supply chain, thus delivering better value to grocery consumers. It is designed to re-engineer the grocery supply chain away from a “push system” in which manufacturers “push” products into stores, towards a “pull system” in which products are “pulled” down the supply chain into the store by consumer-demand information captured at the point of sale (Kurt Salmon Associates 1993). 1 This paper was published in the proceedings of "Bled'98" -11th International Conference on Electronic Commerce, Bled, Slovenia, June 8-10, 126-143.