CARDS Deals Retailers a Good Hand
By David R. Black
Determining the price/value relationship of various lamb products has become easier for retailers, thanks to a computer software program that allows retailers to predict meat production variables and make better purchasing and merchandising decisions based on in-store, meat-case scenarios.
CARDS-Computer Assisted Retail Decision Support-will allow retailers to be more effective and efficient when merchandising lamb, says Jay Kothman, a Menard, Texas, lamb feeder.
"Using the program will help retailers discover different ways of merchandising lamb, as well as give them an opportunity to improve purchasing practices," Kothman points out.
Versions of the software are also available for the pork industry, but it is the beef industry where CARDS has had its most success to date, claims John Walter of the Texas Agricultural Experiment Station.
The program has shown that retailers can make a healthy profit by purchasing and reselling the more closely trimmed beef that consumers have come to demand. As a result, some packers who had never shipped closely trimmed beef now ship up to 25 percent of their company's product to retailers in that form. Moreover, some companies predict they will sell nothing but such products as early as 1995, Walter says.
"I never thought this would be so successful," Walter says. "It has really been a part of making beef more healthful and affordable-and more profitable."
Consumers are also buying less meat that they have to trim themselves. Retailers and packers found themselves in a quandary over who would bear the costs of trimming and disposing of fat, a process that cost the beef industry about $4 billion a year.
Don Fender, director of field services for Minneapolis-based Excel Corp., who helped pioneer closely trimmed products in the 1980s, said the company found marketing of the product difficult because "we couldn't convince retailers of its value."
The onus of trimming was taken on by retailers, who did not believe they could profitably sell meats trimmed at packing plants. Therefore, they did not buy them, which kept packers from developing those product lines.
CARDS helped change that. It has shown how labor costs, quality and yield grades, fat-trim levels, price paid to packers, and other factors impact bottom-line retail profit margins.
Retailers can use the software to make decisions on which kinds of meat they might purchase from packers, whether it is the more closely trimmed, boxed meat or larger cuts that retailers must trim themselves.
Retailers have seen that they could indeed afford to purchase the closely trimmed beef or pork from packers, who charge a premium to trim what was cut off by consumers.
"It has become a significant percentage of our total sales volume," Fender says. "It is also increasing rapidly and encouraging advances in our product mix."
Fender added that all 25 of Excel's meat consultants have laptop computers, complete with CARDS software.
Who's holding the CARDS?
And now, the lamb industry is in the CARDS.
CARDS was developed by a team of Texas A&M University and National Live Stock and Meat Board researchers. Funding for the project came from the Meat Board's lamb committee and the National Lamb Feeders Association.
The program is a macro-based Microsoft¨ Excel spreadsheet with thousands of data points used to predict yields, labor requirements, prices and profitability of different purchase and selling options. It is the most recent element of a communicating cutability project. Its objectives are to determine standard yields, time-needed labor required of various meat products, then create a system to implement that data for specific species.
H. Kenneth Johnson, Meat Board vice president of meat science, said CARDS will assist retailers in determining the value of a retail meat manager's merchandising technique and ideas.
"Every time you put a knife to a lamb cut, you change its value," Johnson notes. "What lamb CARDS does is help quantify the differences in the various cuts [a retailer] can make, giving them more flexibility in the merchandising and purchasing."
In addition, the program will help retailers determine the specific cost of fat on lamb cuts that they purchase, according to Jeff Savell, Texas A&M meat scientist and project coordinator.
"With CARDS, a retailer can see whether it's more cost effective to purchase lamb cuts with cover fat and trim it in-store, or whether they should purchase leaner products from the packing plants," Savell says. "It will more accurately identify the expense of fat purchased by the store.
"Ultimately, that information will be communicated back through the packer to the producer, who can manage his production practices accordingly," he adds.