Reducing out of stock and days of cover

This is among the most challenging projects we’ve ever faced, but it was also one of the most rewarding. The biggest challenge was that there was no focus on the best selling SKUs, and that there was no permanent placement on floor. There were 23 interruption points in the store, but the shopper engagement in the category was very low. The store managers complained that they had little or no control over the category. The stores were like huge democracies; behaving like anarchies. Not very effective, and with poor efficiencies. The retailer promoted (price, space allocation etc.) B-brands more than A-brands - not optimizing the rate of re-purchase speed (built on speed of consumption in homes).

Before situation:

A: Out of stock level at 21%

B: Days of cover (inventory) at 9 days

C: 23 interruption points

D: Low shopper engagement in the category

After situation (What we did):

A: Created ‘Fruit to Drink’ octagon-module in the fresh produce section (Q3)

B: Introduced ‘Home Meal Solution’ Combos in two pizza-freezers (Q3)

C: Introduced a cooler (Q3)

D/E: Reduced from 23 points of interruption, to create a permanent beverage section on floor for best selling SKUs. We freed up space in the shelves, and ‘gave away’ the space to other categories (Q4).

Results:
There were some interesting results from these projects. The most encouraging feedback was from the retailer and the competition. The store managers were thrilled to finally have control over the category. The competition encouraged us to do more projects, and they started to help out. Their growth was good, as the projects were done in an objective manner. All in all, we completed 83 projects together over a three month period. We did not delist any SKUs, but the smaller items were moved from floor to shelf. In that way, we removed noise on floor and highlighted what was selling the most.

By the numbers:

• The category grew 213%

• Out of stock was reduced from 21% to 7% (-67%)

• Days of cover was cut from 9 days to 6 days (-33%)

The Freezer Racks were empty within 6-8 hours, and were not refilled before the next day. Shoppers thought the products were cold; hence the high velocity. Each rack had a capacity of 40 bottles. Not optimal, and required more effort to work better.

End note
It always pays off focusing on what sells. Retail is not about democracy, but rather a cynical prioritization on shoppers’ preferences. It is not just about speed of sales in store, but also the speed of consumption at home. That is the core foundation for the speed of re-purchase, and the development of the category.

A-brands are consumed faster at home; igniting re-purchase to happen at a faster pace.
B-brands slow down speed of re-purchase, and the category is hurt in average three weeks longer.