Efficient local assortment differentiation

Transcription

1 CONSUMER MARKETS Efficient local assortment differentiation Selex Barilla case study ADVISORY

2 Who we are 2

3 Selex 2004 Turnover 6,300 million Marketshare 7.6% 2,646 stores in the Hypermarket, Superstore, Supermarket and convenience channels 22 associated groups with around 25 storebrands Associated firm leading the project of this case study is Megamark (142 stores) with storebrand: 5 th largest retailer in Italy 3

4 Barilla 2004 Turnover 2.5 billion Leader in pasta and crispbread 4

5 Pasta: the essence of Italy Ranked among the top 10 in the Italian grocery business Champion of Italian gastronomy: 26 Kg per capita, SKU s, 140 manufacturers Highly localised People needs Pack size Unusual shapes Local players Need to manage the Category meeting local expectations while remaining efficient 5

6 Our joint project on the Pasta Category Category Management project in South Italy Scope: 130 stores Small super format ( m 2 ) Puglia region concentrated on 5 regional cities Objectives: Improve performance Improve efficiency Leave room for local flexibility 6

7 The situation at the start of our joint project 7

8 We soon realised that the overall performance of the category was outstanding 2,2% Pasta share of store sales 2,8% 3,0% Italy Region Selex our sales were largely in line with the regional market 8

9 The problem was the level of service to the shopper and low in-store efficiency More space to the category than others but many OOS s and high ordering & replenishment costs lots of products with only a single facing 9

10 Our assortment was similar to that of a hypermarket Average number of items on shelf Average number of specialty items on shelf Regional Hyper+Super Benchmark Selex Regional Hyper+Super Benchmark Selex but we are a chain of convenience stores and small supers! 10

11 We had more space and many more items than our competitors Number of items per cluster and zone competitors Cluster Large Cluster Medium Cluster Small and little correlation between cluster size and assortment 11

12 WHY? 12

13 Pasta is a priority category for all retailers in the Puglia region People are more demanding then in other areas in Italy brand loyalty and variety of choice People change stores if they do not find their brand People are highly vocal especially in small store formats they tend to ask for their brand 13

14 The decentralised management of the pasta category has some negative side effects Assortment open/available to all stores Assortment decisions, ordering and merchandising left to store managers Offering not based on market knowledge Little continuity of the offering High level of resistance to imposing restrictions as in other categories! No retail network efficiencies 14

15 Our approach 15

16 Our approach was based on three criteria 1. Improve service to the Shopper Product availability in pasta Continuity of the pasta offering Completeness of the overall store offering 3. Improve the efficiency and effectiveness of assortment and display 5. Leave some freedom to store managers to customise their assortments 16

17 The first two objectives needed category management expertise FROM TO BASED ON 14.5 mt. shelf 13.5 mt. shelf Fixed number of shelves 290 items in assortment 92% market coverage 250 items in assortment 92% market coverage Fixed number of items by brand Store clustering and system of 3 zones 17

18 The objective to provide store managers with some freedom to decide, was more difficult no mono facings Change management proved a key part of the project! Clear brand profile 18

19 We devised a tool to set guidelines for managing the assortment at store level Zone A Zone B Zone C Fixed Flexible Fixed Flexible Fixed Flexible Cluster Small Granoro Divella Barilla Garofalo De Cecco Voiello Barilla Divella Granoro Riscossa Voiello De Cecco Divella Granoro Riscossa Garofalo Barilla De Cecco Fixed Flexible Fixed Flexible Fixed Flexible Cluster Medium Granoro Divella Barilla Riscossa Garofalo De Cecco Voiello Divella Granoro Barilla De Cecco Garofalo Riscossa Voiello Barilla Divella Granoro Riscossa Garofalo Voiello De Cecco Fixed Flexible Fixed Flexible Fixed Flexible Cluster Large Granoro Divella Barilla Riscossa Garofalo Ambra De Cecco Voiello Granoro Divella Barilla Riscossa Garofalo Ambra De Cecco Voiello Granoro Ambra Divella Barilla Garofalo Riscossa De Cecco Voiello 19

20 The tool mixes flexibility and strict rules to reduce the risk of mistakes A fixed and flexible assortment component Guidelines for the flexible component differentiated per cluster SKU s rankings to support brand choice for the flexible component Guidelines for managing promotions Guidelines for implementation 20

21 Results 21

22 The results show an over-performing shelf with improved standardisation ASSORTMENT max - 14 % min SALES + 6 % SPACE max min - 7 % 22

23 In the freed space we could merchandise complementary products Pasta and pasta sauce on the same shelf to favour joint purchasing Oven sauces Pasta Pasta sauces 23

24 Let the store managers talk 24

25 Grazie! 25