Jul 08, 2003
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When manufacturers work closely with retail partners, they may
find they get bogged down in specific tactical issues and lose
focus on the strategy behind growing the business.
David Sheehan, VP/Managing Director of Trade Development for
Nestle Purina, definitely found himself in this position. Mass
market and specialty stores within the pet care category had a
firm commitment to selling pet products -- but what about grocery
“It’s a higher hurdle for a grocery store,” Sheehan says.
Working with a team of researchers, he came up with a targeted
six-step approach to accelerating growth within grocery
-> Step #1. Select a single retailer to focus on
Sheehan wanted a retailer that was already doing well selling pet
care products. He also wanted one that was successful in going
head-to-head with the mass market and pet specialty stores.
For strategic reasons, he chose to look in Central/South Texas.
He decided on H-E-B, the main grocery retailer in that area and a
chain whose main competition is mass market. “They have great
store loyalty, great traffic, a lot of inherent strengths, and
are committed to store brand development,” he says.
The object was not to “fix something that’s broken,” but to build
on the existing strengths of the retailer to help them retain and
regain sales that may have been lost to other channels while in
turn (of course) growing Nestle Purina sales.
-> Step #2. Market assessment
The team looked at H-E-B stores, as well as other retailers in
the Austin and San Antonio area that H-E-B reaches, to identify
market and category trends in the following areas:
a. Sales: Based on a million dollar ACV (all commodity
volume), they identified which stores were selling the most
within the category.
ACV looks at relative sales on the category level rather
than at absolute dollar sales.
b. Varying factors within stores: They looked at each store’s
“total commitment to pets,” based on these factors:
Call-outs at the ends of aisles
Location of the category within the store
Presence of specialty items (dog leashes, pet toys)
c. Idea generation from other categories: They also studied
how retailers in the area support different categories,
such as the chip or baby care aisle, in their stores.
Which categories, they wondered, were stores making an
obvious effort to make a customer destination?
-> Step #3. Isolate variables
Using a linear regression model, the team looked at a
statistically significant number of the stores they had studied
to understand exactly what effect individual criteria have on
“Basically, we go in and diagram store shelves and take a look at
the entire store environment to understand how the pieces fit
together,” says Frank Saulsbury, Managing Partner of Nestle
Purina's research partner for this project, Trademarketing
Incorporated. “From that we come back with a better understanding
of the effect of each of those variables.”
-> Step #4. Identify best practices
Based on ACV and the effects of the different factors within
stores, they identified what the successful stores were doing.
“We don’t know what we’re looking for when we start a project,”
says Saulsbury. “We look at dollar sales and then go in to try to
see what’s causing the difference.”
-> Step #5. Research analysis
Nestle Purina already had quantitative and qualitative research
on H-E-B’s customer market and the market in general, including
syndicated data, household panel data, and consumer segmentation
So, the team combined the existing data with the new data to
measure how good a job H-E-B was doing of converting customers to
buy within the store, and to benchmark that information against
Results: They discovered that marketing pet care as a category
destination drove the higher-volume stores. The opportunity for
greater sales lies in categoric expansion, which leads to
upselling the consumer.
“What’s important to the retailer is how to develop the category,
whether it’s total pet care or total canned vegetables or total
chewing gum,” says Saulsbury.
This is less of a new initiative than it is a “re-focus on
category,” Sheehan stresses. Specific recommendations included
better in-store signage and fixtures.
-> Step 6. Communicate to the retailer
While Sheehan and his team have shared some of the insights with
H-E-B, the main recommendations will be showcased during a top-
to-top planning meeting within the next month or so.
The meeting will include senior level management from H-E-B in
merchandising, assortment and promotion plans, store operations,
“Some of our recommendations -— what their stores look like,
signage, fixturing -— will require an investment on their part,”
Sheehan says. “For it to actually be implemented, we’ll need
store operations support. It’s important to get senior level
Coming out of this meeting, Sheehan imagines they will have come
up with a shared action plan to grow H-E-B’s pet care category
and to increase Nestle Purina sales.
Bear in mind that this is not a promotion of the month, Sheehan
says. Don’t expect to have a 30-day turn-around.
Sheehan’s team had originally thought they’d give recommendations
within three months; in reality, it will take more like six.