SPACE

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SPACE MANAGEMENT
North Carolina ABC Supervisors Meeting
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Defining Efficient Assortment

• Efficient Assortment
• Retailer/Supplier process determining the optimal
  product offering within a category
• Offer assortment without duplications,
  encouraging trade-ups to increase profits
• Achieving target consumer fulfillment and
  producing enhanced business results

ASSORTMENT
FINALIZATION DELETION RETENTION
ADDITION VALIDATION VALIDATION VALIDATION
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The Key to Efficient Assortment Is
Differentiating Between Variety and Duplication
of SKUs
Defining Efficient Assortment

• Increases Shopper interest and visits to the
  section
• Adds incremental sales
• Strengthens Store Image
• Increases Consumer Satisfaction

• Has No Positive Effect on Shopper Traffic
• Dilutes segment sales across similar items
• Adds to Distribution and handling costs
• Frustrates Consumers looking for meaningful
  differentiation in items

Full service for consumer satisfaction needs to
focus on variety and avoid duplication
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Objectives of Efficient Assortment

• Increase sales and profitability for the
  customer/chain within the spirits category
• Offer optimum category segmentation based on
  consumer usage and purchase behavior
• Delete items that provide poor profit / sales
• Retain items that provide flavor or price point
  variety
• If a product does not have real differentiation
  and does not drive sales incrementally, the costs
  of carrying are likely too high
• Enable customer/chain the opportunity to sell new
  items that become available, due to additional
  available space freed up by reducing overall
  assortment

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Why Efficient Assortment is so Important

• There is Increased
• Consumer Satisfaction from having less
  Out-Of-Stocks on high performers
• Profitability because items with low turns and
  high cost may have very low ROII
• Cost Savings from an operational (stocking)
  administrative (buyers time) perspective
• Focus on More Profitable Items when there are
  fewer low equity, commodity brands

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Efficient Assortment Liquor Segmentation

• Vodka
• Rum
• Gin
• Tequila
• Cordial
• Broken out by Size and Price Tiers

• Blended
• Canadian
• Scotch
• Bourbon
• RTD

• Amaretto
• Coffee
• Cream
• Crème De
• Fruit Liqueurs

• Sambucca/Anisette
• Schnapps
• Shooters
• Specialty Liqueurs
• Flavored Brandy

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Efficient Assortment (Example)

• Liquor Segmentation
• Opportunities are identified based upon case or
  share growth
• Shelf space may be determined based upon sales
  performance

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Efficient Assortment (Example)
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Efficient Assortment (Example) 750ml Bourbon

• Observations
• Ultra Premium 750ml segment viable
• Some softness occurring with higher price points
• Ex. Jack Daniels Single Barrel, Basil Hayden,
  Bookers
• Brand leaders continue to drive sales and growth
• Ex. Knob Creek and Woodford Reserve
• Discos or assortment decisions should be based
  upon sales performance
• Draw an imaginary line, where applicable, and
  delete the items below line (excluding new items)

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Efficient Assortment (Example) 750ml Bourbon

• Observations
• Super Premium 750ml segment growing, but will
  require watching
• Increase in retails effecting performance (5
  Dollars / 1 Units)
• Mixed results from category leaders

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Efficient Assortment (Example) 750ml Bourbon

• Observations
• Premium Bourbon declining significantly
• Trade down to lower priced Bourbons???
• Premium Moonshine business down significantly
• Premium 750ml 1.8 without Moonshine
• Price Increases effected category leaders
  performance, but still showing positive growth

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Efficient Assortment (Example) 750ml Bourbon

• Observations
• Popular Bourbon declining significantly
• Trade down to lower priced Bourbons???
• Some of the Premium Moonshine business was
  absorbed by Popular
• Trade down in price points occurring within
  Popular 750ml Bourbon
• Jim Beam trading down to Evan Williams and
  Economy Bourbons
• Popular Traveler business is softening

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Efficient Assortment (Example) 750ml Bourbon

• Observations
• Customers are migrating towards Economy priced
  Bourbons from higher price points
• Solid growth being generated by category leaders
• Moonshine sales did effect overall Bourbon
  performance
• Dollars 4.6 (without Moonshine) / 3.6 (with
  Moonshine)

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Shelf Management Best Practices

• Consumer Driven
• The Consumer must be the focus of all decisions
• What does it Mean?
• Clear Categories and Segments
• Each category must have a clear block to improve
  category Shopability
• Logical Adjancies
• Categories as well as segments need to create a
  logical flow
• Example Tequila should be next to RTD or Cordials
• Usage for Tequila is to add to a RTD Margarita
• Usage for Cordials (Triple Sec or Grand Marnier)
  is mix with Tequila for Margarita
• Clear Signage
• Draw attention to categories, product
  differentiation, promotions, new products, etc.

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Shelf Management Priorities

• Segmentation Shopability
• Quality flows from top to bottom and left to
  right
• Shopability for the consumer - are products easy
  to find and logically organized with appropriate
  adjancies
• Fair Share of Space based on Volume and
  Profitability
• Are products receiving the appropriate space
  based on dollars, cases and profits generated
• Days of Supply
• Sufficient stock capacity to eliminate backroom
  stock and avoid out of stock situations
• Consistent with Retailers Objectives for the
  Category
• Overall Visual Appearance

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Basic Shelf Management Principles

• Be Consistent with shelf methodology
• Block Categories
• Signpost With National Category Leaders
• Consumers will be able to find categories based
  on well-known brands.
• Block Brand Families
• Makes it easier for consumers to find brands
• Set Categories based on Price Flow
• From eye level, consumers can shop the category
  vertically by price
• Allows for consumer trade up to the next price
  tier
• Allocate Space based on Volume Movement

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Bourbon Planogram Example
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SPACE MANAGEMENT
North Carolina ABC Supervisors Meeting