2017 Category Management & Shopper Insights Conference

Transcription

1 2017 Category Management & Shopper Insights Conference

2 Dr Pepper Snapple s Category Captainship at Target Optimizing Assortment and Flavor Variety in the Aisle Barrie Berquist Category Manager Derrek Schulte Senior Buyer

3 Presenter Profiles Barrie Berquist Category Manager 7 years Category Management experience; 4 years at DPSG Category Captain: Carbonated Soft Drinks (CSDs) Derrek Schulte Senior Buyer Beverages 4 years of Merchandising experience at Target 7 years CPG experience with Procter & Gamble

4 Agenda Introduction to Target and Dr Pepper Snapple Group Methodology and Process Overview Adjusting for Units Sold Off Display Plan-o-gramming Endcaps Next Steps

5 Target quick facts Target has: 1,795 stores in the United States 38 distribution centers in the United States 341,000 team members worldwide Online business at target.com Our Guests: Median age of 40 Median household income of approximately $64K Approximately 43% have children at home About 57% have completed college

6 Dr Pepper Snapple Group Great brands across a diverse portfolio Soft Drinks Juices/Drinks RTD Tea Water Premium CSD Mixers Energy Snacking and Other Partner Brands

7 Dr Pepper Distribution Systems Coke Aligned Sales Organization (CASO) Pepsi Aligned Sales Organization (PASO) Packaged Beverages (PB) Independent Sales Organization (ISO) 40% 44% 15% 1%

8 Dr Pepper Distribution Map CASO System PASO System PB System ISO System

9 Brand Flows and Pepper Placement Pepsi Led Sets Coke Led Sets Coke Distributed Coke Distributed DPSG Distributed DPSG Distributed Pepsi Distributed Pepsi Distributed

10 Methodology and Process Overview

11 Complexities of Building POGS at Target Store Volume Carbonated Soft Drink Volume Market Shopper Demographics Fixtures Profiles Store Format Set Size Presence of Premium Set VS Coke led vs. Pepsi led sets Distribution of Pepper

12 Objective #1: Shift the mix toward smaller packages 12 Packs 2 Liters 6 Pack.5 Liter 8 Pack 12oz 7.5-8oz Mini Cans Other Source: Nielsen, Target FYTD thru

13 Objective #2: Capitalize on Flavor Growth Examples of Colas Examples of Flavors Source: Nielsen, Target FYTD thru

14 Planogram Generator Build & Test Template POGs Template Planogram Define & Prepare POGs Store Equipment (Target Planograms) Data & Rule Sets Generate POGs Review POGs Final Planograms

15 Days of Supply Methodology Allocates space based on an item s strength analyzing by SKU not Manufacturer No interpretation decisions are fact based learn from scanning history! Calculates minimum levels of inventory needed between distributor visits. Accounts for the different package dimensions More efficient use of inventory, frees up space for more variety and new items on shelf Reduces Out of Stocks Increase Category Turns Satisfies Consumer Demand Calculation: Days of Supply = Shelf Capacity (# Facings x Depth) / Daily Unit Sales 15

16 Prepping the Reset Data (All Manufacturers and Packages) Pull 52wk Data Calculate Deletes Calculate New Items Adjust for SKU Changes Adjust for Anomaly Weeks Adjust for Units Sold Off Display

17 Adjusting for Units Sold Off Display

18 Situation The shelf needs to support the inventory that consumers are buying in the aisle. Displays offer additional inventory during promotions. What percent of units are actually sold off display during promotion? VS.

19 Our Previous Method For 12 packs, remove 50% of promoted unit sales from the top 9 SKUs by store for each manufacturer SKU #1 SKU #1 SKU #1 SKU #2 SKU #2 SKU #2 SKU #3 SKU #3 SKU #3 SKU #4 SKU #4 SKU #4 SKU #5 SKU #5 SKU #5 SKU #6 SKU #6 SKU #6 SKU #7 SKU #7 SKU #7 SKU #8 SKU #8 SKU #8 SKU #9 SKU #9 SKU #9 Previous Method Assumptions: 1) An endcap usually displays about 9 SKUs 2) An equal amount of display volume is coming from each of the top 9 SKUs 3) Each manufacturer has an equal number of features and displays Coke Pepsi DPSG

20 Determining Units Sold from the Shelf Determine volume generated from the shelf to determine true holding power. Total Units 50 Base Units = + 18 Increm l Units 32 Days of Supply Methodology Total Units = Base Units + Incremental Units Nielsen breaks out Incremental Units into four buckets (in blue box). Increm l Units Inc Unit Tmp Display only 9 32 = + Inc Unit Feat & Tmp Disp 15 + Inc Unit Feat only 5 + Inc Unit TPR only 3 Our DOS methodology extracts Units best represented by temporary displays (in red box) from Total Units which equals Units Sold From Shelf. Increm l Units from Tmp Display 24 Inc Units Tmp Display only 9 = + Inc Units Feat & Tmp Disp 15 *BASE VOLUME is volume generated in the absence of any promotion (displays, features, price reductions). Total Units 50 Increm l Units from Tmp Display 24 - = Units Sold From Shelf 26 20

21 12 Pack Display Sales by Brand Source: Nielsen Scantrack ; 52WE

22 2 Liter Display Sales by Brand Source: Nielsen Scantrack ; 52WE

23 Our New Method 12 Packs 2 Liters All Other Packages Tier 1 Remove X% of unit sales from top 10 SKUs Tier 2 Remove Y% of unit sales from next largest SKUs Remove Z% of unit sales from top 10 SKUs Did not remove any sales Tier 3 Did not remove any sales from the rest of the SKUs

24 Example of 2 LTR Change Before vs. After Before After 5 Incremental 2-liter SKUs added to assortment

25 Example of 12 Pack Change Before vs. After Before After 7 Incremental 12-pk SKUs added to assortment

26 Results of Methodology Change CSD category +1.2 pts post transition Flavors +1.5 pts Colas +0.9 pts Flavored CSD percent of mix = +1 point Reduced Cola 2 liter facings allowed for expansion of 6pk.5L package which is +28% Increased assortment despite shrinking set sizes 2 Liters gained 4,504 or +5.3% points of distribution 12pks gained 7,587 or +6% points of distribution Increased flavor variety 2 Liters Facings Gained Schweppes Ginger Ale 1223 Cherry Coke Zero 762 Barq's Root Beer 721 Fanta Strawberry 617 Mello Yello 610 Diet Cherry Dr Pepper 589 Cherry Dr Pepper 586 Fanta Grape 553 Mountain Dew Voltage 528 Crush Grape Pk 12oz Can Facings Gained CF Diet Coke 1869 Diet A&W Root Beer 1347 Diet Canada Dry 1305 Sunkist Orange 1147 Canada Dry 966 Fanta Strawberry 894 Vanila Coke 859 Fanta Grape 838 Diet 7up 783 Squirt 774

27 Plan-o-gramming Endcaps

28 Bi- and Tri- Manufacturer Shared Ads Tri Manufacturer Ad

29 Bulk Endcap Versions Endcap Variations # of Stores 3x64 (33/33) 1 3x84 (18/18) 51 3x84 (18/22) 9 3x84 (18/33) 20 3x84 (22/22) 72 3x84 (28/22) 2 3x84 (28/28) 161 3x84 (28/33) 1 3x84 (33/22) 11 4x64 (22/22) 7 4x64 (28/22) 44 4x64 (28/28) 4 4x64 (28/33) 5 4x64 (33/22) 2 4x64 (33/33) 1 4x84 (18/18) 55 4x84 (18/22) 100 4x84 (18/33) 63 4x84 (22/22) 547 4x84 (28/22) 1 4x84 (28/28) 336 4x84 (28/33) 4 4x84 (33/22) 87 4x84 (33/33) 2 5x64 (28/22) 4 5x64 (28/28) 4 5x84 (28/22) 4 5x84 (28/28) 22 6x64 (28/33) 5 6x64 (33/33) 143 6x84 (33/33) 1 7x84 (18/33) 1 Grand Total different Endcap variations -5 different widths -2 different heights -10 different shelf depth combinations Most common version is 4x84 (22/22) 547 stores

30 Coke/DPSG Shared Bulk (Coke Bottles Pepper) Version B1 4ft, Even Shelf Depths Green: 7UP Brands Maroon: Dr Pepper Red: Coke Brands 2 Liters 8pk 12oz 12pk 12oz 30

31 Coke/DPSG Shared Bulk (Pepsi Bottles Pepper) Version B2 4ft, Even Shelf Depths Green: 7UP Brands Red: Coke Brands 2 Liters 8pk 12oz 12pk 12oz 31

32 Pepsi/DPSG Shared Bulk (Pepsi Bottles Pepper) Version B1 4ft, Even Shelf Depths Green: 7UP Brands Maroon: Dr Pepper Blue: Pepsi Brands 32

33 Pepsi/DPSG Shared Bulk (Coke Bottles Pepper) Version B2 4ft, Even Shelf Depths Green: 7UP Brands Blue: Pepsi Brands 2 Liters 8pk 12oz 12pk 12oz 33

34 Issues Yet to Resolve Communication Challenges with Internal Systems Field execution of POG d Bulk displays Inventory due to limited back room capacities

35 Questions?

36 Appendix

37 Space & Assortment Process Phase 1 Discovery Phase Phase 7 Communication Process Phase 2 Assortment Process Phase 6 Planogram Execution Process Phase 3 Data Process Phase 5 Merchandising Process Phase 4 Planogram Development Process