ECR Europe Forum '05. Shopper. Case Study Selex Barilla

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

Who we are… 2

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

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

Pasta: the essence of Italy Ranked among the top 10 in the Italian grocery business Champion of Italian gastronomy: 26 Kg per capita, 4.000 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

Our joint project on the Pasta Category Category Management project in South Italy Scope: 130 stores Small super format (400-1000 m2) Puglia region – concentrated on 5 regional cities Objectives: Improve performance Improve efficiency Leave room for local flexibility 6

The situation at the start of our joint project… 7

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

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

Our assortment was similar to that of a hypermarket … Average number of Average number of items on shelf specialty items on shelf 273 278 90 38 Regional Selex Regional Selex Hyper+Super Hyper+Super Benchmark Benchmark …but we are a chain of convenience stores and small supers! 10

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

WHY? 12

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

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

Our approach… 15

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

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 250 items in  Fixed number assortment assortment of items by brand 92% market 92% market  Store coverage coverage clustering and system of 3 zones 17

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

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 • Granoro • De Cecco • Barilla • Voiello • Divella • Barilla Cluster • Divella • Barilla • Voiello • Divella • Granoro • De Cecco • Granoro • Riscossa • De Cecco Small • Garofalo • Riscossa • Garofalo Fixed Flexible Fixed Flexible Fixed Flexible • Granoro • De Cecco • Divella • Riscossa • Barilla • Voiello Cluster • Divella • Voiello • Granoro • Voiello • Divella • De Cecco • Barilla • Barilla • Granoro Medium • Riscossa • De Cecco • Riscossa • Garofalo • Garofalo • Garofalo Fixed Flexible Fixed Flexible Fixed Flexible • Granoro • Ambra • Granoro • Ambra • Granoro • Riscossa Cluster • Divella • De Cecco • Divella • De Cecco • Ambra • De Cecco • Barilla • Voiello • Barilla • Voiello • Divella • Voiello Large • Riscossa … • Riscossa … • Barilla … • Garofalo • Garofalo • Garofalo 19

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

Results… 21

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

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

Let the store managers talk … 24

Grazie! 25

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ECR Europe Forum '05. Shopper. Case Study Selex Barilla

by ECR Community on Jan 09, 2010

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ECR Europe Forum ’05. Shopper. Case Study Selex Barilla — Presentation Transcript