CASE STUDY: Grocery Channel Success
How to get serious about the Grocery Channel – a case study in seasonal ranging, category development and promotional effectiveness.
The client was a pharmaceutical giant, well versed in ethical medical and pharmacy sales. We had already trained their pharmacy and medical sales teams and had strong credibility in the organisation.
They began to recruit grocery specialists to manage the relationship with that channel which was then, as now, intent on putting pharmacies out of business.
This case illustrates the importance of addressing major market issues upfront in consulting projects. Customers and client staff will accept any level of change if they have proof that it will lead to results.
The incoming Account Specialists “knew the game.” The issue was to build credibility with retailers and demonstrate what was achievable, quickly. We identified 3 focus areas together:
- Seasonal ranging: Success rates in winter ranging were woeful. The easy, early success…to cause management and customers to pay attention, would be to fix that. The seasonal sell-in was imminent
- Analgesics category management: Retail category management was embryonic here: section size too small; too little emphasis on contemporary formulations; underfacing of best sellers
- Promotional Effectiveness: The client had one power brand and a long tail of small brands. Fixed promotional charges were still in place and the smaller brands all made losses on promotion. The structure of trading terms was forcing them to pour valuable resources down holes in the ground
Action and Results
We worked with the team to create Seasonal Range Presentations which delivered the highest ever distribution of winter cough and cold products. That created momentum.
The Analgesics category development presentation was fact based and compelling. The only thing we could not prove was the probable impact of a 30% increase in overall category space. In the event, all retailers accepted the proposal and, in Year 1, category sales increased 30%. Our client’s products were featured strongly in relays and increased sales by 40%.
The Promotional Effectiveness issue was easier to handle in an environment of innovation and success. They persuaded the two leading retailers to accept variable investment for all small brands (no fixed charges). This increased the number of promotions, overall sales volumes, promotional profitability for the client and “co-op advertising” accrual for the retailers…an all round win-win.
As a postscript, the client’s one power brand, selling $10 million per year then, sells $100 million now.