Getting to the shelf is the most challenging step in distribution
Last week we discussed the challenges in distribution. It can be one of the biggest hurdles to overcome as a brand is built. It also can also require a lot of money to get it right. We promised to focus on the third step this week-getting your product to the shelf.
Distribution is a 3 step process
After you have done the work to get your product produced and packaged, if you are selling in retail, you need to get it to consumers. You have 3 steps to get there:
1. Get the product from your production facility into a distribution network.
2. Get the product to the store
3. Get the product to the shelf
Step 3- Getting to the shelf
This is the shortest distance but the toughest to get right. Once your product gets in the store it has to get to the shelf. If it does not get to the shelf, all of the hard work and money you have spent will be wasted.
You will be judged by your product sales. You need to ensure the product gets to the shelf.
Plan o grams
The larger retailers use plan o grams to manage the shelf space. A plan o gram is an allocation of space to each product in the listing base. These ‘line ups’ are created based on sales potential, requirements for inventory, placement from listing fees and the placement in the category. The plan o gram is the supplier’s assurance their product will be in the same place across all stores.
Smaller retailers and specialty stores do not have the same resources, so shelf line ups are created at store level. A new product gets ‘lined in’ which means something comes off the shelf or the facings of existing listings are reduced.
Products in the plan o gram
When your product is in the plan o gram it is great if you can get a copy. Often stores will put them up in the aisle when they are making changes, so it is a good idea to grab a photo if you see it. You can also ask store employees if you have a good relationship with them. When you know where you fit you can check stores for execution.
One key difference from one retailer to another is standardization. Walmart stores are much more similar across the country than Loblaw or Sobeys. This makes the merchandising process more efficient. Walmart might need 2-3 versions of a pasta plan o gram. It is really dependent on the linear footage available. In Loblaw and Sobeys they might have 7-8 different versions because of the different stores they have to manage.
If your product is listed properly and in the plan o gram it should be on the shelf. If it is not you should start with the store then move to the office if the problem is not resolved.
There are a number of reasons why it is not there and you really need to keep digging until you find the root cause. If you don’t figure it out the out of stocks will persist and you will be judged by the sales you deliver (or don’t deliver).
1. Product is out of stock at warehouse-if this is happening store will receive shortage reports. Follow up with your shipping to understand who this could happen. You should be monitoring PO’s from customers. Do not assume they are right. Buyers are an entry level position and they buy from what the system tells them to.
2. Your product is in back room but never makes it to the shelf. If the store is on computer assisted ordering (CAO) the system ‘thinks’ the store has inventory and there are 0 sales so they do not order any more. You need to work with store people to get the inventory out to the shelf and get sales going.
3. There can be an issue with the re-order level. If the system is set for a certain amount of inventory no new product will be ordered until that inventory is depleted. If there is nothing to sell it will never get to the re-order point and order more product. Until you get this resolved you will be out of stock.
4. Inventory level in the system is not correct. There are times a store does not receive a product or receives it incorrectly. This issue will impact the re-order point as well.
5. The product could have been on promotion and the volume was not adjusted for the lift.
When you know there is inventory in the warehouse there is always a reason for an out of stock. Keep digging until you figure it out. You can spend a lot of money on trade spend, marketing spend and other initiatives to drive sales. If there is nothing to buy you will not get the return on your investment.
If you are in the plan o gram and delivering direct to store it is your responsibility to have a process in place to keep the shelf full.
Regardless if you are delivered through the warehouse or direct to store you need a process to monitor your in stock position. These audits can be done by your own people or there are third party services such as field agent that can do this work for you. Create data over a period of time to understand what is happening and which stores need more focus.
Share the results with your customers. Some think they are perfect and do not take the facts very well. Others want to work with you to ensure in stock position is good and you both maximize sales.
One thing we continue to learn is people want useful information in their business, but not too much at one time. As we were creating our newsletter this week, we realized this topic is a big one. We will continue next week with the space devoted to products that are not in the plan o gram. Often these are items in the ‘local’ program or certain departments where plan o grams are more difficult to maintain.
Next week we will dedicate the newsletter to getting to the shelf if you are not in the plan o gram. There is lots to talk about to ensure you have the right in stock position and maximize the sales opportunity.
Peter
SKUFood Recipes for Success Podcast
The response to our SKUFood Recipe for Success podcast has been great. We want to thank everyone who has been with us as a guest. So many interesting conversations about our industry.
With thirty-three years on the retail side, Eric has honed his skills in distribution center operations, health and safety, process improvement, and more. His diverse expertise spans from quality assurance to procurement, bringing a wealth of knowledge to the table.
But Eric's journey doesn't stop there. For seven years, he's lent his talents to the supplier side, excelling in sales and marketing roles. His contributions extend beyond individual companies, as he's actively involved in industry organizations like the CPMA and CFIA advisory board, where he's made a lasting impact.
Currently the Director of Sales and Business Development at Algoma Orchards, Canada's largest independent apple grower, Eric continues to shape the future of the produce industry.
Join us as Eric shares his insights, lessons learned, and the secrets to cultivating success in this ever-evolving field. Whether you're a seasoned professional or just starting out, this episode is sure to leave you with a recipe for success.
Food Safety impacts consumer trust
Food safety issues are always a reminder to everyone in this industry about the vigilance we need to have, Issues can happen to the biggest or smallest producers, processors, retailers and food service. They will happen and we need to learn each time to prevent issues in the future.
We sometimes assume with a food safety issue like this that it is beef but it can be any of the additional ingredients.
I do have travel coming up to Calgary, Saskatoon, Winnipeg, Vancouver and Lethbridge so if you want to connect or have an even in any of these locations give me a call or send me an email.
