Expert Insight: Guest Contribution

By Eric Peters,

President, TrueDemand Software

Date: December 17, 2009

Can You Market a Hole on the Shelf?

Shopper-Driven Supply Chain - Working as One to Satisfy Demand at the Shelf

Thirty percent of shoppers from around the world wait until they are in the store to decide which brand they will buy.  Nearly 20 percent will buy from categories they had no intention of buying from before entering the store.  With so much uncertainty at the shelf, it is no wonder that CPG companies are focusing on shopper marketing.  But can you market a hole on the shelf?

The shopper is your ultimate customer, but with so much focus on shopper marketing, we sometimes forget about the impact that operations can have on that customer.  It is the supply chain that ensures your product is on the shelf, in the right place, at the right time when the shopper is standing at the shelf making a buy decision.   So how do CPG companies align their retail account teams, store merchandising operations teams and supply chain teams to work as one to satisfy shopper demand at the shelf?

The first step is to identify what is going wrong in the retail store at the item and location level on a daily basis — be it out-of-stocks or a promotion that is misfiring. Once you have identified a problem, you can assign root causes and develop directed tasks to solve them.  In many cases, these improvements can result in a 2 to 4 percent increase in sales.  By providing granular, directed tasks, it is possible to align your operational assets to support a shopper-driven supply chain. 

Alignment starts at the shelf.  Most CPG companies employ some sort of merchandiser in the store, whether in-house or outsourced to a sales and marketing agency.  The traditional method involves a merchandiser visiting a store to survey the shelf and look for gaps.  By creating directed tasks, you can both reduce the number of tasks performed by the merchandiser and increase his effectiveness. From the merchandiser, you can also gain valuable shelf information of what is happening at the store to improve the overall supply chain performance. 

Step two is for CPG companies to get this information to their retail account teams so they can work collaboratively with the retailer to satisfy shopper demand and to help drive incremental sales.  With visibility into sales and supply chain information, the retail team will have the data required to make recommendations to the retailer to change the forecast, change inventory levels or make specific-store or distribution center-level recommendations that will lift sales at the shelf.

Finally, the third area is the supply chain.  If the supply chain breaks down, the greatest shopper marketing in the world will not be able to sell a hole on the shelf.  Demand needs to be forecast daily at the item location level and that information aggregated to drive supply chain performance.  This information needs to be used to create the optimal levels of inventory that can support the highest levels of performance at the shelf and make supply chains more responsive to shopper needs.

These are the steps required to create a shopper-driven supply chain.  It is about store operations, retail replenishment and account teams, and supply chain all working as one to satisfy the demand at the shelf.  This singular understanding of demand will make sure you are not marketing a hole on the shelf.

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About the Author

Eric Peters is a co-founder and former Chief Executive Officer of TrueDemand Software. In December 2009, TrueDemand Software was acquired by Acosta Sales & Marketing and Mr. Peters assumed the position of President, TrueDemand.

Mr. Peters has 25 years experience in the consumer goods and retail supply chain and is recognized as a leading authority on the subject.   He has been featured and quoted in hundreds of articles and stories on supply chain, is a contributing author to several books on the subject of supply chain, and has received numerous industry awards and recognition for his contributions to the supply chain.


Peters Says:

Demand needs to be forecast daily at the item location level and that information aggregated to drive supply chain performance.

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