Making the Most of the Cold Vault

Boost profits with variety

It’s no secret that beverages are an important part of a convenience shopper’s trip. In fact, 70% of shoppers intend on buying a beverage on any given trip to a c-store, according to the Nielsen/Affinnova Assortment Optimization Study from February 2015. But did you know that the variety of beverages you carry could be the factor that brings customers to your store instead of the store across the street? woman choosing from cold vault

Per the study, when shoppers were asked for the primary reason they chose one store over another, bottle and can variety was the third most important driver, and shoppers said they were looking for more variety in almost every beverage category. The challenge is in figuring out how you can leverage these key insights about shoppers. If shoppers want more variety, how do you give it to them? Do you invest in larger stores with bigger vaults?

Maybe there’s an easier way.

Make the space work harder. The most common way to allocate space in this channel is by “fair share,” meaning that if a product has 10% of the sales, it gets 10% of the space. While that’s fair for the manufacturer and easy enough to figure out, it isn’t fair for retailers or their shoppers. It doesn’t make for efficient assortments that allow retailers to add the variety that will grow beverage sales.

The reality is that giving an item space based upon sales results in “dead-profit zones.” Top-selling items end up with far more space than they need to prevent out of stocks, which means retailers don’t have the space to add innovative items that are the future of the business—or those items that are “on fire” for competitors that you couldn’t find space for in the last reset.

To satisfy more of your shopper’s needs, and maximize cold-vault sales, use a days-of-supply methodology to determine how much space to allocate to any one item. The grocery/mass channel moved to this methodology years ago and has been reaping the benefits. All top major grocery/mass retailers are using a DOS method. By eliminating dead-profit zones, retailers may find that they can free up 10%-20% of the space in the vault, providing them with plenty of room to add those hot new items they’re missing out on. This method also increases turns and reduces inventory costs, which are critical to the bottom line.

This post is sponsored by Keurig Dr Pepper


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