MECHANICSVILLE, Va. -- Higher margins. Stronger sales. An opportunity for a retailer to have his own voice in what products are offered in his store. These are just some of the promises that came out of a warehouse-delivery study conducted in 2003 by the American Wholesale Marketers Association (AWMA). Two years later, the association's Warehouse-Delivered Snacks Committee has a battery of evidence showing just how beneficial its multi-vendor endcap (MVE) program can be.
The item performance was pretty amazing. We were able to increase the item performance [image-nocss] vs. in-line by 67.8%, said Russ Quick, marketing manager for Fas Mart Convenience Stores, during a CSPNetwork CyberConference entitled Capitalizing on Candy & Snacks. That's pretty impactful with additional placement of MVE items.
Click here to view an on-demand replay of the cyberconference, sponsored by AWMA (free to retailers and wholesalers).
Fas Mart, Mechanicsville, Va., tested the MVE concept in 58 of its 161 stores beginning in mid-2003, and has since expanded it with a full recommendation that other retailers give it a shot, as well.
Our initial results were pretty amazing, Quick said, noting an 18.5% increase in sales and a 22.3% increase in margin dollars. We were very happy with what we did considering where we placed this MVE. Fas Mart initially placed the endcaps in the back of the store near the cold vault because of restrictions set by a contract with direct-store-delivery (DSD) companies.
However, the success of the MVE, which essentially allows a retailer to place candy and snack products from various manufacturers from a single wholesale supplier on a single rack, has allowed Fas Mart to reduce its dependency on DSD manufacturers. More than 50% of the salty category used to be [from a single DSD supplier]. Now they're less than 20%, Quick said. So we've shifted our delivery model over to a heavier warehouse focus.
That has meant more freedom in choosing what products to stock, which is precisely the point of the MVE program, according to Marty Monserez, convenience channel leader forProcter & Gamble and a member of the Warehouse-Delivered Snacks Committee. Retailers need to find the right balance to maximize their business, he said. There's benefits to DSD products that sell well, and there's tremendous benefit in warehouse snack products that sell well and deliver high margins.
But it takes tenacity to make a warehouse-delivered program work, Quick said. It boils down to whether the retailer has a commitment to the category or has the resources and is going to structure their contract toward the warehouse delivery, he said. It takes a commitment from both [management and operations] because the stores have to order, they have to execute, they have to put out the products. And when you put a rack in the front of the store, it's going to sell.