ATLANTA -- Taking the next step toward its goal of rolling out an efficient assortment program to maximize sales, the Atlanta division of Kroger Co. will revamp, by June, the tea category across its 150 stores in the region.
The program will be based on "store clustering," which involves analyzing profiles of tea drinkers against the profile of shoppers in a particular store or group of stores. By doing so, the retailer and the manufacturer are able to determine the optimal type, quantity, promotion and presentation of teas in each store.
Cincinnati-based Kroger has also worked on efficient promotion analysis of teas with Lipton, Englewood Cliffs, N.J. Last month, the retailer and manufacturer evaluated how they have been promoting the tea category and explored ways to maximize gain in the future. Potential promotional methods include displays, cross merchandising and meal solutions.
Noting that the iced-tea business is very good in the spring and summer, Ken Clark, a Kroger category manager, summed up the retailer's traditional merchandising philosophy as "Take it into the market, sell it as much as you can."
But Clark, speaking at a workshop on category management at the Third Annual ECR Conference here, said that the consumer has changed. As a result, Kroger's presentation of teas will be different this year.
Kroger's summer promotions will include a combination of a decaf program with 24-count regular tea bags, and cross merchandising subcategories such as instant tea.
Rob Goodwin, senior business manager at Lipton, who also spoke at the workshop, said its efficient assortment analysis revealed that decaf tea bags were a growing segment. As a result, Lipton is working with Kroger on cross merchandising decaf tea bags, tying that into its regular promotions on key items that sell.
Clark stressed that Kroger has worked closely with Lipton since March 1996 to reach this point.
Goodwin added that Lipton made recommendations on efficient assortment this past January, which Kroger agreed with. However, when Lipton and Kroger reached this juncture, both realized there was additional work to be done.
"Efficient assortment is the first step," Goodwin said. "So we decided to do a little bit more research into space allocation of the tea section based on the new suggested items in the set. And when we did that, we even came up with some more questions."
Clark added, "When we got to this point, that is truly when advanced category management came in."
Goodwin said that since the set has not actually been implemented yet, financial results are unavailable.
However, the ongoing collaboration in the tea category has led Lipton and Kroger to a greater understanding of the category, the consumer and how best to go to market. "Hopefully, by the end of June we will have implemented all the clustering and everything else we're trying to do. And from that we believe our work begins," said Goodwin.
Looking back on the efficient assortment process, which took far longer than he originally thought it would, Goodwin said "Some people walk in and think they can do an efficient assortment in 30 to 60 days and then walk out the door and think they're done. We found that to be very much not the case.
"Kroger has been involved in a number of activities in category management, implementing roughly 20 to 25 category reviews over the past four years.
