Mixed modules are drawing more attention as a way to cut inventory costs, speed product flow and spur retail sales, frozens professionals say.
Also called mixed or "rainbow" pallets, these supply units contain multiple varieties of a certain product or category in one load, furnishing retailers with a preset selection of popular items ready for pack-out. They typically are set up at a manufacturer facility but also can be assembled at a wholesale, retail or third-party distribution center.
"It's getting more popular because it makes sense. I'd say that for about the last two years it's been very popular here," said Sam Ciardi, frozen food and dairy supervisor at Village Super Market Inc.
The Springfield, N.J.-based ShopRite chain, part of the Wakefern Food Corp. co-op, regularly buys mixed pallets for ice cream and dinners as well as other frozens categories, he said. "When you have an item that you're going to blow out of, they're really effective. It already comes with the right variety. They park them [in the warehouse] and then they send them out. There's no in-between handling and less chance of damages. You save every which way."
"It's definitely a trend," said John Monahan, division manager of United Refrigerated Services, Atlanta, and a past chairman of the International Association of Refrigerated Warehouses, Bethesda, Md.
"We have a consolidation program here that's quite large. We ship out 100 loads a day on average, and it's all mixed modules. It allows supermarkets much more flexibility in putting orders in; they don't have to have the inventory on hand very long."
Spartan Stores, Grand Rapids, Mich., actively requests mixed pallets from manufacturers to help trim unit costs, cut supermarket out-of-stocks and drive store profits, said Joel Westrate, frozens purchaser. Over two months in the 1995 holiday season, the wholesaler sold nearly 1,000 mixed modules, or 42,000 cases, including pallets done for Sara Lee pies, Cool Whip and frozen vegetables, he said.
Suppliers foot the cost of assembling the modules, either at their own facility or a third-party warehouse, but benefit at the retail end, Westrate noted. Having multiple varieties on a pallet boosts the odds of retail promotional support and guards against running out during sale events, he said.
"It reduces our cost, which we pass on to the customer. It doesn't reduce the manufacturer's cost, but the manufacturer gets value out of it in more display and increased sales," Westrate explained. "You're likely to display the product if you buy in a mixed module because you have more cases and you need to move them. The product pricing, at least with our customers, will be quite a bit more favorable than the open-stock pricing. So there's going to be more profit for their ad, and in that regard they're also more likely to display it."
Westrate estimated that, compared with open stocks, mixed pallets have yielded a 2-cent to 15-cent unit savings and a 20% sales lift. He said he's run about 30 different mixed modules through his warehouses, and many are run repeatedly -- such as those from Campbell/Swanson, which he cited as being aggressive in mixed pallet programs. "Once you get into modules, you know pretty much how much you're going to sell, and you get in the automatic mode. That's almost where we're at right now," he said. Often, mixed pallets are shrink-wrapped with promotional materials inside, he added.
Last summer, Fleming Cos.' Portland, Ore., division began rolling out more mixed modules after instituting activity-based charges, said Brian Kempster, frozens category adviser.
"Those charges are less if we select by the pallet than by the case. Therefore, our retailers are asking us to set up more mixed pallets and to make those available to them because it's cheaper to buy from us that way," he said, noting that most of the pallets are display quantities. "Once we got up to speed and understood it better, we started more aggressively pursuing pallet-type deals and pallet configurations that made sense for the retailers."
Mixed modules have been done for Chef America Hot Pockets, Sara Lee pies and frozen orange juice, Kempster said. "Corporate is coming up with more private-label items that are going to be available in mixed pallets for [certain] seasons, like lemonade for the summer," he said. ConAgra also is providing him with information to set up dinner pallets, he added.
Overbuying is less of a problem with mixed pallets, Village's Ciardi noted. "If we ever have extras at the end of the week, usually the better sellers are on there anyway. So you're not stuck with the bad-selling varieties. Therefore, you can merchandise and get rid of it," he said.
Mixed modules can assist in category management, said Ken Call, director of logistics at Americold, Watertown, Mass.
"One of the pros from the receiver's side is that they can go across manufacturers within a category at many public [warehouse] facilities," Call said. "For example, we might have two or three companies at our facility that produce entrees. So you can make a store-ready pallet of, say, two tiers of ConAgra and two tiers of Stouffer's. It's almost an aisle-ready pallet, if you will. And you can do that within categories, whether it's concentrate juice, pizza or whatever."
But mixed modules can be tricky logistically, frozens professionals say. To be set up and delivered in time, mixed pallet orders must be made well in advance, which could affect buying accuracy. They also must be correctly configured for stores and be clearly marked as a mixed pallet in the warehouse.