PHILADELPHIA -- Setting aside more room for a particular product -- or cutting down on space -- can make a dramatic difference in sales, panelists said during a program at the Produce Marketing Association's Fresh Summit 2001 here.
Two retailers and two commodity board representatives served on a panel that addressed "Space Allocation: Finding the Right Balance." Panelists were: Hugh Topper, director of produce procurement for H.E. Butt Grocery Co., San Antonio; Mike O'Brien, vice president of produce for Schnuck Markets, St. Louis; Bart Minor, president of the Mushroom Council, Dublin, Calif.; and Jean Ashby, category management director for the Washington Apple Commission, Wenatchee, Wash.
Topper used white nectarines -- a higher-ring item, compared to yellow nectarines -- to illustrate how a change in the amount of space set aside for a product can impact sales. Produce department officials decided to promote white nectarines, and, in doing so, dedicated more space to product displays, Topper said.
Over the course of one year, sales of white nectarines shot up from 1% to 34%, said Topper, noting the increase in space played a part, but wasn't the only reason for the sales boost.
Minor recalled a situation where a retailer reduced space for whole white packaged mushrooms -- "the staple of the mushroom industry," he said -- and created more space for sliced and specialty mushrooms. The end result?
Ashby shared the results of an in-store test, conducted at eight stores that are part of a major Midwestern chain, to gauge the impact of realigning total apple space. Mainstream varieties of apples gained some space, but total apple space did not change. The results showed a 5% increase in sales volume for apples, achieved simply by resetting the area to create more space for the most popular apple varieties.
"Beyond space, you should identify different performance measures to see if you're maximizing the use of space," Ashby said.
Space allocation is an important piece of the category management puzzle, O'Brien said, noting top executives at Schnucks are committed to the issue, and produce departments are catching up to grocery departments in getting a handle on category management.
Once companies have established a category-management plan, they cannot assume it will take care of itself, O'Brien said. Monitoring and evaluating the plan is an ongoing effort.
Determining space needs for various categories takes a commitment from retailers and suppliers, he said. Information-sharing is crucial -- both parties must trust each other enough to share data.
For suppliers, the most important information is scan data, O'Brien said. Officials can use it to determine plans for individual stores. Before making space allocation decisions, retailers must know the demographics of the customer base within their market, understand shopper needs and be aware of their expectations, Topper said.
H-E-B serves an extremely diverse clientele; at some stores, the majority of the customers are Mexican citizens traveling from across the border.
In produce departments, top-selling products can vary from store to store, even when the stores are in close proximity to one another. At three stores within four miles of each other, Topper noted the top-selling produce items differed from store to store. One variety of banana was the top seller at one store, tomatoes were No. 1 at another unit and bing cherries were the bestselling product at the third store. Practical considerations, such as being able to keep display bins full at peak business hours, also drive space-allocation decisions, he said.
Over the last decade, produce departments have changed dramatically in the assortment of merchandise they offer, he said. Consumers, many with little or no cooking skills, are confronted with an array of new products.
Beyond setting aside display space, retailers should take the next step -- teach customers how to use products, particularly if they are new, he said.