CUB INCREASES VARIETY IN ITS CEREAL AISLES

RICHARD TURCSIK

STILLWATER, Minn. -- Cub Foods is rolling out a shelf-management strategy in the cereal aisle that increases the varieties within its cereal assortments offered to consumers, said a Cub Foods official here.

The new strategy, a spinoff from an earlier, industry-sponsored study in which Cub Foods participated, departs from the currently prevalent objective of trimming stockkeeping units as a way to increase profits and efficiencies within grocery departments.

"We have not reduced the size of the cereal department. In fact, in some stores we increased the size of the cereal department because we added some new varieties which we did not have before," said Lynn Olsen, director of shelf management at Cub.

"In certain categories, for example, we added club-pack items and brought them into the cereal aisle. We added more varieties of bagged cereals and more variety of private label. We did not reduce any cereal sections," he said.

Cub Foods began to institute the new shelf-management program last summer, with the goal of gradually expanding it throughout the store. Cereal was one of the first categories chosen for evaluation.

Olsen offered a number of reasons for choosing to add, rather than minimize, space allocation and varieties for the category. "Cereal is a major contributor to department sales, and it is a category that has a tremendous amount of new-item introductions every year. It is also a bulky item," he said.

Cub Foods' decision to institute new shelf-management practices arose out of a Food Marketing Institute study on variety vs. duplication, in which Supervalu's

retail division participated. The results of that study were released at last May's FMI convention in Chicago.

Eight Cub Foods stores were evaluated in the study, along with selected stores operated by Pathmark Stores, Woodbridge, N.J., and units of Bi-Lo, Mauldin, S.C. The study was funded by food manufacturer Frito-Lay. Research and statistics were compiled by Willard Bishop Consulting, Barrington, Ill., and Information Resources, Chicago.

The study found that retailers can see an increase in sales if they eliminate duplication of products by cutting some sizes of items from their mix, which opens up space to add to the true variety within a given category. Olsen said Cub Foods is following the FMI guidelines as it builds its own shelf-management strategy.

"We are using those methods as prescribed by FMI. We started shelf management in our company in 1993 and have made a lot of progress on it. We are using those methods we learned as a participant in the test. And they seemed to have worked well," Olsen said.

"Part of that methodology involves looking at the number of sizes that we carry and being careful that we have the right number of sizes, but not too many. We are then using the space that is freed up to add what we call 'true variety' where possible. That is exactly what we're doing," Olsen said.

Olsen said it was too soon to gauge if Cub is seeing a chainwide increase in overall cereal sales as a result of bringing the shelf-management strategy to bear on the category. Cub Foods did record a 1.62% increase in total store sales for the eight units that had participated in the FMI study.

Customer reaction so far to the restructuring of the cereal aisle has been positive, he said.

"We do monitor customer comments in our stores on an ongoing basis, and we have not been getting any negatives that I'm aware of. The overall response has been very positive," he said.

"When we were conducting the test, the great majority of the shoppers thought that we had actually added items, because we had better in-stocks and they were able to find the items they wanted to purchase," Olsen added.