Customer Focus Boosts Meijer's Inventory Turns

MICHAEL GARRY

NEW YORK — Meijer, Grand Rapids, Mich., has found that by implementing systems, processes and organizational changes over the past year which enable it to better predict and respond to consumer behavior, the 181-unit supercenter operator has been able to increase its inventory turns by more than 25%.

Meijer's new focus on “consumer-centric planning” as a way of managing inventory and assortments was explained by Dennis Mullahy, the chain's group vice president, merchandise planning/supply chain management, during a session at the National Retail Federation's 97th Annual Convention & Expo, which took place this month at the Jacob K. Javits Convention Center here.

Mullahy was joined in the session by Kevin Smith, director of global demand management, Kraft, and Scott Strickland, vice president, information systems, Black & Decker.

“With consumers having many formats to choose from, we need to be more predictive and selective in what we offer them,” said Mullahy. “Every dollar of inventory increases our risk.”

In determining assortments, placements, prices and promotions that are “tailored to the consumer,” Meijer examines consumer-demand information at each store's POS “down to the item level,” as well as market trends, Mullahy said.

The chain continually factors in changes in product demand to refine its forecasts of consumer behavior and to improve execution at the store level. “We base our decisions on what is happening today,” said Mullahy.

Among the systems Meijer employs in this process are Intactix space-planning tools and Manugistics applications provided by JDA Software, Scottsdale, Ariz., Mullahy said.

In addition to better aligning the chain with consumer behavior, Meijer's “single view of demand” also improves its partnerships with manufacturers, with whom Meijer shares demand data, Mullahy said. “We're talking about how we can grow our business.”

With its emphasis on consumer behavior, Meijer joins a growing number of retailers, including Kroger, Safeway, Food Lion and Tesco, that are leveraging consumer data to make a host of strategic merchandising decisions.

At a separate NRF session, Food Lion executives also discussed their use of demand-based applications that help tailor products and prices to shoppers' preferences. (See “Food Lion Refines Customization,” SN, Jan. 21, Page 6.)

In SN's latest technology survey, a cross-section of retailers also expressed greater interest in applications like data warehousing that provide insight into store operations. (See story, Page 55.)

At the session with Mullahy, Smith said that Kraft is able to calculate better forecasts of its shipments by incorporating POS data and inventory policies from retailers.

“In the short term, we're taking POS data and replacing our [traditional] forecasts with actionable projected demands over the next several weeks,” said Smith. “That's where we're going with retailers who share data with us.”

Kraft is also monitoring promotional events at retailers. “If the event is going better than planned, we produce additional product, and if it's not doing well, we stop producing,” Smith said.