SUPERVALUE REPORTING SKU DROP, SALES RISE

LINDA PURPURA

ATLANTA -- Category-management efforts are delivering sales and profit increases for Supervalu's independent retailers, while at the same time reducing stockkeeping units at the retail level, according to Leland Dake, corporate vice president of wholesale merchandising at Supervalu, Minneapolis.

The wholesaler has tracked net SKU reductions of 12% in the past two years from its category-management work with several hundred stores, he said. The participating retailers' dollar sales increased an average of 6.5%, and unit sales were up 4.7%. Gross profits increased by 7.1% during this period.

Dake spoke at the "Category Management: Success from the Front" session at the fourth annual Joint Industry ECR Conference, held here March 18 to 20.

Supervalu achieved these results by making a major commitment to training, not only with the wholesaler's category-management staff, but also for the independent retailers and their vendor partners.

"It's not cheap to start a program," he said. "We've projected the first-year cost for a 10-store retail group to get started with 40 categories is in the neighborhood of $450,000."

Not only is category management expensive, it also requires a commitment to shelf integrity and to retail compliance with the planograms, he said. Independent retailers, such as Kirby Foods, Champaign, Ill., which are supplied by Supervalu, are addressing these challenges.

Kirby Foods has assigned in-store coordinators at four of its stores to be responsible for shelf compliance. In addition, the retailer is testing the process of placing the planograms into a slip sheet, taped to the underside of the shelf, at 10 of its 18 stores. Placing planograms here puts information in the aisle for store personnel, vendors and brokers, according to Vic Buraglio, president and owner of Kirby Foods, who also spoke at the session.

"Not only will our store personnel be able to look at planograms, but any vendor or broker who has a question on how the shelf should be set up can easily reference the planogram in the aisle," said Buraglio. "It's a simplified way for our store personnel to manage the planograms sent from the wholesaler."

The retailer has tried using binders and folders for planograms, but found that these systems were more difficult to maintain and not as easy to access as planograms at the shelf.