Interview by Symphony RetailAI’s Paul Hoffman. John Williams presented on the category and aisle optimization journey taken by Dr Pepper Snapple Group at Xcelerate Retail Forum 2017.
From your perspective, what has been the biggest change in category management over the last five years or so? How is it impacting retailers and their suppliers?
Okay, so the biggest change that we’ve seen is the data available to us and the move towards using insights within category management. As you look at the industry, there’s more loyalty card data available – this goes on top of the syndicated data and the panel data that we currently have. So, that adds some complexity when you consider extracting detailed data to use with specific retailers and their shoppers. We’ve done more on the shopper insights side of the business now and have been able to use those insights directly with our retailers to impact their business, and our business, and help the shoppers have a more organized set to be able to find their items easier.
What do you think the next big thing(s) will be in category management?
I know for Dr Pepper Snapple, we’ve been getting into aisle management optimization. With the better tools we have now, we’re seeing great success in this area. That has recently benefited our business on a few projects that we have done within aisle optimization.
I think the second area relates to the focus on shopper insights and companies creating or expanding their Shopper Insights department and linking it to category management. At Dr Pepper, we work very closely with our Shopper Insights group, which has grown over the years, and they’re a key part of our retailer meetings. So, we’ll collaborate and have all the subject matter experts be part of the meeting, so Category Management, we’ll have Shopper Insights, we’ll have Sales. We may have Marketing involved, our Revenue and Margin Management team.
We’ve all come together to collaborate in retailer meetings a lot better than what we did in the past. In the past, we may have Sales and Category Management going in or Sales and Shopper Marketing. Now our meetings are bringing everybody together at one time, which has worked out really well.
Regarding aisle optimization, are there specific technologies that you’re using there that you can comment on?
Yes, so that’s where we get into the solutions that we’re using. We are using SR Category Space Optimization for aisle optimization. That has been very successful for us, so far, on three big projects that we’ve taken to some regional retailers. We’ve basically optimized the beverages within their footprint in the store. We’ve expanded some categories, contracted some categories, we’ve added the right assortment.
We’ve had one retailer who has tested that and rolled it out to all their stores and it’s been extremely successful for them and us. It’s actually given us another $1.4 million in margin on top of what we were currently producing with that retailer. So, it was an extremely profitable exercise once they rolled it out to all stores. And, of course, it’s mutual gain, as our retailer is benefiting tremendously as well.
What were the main themes of your presentation?
Yes, so at Xcelerate, I took everybody through an aisle optimization collaboration project with a west coast retailer. One really key point to the project was that they were open to allowing their private label to expand or contract based on the recommendations from the solution – SR Category Space Optimization. Most of the time, you don’t get retailers to open up and let their private label be contracted, and so that was really interesting. The other thing that happened was the retailer wanted to test a change in strategy. They were more of a limited-assortment retailer. Then they decided to open up their assortment a little more while they optimized the footage of the categories. So, in our test store, we got a plus 23 percent increase in all the beverage categories. They discussed that internally; it went up pretty high within the organization and they decided to do a few more test stores. After that they decided to roll it out to the entire chain.
That’s a big process; it ended up taking about a year and a half from start to finish, from testing to their actually investing in shelves. They had to purchase shelving to redo all their stores and then execute the project.
So, is it fair to say that your retail partner’s trust in Dr Pepper Snapple and your technology and insight really enabled this?
Yes, and I think they knew, in the back of their minds, that their private label was over spaced, and so they allowed us to do what was right and we cut it pretty drastically. They went along with it and rolled it out. You don’t usually get that; you usually have retailers saying, “Okay, we can do anything except don’t touch our private label.”
Why did you agree to speak at Xcelerate?
I wanted to share some of the successes we’ve had with these tools in the industry so it’s clear what was done and how it could be expanded to other manufacturers. Other manufacturers can have the same success that we have had. I’m also really love to network, to get to know other people, other manufacturers, see what they’re working on.
Watch the video interview with John Williams below, and click here to read the full Dr Pepper Snapple Group case study