The results of the studies which are reported here were conducted in France on behalf of the Association of Manufacturers of Fresh Dairy Products. The studies were carried out in 1980 and the results were presented to distributors in early 1981. This paper out-lines the results and indicates future applications.
The results of the studies which are reported here were conducted in France on behalf of the Association of Manufacturers of Fresh Dairy Products. The studies were carried out in 1980 and the results were presented to distributors in early 1981. This paper out- lines the results and indicates future applications.
This paper has two parts: firstly, a general consideration of the theoretical and conceptual problems which researchers need to overcome if they are to provide retail management with useful findings in the major problem area of product range and line assortment selection; secondly, a report on a cross-sectional study of the responsiveness of 55 product groups to varying amounts of shelf space in British supermarkets.
In this paper we consider, optimal allocation of shelf space over article groups by a mass retailer. To this end the general structure of a number of mathematical marketing models is developed. These "risk-evaluation" models allocate shelf space over article groups and account for the risk which is inherent in the choice of article groups. The models are based on models which are used in financial management to analyse and select portfolios. A couple of these models are tested and some future directions of research in this area are indicated.
Determining the number of lines per range requires assortment decisions on the number of items and facings displayed in the stores. The constraint of limited shelf space and demand and cost interactions among the various products of the assortment must be considered. In many cases, retailers try to solve the problem by trial and error. An alternative is to conduct controlled experiments using experimental designs. They allow definite statements that have a known and controllable probability of being correct and consequently provide a reliable basis for decision-making. The testing procedure is illustrated by two case studies using latin square designs to answer the fundamental questions of adding/deleting a product and changing shelf space allocation.
There is not so much a conflict between "range" and "rationalization" as a need for balance between the two: a need to determine the "rational range". The starting point towards this goal is to allocate store space to grocery commodities in relation to their true contribution to the store's profit, taking account of the "space responsiveness" of these commodity groups to changes in space allocation and the store's overall marketing philosophy. Once the frozen food space allocation is determined the issue of the extent of the variety sold through that space may be tackled. Birds Eye has conducted fairly extensive research into these issues, closely examining the consumer's behaviour in the shop. Taking the consumer as the starting point, it is important to recognise that about half of all frozen food purchases are made on impulse. The frozen food display is the key area of consumer interest amongst self-service commodities. Wide variety is a very strong attraction to the impulse shopper, and the benefits of increased range may be quantified. The basic finding of our inventory management studies was that, provided adequate stock cover is maintained, more sales come from improving product variety than from enhancing display impact with additional facings of a lead line.
The paper, drawing on the experience of over thirty John Gordon Outlet Studies in various European retail situations, proposes that in order to maximise shelf sales and profitability a retailer must: 1. Examine current shelf profitability, taking into account not only sales and gross margins, but also the direct cost of achieving these sales. The result can then be expressed as Direct Product Profit per linear or cubic shelf meter, and can be used for comparisons between, or within, different sections of the store. 2. Direct Product Profit measurements, however, reflect solely the current shelf situation in the retailer's outlets. They do not take into account the potential based on outside marketing factors. This paper outlines how such a marketing audit should be carried out, linked to a total strategy for the section, and how the results influence the final layout plan of the section. The Outlet Marketing approach is illustrated from a U.K. Case Study on Health and Beauty Aids in Supermarkets carried out on behalf of a group of sponsoring manufacturers.
The food trade in the Netherlands tries to make food distribution more efficient by introducing shelf space allocation systems and re-stocking systems. Systems were developed, some focus primarily at shelf allocation, others at re-stocking. Wrong assumptions of some systems and assortment consequences cause problems for specific product groups. This makes it necessary for the manufacturers to elaborate on the specific attributes of their product groups in order to change systems or make additions. Every system is rather general, so there is room for addition or change. The John Gordon approach is one of the existing possibilities open for the manufacturer. A project needs cooperation with the food trade: John Gordon has authority and got trust from trade and industry. This makes this organisation suitable.