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PERISHABLE Fresh Meat Produce Fish Bakery Prepared Food Package Diary Frozen NON-PERISHABLE Edible Non-Edible Health & Beauty Care General Merchandise Typical Departments DELLMART & COMPANY
MINIMUM Perishable Non-Perishable OR Random Weight Packaged MAXIMUM Meat Produce Fish Bakery Prepared Food Dairy Frozen Dry Grocery (ambient) HBC GM Number of Departments DELLMART & COMPANY
Category Role • Destination - To be the primary category provider and help define the retailer as the store of choice by delivering consistent, superior target consumer value. • Routine - To be one of the preferred category providers and help develop the retailer as the store of choice by delivering consistent, competitive target consumer value. DELLMART & COMPANY
Category Role (Cont.) • Occasional/Seasonal - To be a major category provider, help reinforce the retailer as the store of choice by delivering frequent, competitive target consumer value. • Convenience - To be a category provider and help reinforce the retailer as the store of choice by delivering good consumer target value. DELLMART & COMPANY
Strategies Traffic Building Transaction Building Profit Contribution Cash Generating Excitement Creating Image Creating Turf Defending Characteristics - High share, frequently purchased, high % of sales - Higher Ring-up, impulse purchasing - Higher Gross Margin, turns - Higher turns, frequently purchased - Impulse, lifestyle oriented - Frequently purchased, highly promoted, impulse, unique - Used to draw customer base Category Strategy DELLMART & COMPANY
Categories Minimum 1 Maximum 85 Example Juices Sub-Categories Minimum 0 Maximum 9 Example Fruit & Nectars Powdered Tomato Number of Categories DELLMART & COMPANY
Item Planning • Support category role and strategy • Provide an eye appealing presentation • Minimum of 2 facings • Recommend full case stocking • Minimizes labor • Reduces damage DELLMART & COMPANY
Shelf Holding Capacity • Average non-promotion movement • Replenishment cycle • Order to shelf time DELLMART & COMPANY
Space Allocation • Software • Apollo • Spaceman • Process • Assign minimum • Add for full case stocking • Adjust for replenishment cycle • Add for profit • Adjust for presentation DELLMART & COMPANY
Assortment • Components • Brands • Flavor, style and color • Size • Research • Excess difficulty to find item and shop • Shortage limits sales and customer satisfaction DELLMART & COMPANY
Measurement • Per linear meter • Per floor square meter • Per display square meter DELLMART & COMPANY
New Items • Match target market • Should replace existing item • Complete or fill in offering • Increase category sales and profits • Item cannibalization not productive DELLMART & COMPANY
Formats Hypermarket Supermarket Limited assortment Hard discount Warehouse Club Convenience Organic Issues How to manage? Who controls? Managing Multiple Formats DELLMART & COMPANY
Multiple Format – Plan A All Format Buyer • Advantages • Buying power • Lowest cost • Disadvantage • Lose focus • Conflicting decisions DELLMART & COMPANY
Multiple Format – Plan B Format Merchant • Advantages • Buying power • Dedicated focus • Disadvantages • Conflicting decisions DELLMART & COMPANY
Multiple Format – Plan C Format Buyer • Advantage • Greatest focus • Disadvantage • Fragmented buying • Added cost • Increase items • Increase transactions DELLMART & COMPANY
AGENDA INTRODUCTION DEPARTMENT / CATEGORY / ITEM REPLENISHMENT PROMOTING DELLMART & COMPANY
Holding Cost ( Cube * Rate ) + (Cost * Rate) • Cube is the dominate supply chain cost driver • Display space is a scarce resource • Wide range of products • Health & Beauty Care • Paper products DELLMART & COMPANY
Traditional Weekly data Fixed review Vary quantity Recommended Daily data Daily review Fixed quantity Time Vs Quantity DELLMART & COMPANY
Safety Stock CPW * (RI +VLT) * (( 1+MMAD / CPW) * (1 + LMAD / LT) ) ** SF - (( RI + VLT) * CPW) • Cases Per Week • Review Interval • Vendor Lead Time • Movement Mean Average Deviation • Lead time Mean Average Deviation • Lead Time • Service Factor DELLMART & COMPANY
Item Order Point (( Rev Int + VLT) * CPW) + Safety Stock • Trigger point for ordering an item DELLMART & COMPANY
Forward Buy Savings – ( Extra Handling ) Holding Cost • Quantity = Weeks * Average Movement • Excess inventory • Cut off • Management maximum • Next vendor promotion • Product dating • Round to pallets DELLMART & COMPANY
AGENDA INTRODUCTION DEPARTMENT / CATEGORY / ITEM REPLENISHMENT PROMOTING DELLMART & COMPANY
Why Promote ? • Create merchandising excitement • Attract customers • Present savings • Show value • Reward loyal customers • Increase sales DELLMART & COMPANY
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