BrainTrust Query: How Will Localized Assortments Affect Distribution Methods?
By Bill Bittner, President, BWH Consulting
I won’t say
how long ago it was that I began stocking shelves in a grocery store, but
it was just before the start of the "Supermarket Age." The modern supermarket
is a vast bizarre of products, seemingly targeted to no one and aiming
to please everyone. But concern over waste and slow moving inventory has
prompted retailers to consider more specialized assortments. The goal has
become "localized assortments" that better reflect the actual needs of
a particular location’s customer base.
I was thinking
about how this would change distribution methods and recalled the "mixed
cases" of toilet tissue from my shelf stocking days. Basically, we could
order white tissue and a case of colors that had one row each of, say,
pink, blue, green, and yellow. But as supermarkets came on board, with
larger shelf space and the desire to replenish products individually, the
use of mixed cases seemed to decline. Of course, the challenge with mixed
cases is that not all locations will sell the different colors at the same
rate. Just because the store needs more pink doesn’t mean it also needs
one look at how the whole concept of localized assortments may have a profound
effect on distribution methods and store layouts. Items that had previously
been handled through warehouses or wholesalers may go to jobbers or DSD
specialty suppliers. Warehouse layouts must be reconsidered because travel
distances will increase as more items are bypassed during order selection.
Store layouts will not need to handle as many different items, so out of
stocks should decline as the remaining items increase their inventory in
the selling area.
may see a resurgence because they reduce the facings and handling required.
I think more manufacturers should consider them. Any retailer will tell
you that the majority of pack sizes are too large. Studies repeatedly show
that 90 percent of the items sell less than a case per week. Intelligent
use of mixed cases that includes a replenishment application that can consider
all the options seems like an opportunity to improve the servicing of localized
assortments and the efficiency of the supply chain.
Questions: How will localized assortments affect distribution? With perpetual
inventories becoming the norm, do more mixed shipping containers make
sense? Are replenishment applications up to the task?