Reduced range delivers 85% increase in GP for Woodlands Local

AG Barr planogram in action

While it’s difficult to strip out the effects of a long, hot summer and the temporary closure of our nearest competitor store, the remerchandising of our soft drinks fixture by Barr Soft Drinks a couple of months ago seems to have contributed to a huge growth in sales and GP.

by Antony Begley

There’s no doubt that one of the hardest parts of analysing the success of anything we undertake in the store is stripping out all the external factors that might be affecting results – and that’s particularly challenging in one of the most significant bits of work we’ve done in the store by remerchandising the entire soft drinks fixture to the new planogram from Barr Soft Drinks.

In an ideal world we would carry out new projects in complete isolation, however it’s effectively impossible in practical terms because there’s always so much else going on that can affect the results of any in-store trial. On this occasion, not only were we in the midst of an extremely rare extended period of very warm weather, we also had to factor-in the effect of our nearest competitor store closing down for weeks for a major refit.

Consequently, we would fully have expected to see an upturn in soft drinks sales, given as it’s probably the category most affected by weather. But even accounting for both of these issues, we’ve still come to the conclusion that the remerchandising has been a resounding success.

Between January and July this year (the last full month’s sales we have available as SLR went to press), unit sales had increased by an astonishing 32.2%.

That figure is impressive enough from a store that’s been on the site for decades, but it’s not half as impressive as the increase in GP over the same period, a stonking 85.4% hike in the category.

Good weather and reduced competition clearly helped, but it’s reasonable to assume that the remerchandising more than played its part too.

The deeper you dig into the numbers the more it becomes clear that the remerchandising can actually be held responsible for a significant chunk of the increase in GP.

Even though in the month immediately following the remerchandising unit sales volumes fell by almost 10%, the GP we made from selling fewer products actually held more or less firm. This clearly indicates that the re-ranging removed a lot of the higher volume but painfully low margin lines that were cluttering the shelves of the chiller.

It’s been a mantra in retail for some time now but, in this instance, it absolutely seems that less is more.

And just to prove that the decision to take this route was the right one, soft drinks sales the following month shot up by almost 1,000 units and GP shot up by 22.83% in a single month!

These top line figures indicate clearly that the work has been a huge success. In the next issue we will take a closer and deeper look at the data that sits behind these numbers and analyse how each of the six key ‘need states’ [see below] contributed to the overall growth of the category.

What did we change?

As part of the remerchandising, we were following a new Barr Soft Drinks planogram built around six identifiable ‘need states’ that Barr’s has homed in on.

Key drivers

The six consumer need states have been derived from three key drivers that AG Barr believes reflect changing consumer lifestyles, influences and needs in relation to buying and consuming soft drinks. They are:

  • Health & Wellbeing
  • Taste & Fun
  • Lifestyle & Culture

The planogram has specifically highlighted sections, one for each need state, complete with shelf edge stripping to make the fixture bright, lively and easy to navigate around.

The need states are as follows:

  • Healthy Refreshment – Water and water-plus products perform an important, functional role
  • Tasty Hydration – Low calorie products with the health benefits of water and the great taste of a carbonate
  • Everyday Enjoyment – The backbone of the fixture needs a good range of great-tasting choices
  • Adult Social – Indulgent treats and options for those that avoid alcohol
  • Connecting Cultures – Vibrant section to tap into growing demand for exotic flavours
  • On The Go – Nearly a third of purchases is an energy drink, so this section must offer the right range of products and flavour choices

Soft drinks sales growth in numbers:

  • 2% increase in unit sales between Jan and Jul
  • 4% increase in GP between Jan and Jul
  • 10% fall in unit sales in month following remerchandising…

…BUT GP held steady, even with much reduced unit sales

  • 1,000 units increase in sales the following month (July)…
  • …AND a 22.8% in GP in that month

Love life… eat well