“Seasonal”
can be something of
a dirty word in the beverage
game, summoning
images of everything from
decaying eggnog to left-over
pallets of Jones Soda's Thanksgiving
feast flavor bonanza.
But seasonality doesn’t have to revolve solely around a few dodgy
product offerings designed to spur interest in established lines. In
fact, learning how to handle changes in your beverage sets on a
seasonal basis can be a great way to tinker with your SKUs and ramp up
your profits. But you don’t have to go overboard, retailers suggest.
Seasonal sets are a basic of category management, according to Brian Woolf, president of the
Retail Strategy Center in Greenville, S.C. But what works for one store might not be a fit for all.
The most basic adjustment many stores make – particularly smaller retailers, like convenience
stores and small groceries – is in the weight they give to beer in the cold vault. With the highest demand
for beer coinciding with later spring through summer (the traditional Memorial Day to Labor Day period),
convenience stores often add another door or two in their drink coolers for beer displays in late May.
“Smaller format stores have to have a mechanism for those adjustments because of their limited space,”
said David Bishop, a partner at the retail consulting firm Willard Bishop.
But that doesn’t mean you should only think about categories, either. For example, Hal Adams, the merchandising
manager for Valero Energy Corp., says that many Valero stores increase the size of their RTD beverages during the
summer months, even though they rarely make cold vault adjustments because most of the company’s convenience
locations are in the always-warm Southwest.
“We may not carry 64 oz. Gatorade all year long, but in the spring and summer, we’ll put it in more,” Adams said, adding
that customers come in thirsty from yard work or outdoor exercise.
Category adjustments aren’t made seasonally in grocery, either, notes Bishop.
“In larger format stores, most beverages aren’t merchandised in adjacent spaces, so it’s just not necessary,” he said.
Even a smaller grocery chain like Texas-based United Supermarkets,
which fights for every edge against larger chains, doesn’t pay
attention to seasonality when handling its stock. But it will make
other changes.
“We do not adjust our sets for seasonality,”
said Eddie Owens, a spokesman for United
Supermarkets. “We use additional displays
instead.”
Of course, many retailers would love to have
enough of a surplus of space to take the careful
balancing of profit-per-spot off of their todo
lists. But the tightrope that comes with
limited space can also be a boon, particularly if
you reset seasonally.
“With a small box, you see things,” Bishop
says. “Obviously, one of the most remarkable
changes is the continued growth of energy drink
sector. With the continued expansion of that
shelf space, first there might have been a few
shelves, now it’s potentially two doors in these
markets. Retailers have used their reset schedule
as a way of trying out the effects of those
changes. Some of those scheduled resets are used
to reallocate space on a more permanent basis.
Energy drinks have benefited, as have water –
mostly at the expense of the soda category.”
In fact, checking in four times a year on the
weight retailers give to different beverage categories
will give them an advantage when dealing
with marketers and distributors, Bishop added.
“From a retailer perspective, as they look at the allocated space, they know the value of having
their products in that space to a manufacturer,”
he said. “A retailer recognizes that and understands
that at those points, that if the trends
aren’t playing to the manufacturer and his product
lines, that might motivate the manufacturer
a bit with regard to negotiations for merchandising
or promotional support.”
That’s important, because seasonal changes
are also notorious for bringing out “limited
run” products (i.e. Pepsi Spice, Mountain Dew
Code Red). For retailers large and small, a seasonal change or large holiday can mean pressure
from manufacturers to run a series of temporary
line extensions or special flavors out to a public
that may or may not be receptive. Even in
larger grocery stores, where there is separation
between products, certain “Octoberfest” or
“Winter Warmer” brews might be high priorities
for manufacturers.
In cases like that, consultants say, be careful
that the product has a reason to be on the
shelf, and, no matter how good a deal you
get from marketers, order carefully. Otherwise,
the retailer runs a two-edged risk: overbuying
a seasonal product, and then being forced
to make deep discounts after the holiday, or
else under buying and chancing the disappointment
of out-of-stocks.
One way to handle the risk is to be in communication
with the manufacturer or a wellinformed
distributor. At Valero, for example,
regional merchandising groups and local buyers
are aware of planned-for short term line extensions,
and they are factored into shelf sets annually.
That allows the unexpected ones to be dealt
with as they come in without much upheaval.
“Our local merchandisers make that decision
on a case-by-case basis,” Adams said.