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Fox believes that each brand should be regarded as a separate entity.
“A large company with multiple brands may be able to provide flashy programs,
free coolers and various display vehicles, but that doesn’t necessarily
mean that all of their SKU’s deserve real estate in store,” she said. At
the same time, one large company may, in fact, be able to satisfy many
consumer requirements. “Once the retailer develops a strategy and puts
benchmarks in place for what is on their shelves, the consumer will quickly
decide whether a certain offering will have longevity in store.”
Smaller brands that fall under the same large umbrella should also be
treated separately, Moro says, likening the water category to the cereal
section. “If Kellogg’s comes out with five more line extensions of Rice
Krispies, they all need to stand on their own and bring some additional
value,” he said. Similarly, if a bottled water manufacturer that releases four
different sizes of the same bottle – a sport bottle, for example – retailers
should choose one size, and call it a day. “At some point in time, you’ve got
to say, ‘stop. I understand you have this, and I understand it’s good, but I
can’t have six more varieties of the same thing.’”
Grace Jeon, vice president of marketing at artesian water manufacturer
Fiji Water in Los Angeles, California, suggests that value brands be kept
to a minimum – an idea which would certainly benefit her own fastcharging
brand, which has sworn to be the top-selling premium water
before the end of the year.
“You would certainly provide more space for those brands, but you don’t
need 10 different brands within each of those [value] segments, because at
the end of the day, consumers are compelled
to purchase based on price,” she said. Featuring
several premium brands – including the
consumer education material that many of
these companies supply – offers the retailer
the chance to trade up those consumers who
don’t necessarily look at price first.
Retailers employ a number of merchandising
strategies for water – again, depending
on store layout and how their customers
make their purchasing decisions. Fox suggests
positioning enhanced water on one side of
the display, and unflavored on the other,
separating the products further based on
brand, size and price. Seasonality, too, plays a
significant role: water sales increase, obviously,
during warmer months. Fox says that
retailers can cash in on this by making water
more available in racks, cooler barrels,
case displays and pallets.
Deep-well sets or case packs – the packages
of 24 half-liter bottles – have also proved successful when retailers
stock them on pallets on their bottom shelf, Hipwell notes, because it
enables stores to stock large quantities. “It’s easy to manage off the pallet,
and retailers are profitable,” he said. “You don’t need to sell it at cost,
the way you would with carbonated soft drinks. They can sell this with a
mid-teens margin and be quite successful.”
Hipwell observes that retailers face the additional challenge of stocking
items that fall under the water category, but aren’t technically water. “This
isn’t necessary a bad thing, but if a retailer wants to bring it in, he’s got
to make space for it,” he said. “It’s important that retailers take advantage
of the trends and move quickly. The ones that move quickly into taking
the new items on, finding space for them and deleting space on things
that are not growing, will win.”
In acknowledging that it is impossible to please everyone, those retailers
that focus on what their consumers’ needs are, and which brands are focusing
on building the category, will reap the most success, Fox maintains.
“This is what will create pull from the stores – an offering that meets the
consumer demand, turns quickly and drives growth for the supplier, and
makes great profit for the retailer.”