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Since its acquisition of Folgers in 2009, the J.M. Smucker Co. has worked to build a comprehensive knowledge base regarding how to optimize the coffee category. While expanding its relationships with retailers through this new category, Smucker recognized the need to help its partners drive their business with increased insights that incorporate the entire warm beverage aisle. This included every category commonly found in the aisle, from coffee, tea, cocoa and milk flavorings, to complementary categories like creamers and filters, in most of which Smucker doesn’t compete.
In the past year, Smucker undertook a comprehensive project to gain an understanding of what truly optimizes total aisle performance. The project was well grounded in multiple forms of research that began with a 3,000-store audit and store group analysis to assess the current state of the market and recent aisle trends across the country. Once the groundwork was completed, Smucker was able to build upon the findings by leveraging a market structure analysis, shopper intercepts, shopper card research and shopper segmentation. These insights-driven tools allowed Smucker to fine-tune aisle recommendations based on emerging new trends and essential shopper needs, developing truly shopper-based insights.
The aisle and category research resulted in several key recommendations, including:
- Dispersing higher household penetration categories throughout the aisle to draw traffic through the aisle to allow for optimal traffic flow
- Placing highly planned categories near the back of the aisle, and more impulse-driven categories near the front of the aisle
- Placing complementary categories between highly cross-shopped categories to maximize basket size
- Creating a distinct section for K-cups and related offerings between ground canister coffee (mainstream) and bagged (premium).
Smucker worked with SymphonyIRI to provide the quantified sales velocity benefit to implementing these warm beverage aisle recommendations. The case study revealed that retailers have anywhere from a 5-plus percent potential increase in velocity.
In addition to developing a national proposal, Smucker developed customized regional recommendations based on each area’s unique dynamics.
Several retailers have begun to implement Smucker’s recommendations and are seeing positive category and aisle growth, according to the company. One such retailer in the Southeast made the recommended changes to its coffee set and experienced double the dollar sales growth of the rest of market, a greater share of trips of current shoppers, and increased shopper conversion. While the retailer benefited, so did the top players in each of the segments.