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Campbell Soup Co.’s Pepperidge Farm brand recently joined forces with IRI on a solution to choose the most efficient assortment driving the role of variety enhancer and enhancing shopper loyalty and store experience. With the economic downturn, consumers have become savvier in preparing for shopping trips, while retailers have focused on SKU rationalization to bring greater efficiencies to the shelf. However, lessons learned from major retailers reveal a high risk to losing shopper loyalty by using only velocity metrics to make assortment decisions. This risk to shopper loyalty exists because of the crucial connection between unique lower-velocity SKUs and the shopper’s store experience. Understanding the differences between variety and duplication is key to achieving the connection of unique SKUs to shopper store experience.
Pepperidge Farm and IRI performed a study to numerically measure “variety” -- the measure of a SKU’s uniqueness. The IRI study clearly showed that “higher-uniqueness” SKUs contribute well beyond their individual velocities: They contribute to total category velocity by driving a shopper’s decision on store choice. For the research, Pepperidge Farm employed an Assortment Optimization Power Ranking, which incorporates an item’s incrementality, velocity metrics and uniqueness score.
Insights gleaned from this study were shared with two major food retailers, both of which subsequently experienced double-digit dollar sales increases in Pepperidge Farm items, along with lifts in the overall cookie and cracker segment.