BrainTrust Query: How Will Localized Assortments Affect Distribution Methods?
I won't say how long ago it was that I began stocking shelves in a grocery store, but it was just before the start of the "Supermarket Age." The modern supermarket is a vast bizarre of products, seemingly targeted to no one and aiming to please everyone. But concern over waste and slow moving inventory has prompted retailers to consider more specialized assortments. The goal has become "localized assortments" that better reflect the actual needs of a particular location's customer base.
I was thinking about how this would change distribution methods and recalled the "mixed cases" of toilet tissue from my shelf stocking days. Basically, we could order white tissue and a case of colors that had one row each of, say, pink, blue, green, and yellow. But as supermarkets came on board, with larger shelf space and the desire to replenish products individually, the use of mixed cases seemed to decline. Of course, the challenge with mixed cases is that not all locations will sell the different colors at the same rate. Just because the store needs more pink doesn't mean it also needs more blue.
This presents one look at how the whole concept of localized assortments may have a profound effect on distribution methods and store layouts. Items that had previously been handled through warehouses or wholesalers may go to jobbers or DSD specialty suppliers. Warehouse layouts must be reconsidered because travel distances will increase as more items are bypassed during order selection. Store layouts will not need to handle as many different items, so out of stocks should decline as the remaining items increase their inventory in the selling area.
Mixed cases may see a resurgence because they reduce the facings and handling required. I think more manufacturers should consider them. Any retailer will tell you that the majority of pack sizes are too large. Studies repeatedly show that 90 percent of the items sell less than a case per week. Intelligent use of mixed cases that includes a replenishment application that can consider all the options seems like an opportunity to improve the servicing of localized assortments and the efficiency of the supply chain.
Discussion Questions: How will localized assortments affect distribution? With perpetual inventories becoming the norm, do more mixed shipping containers make sense? Are replenishment applications up to the task?