SALT LAKE CITY - In the past, Scott Smeding didn't find out about new products until he saw them on his competitors' shelves. Now, he can get a jump on his rivals when he gets new items like S.C. Johnson & Son's Scrubbing Bubbles Automatic Shower Cleaner kit, which came out last spring.
"They promoted it, and when it was introduced, they put shippers out there, and it just flew," said Smeding, a grocery manager at two-store Kohler's Food Stores in Lehi, Utah.
That improvement has come thanks to a new program from Kohler's wholesaler, Associated Food Stores. The Code Red program is designed to dramatically cut the time it takes retailers to get new items, which drive an estimated 70% of category sales. It does that by continuously updating retailers about new items and their position in their store's unique planogram.
The goal is to reduce to seven days from 28 the time it takes to get new items from the warehouse to stores, said David Rice, director of category management for Associated, based here. Seventy stores are participating in the program, which Associated began rolling out this year. Associated serves 23 corporate-owned and about 95 independent conventional stores in the western United States.
Generally, it used to take more than four weeks for new products to enter distribution. Now, about one-third of participating Code Red stores have new items on the shelf within one week, Rice said.
"We consider that to be a huge victory," he said, adding, "Seven days is a pretty lofty goal."
Of all its competitors, Associated particularly had Wal-Mart, SuperTarget and Kroger's Smith's Food & Drug Stores in mind when it launched Code Red.
"We knew we lagged behind our competition for years in getting new items to shelf," Rice said.
That lag translates into lost sales when disappointed shoppers head elsewhere for a new product. With Code Red, Associated expects to reap another $15 million to $18 million in annual sales.
Steve Day, who just started implementing Code Red at his two Heber City, Utah-based Day's Market Place stores, is one retailer who's eager to close that gap with his rivals. By the time new products arrive at his stores, Smith's and Albertsons often have them on the shelf already.
"The manufacturers do a coupon drop in the area, so the customers look for it, and if you don't have it, you're sending them to your competitor," Day said. "It's the competitive edge that the chain stores have had that we'll be able to take away from them."
At Kohler's, Smeding found himself spending a lot of time finding out about new products and then locating them at Associated. Now, his wholesaler sends him a list of new products as they come in and details on where they fit in his planograms.
"It helps me with what I need so I can get the right items in the store," he said. "It helps you be a lot more proactive and be aggressive. You see they're selling, you see the movement."
Getting the program to achieve its maximum potential also will take more retraining at the store level. To that end, Associated created a team of four experts, called Code Red coordinators, to assist stores in carrying out the new program. They also work with stores to implement other major merchandising programs.
Once Associated is comfortable with Code Red's execution, the wholesaler plans to step up efforts to market new items, Rice said.
