HOUSTON -- Randalls two-year-old beer category-management program has paid off in higher profits, according to Peter Kemp, senior category manager for grocery.
The retailer's program manages categories throughout the chain's 125 stores, including the 89 locations that are allowed to sell beer under local laws.
"Our program analyzes every department in the store, and can break any category down to the Universal Product Code level," Kemp said. "Whether it's spices, paper or canned goods, they all need to be analyzed. You need to know where your sales are strong. You need to know where your competition is, too. What are Kroger, Albertson's or H.E. Butt doing? You need to know because your own stores have to be marketed against the competition."
Although all major brewers offered to help Randalls manage the beer category, the supermarket chain opted to develop its own software for the task, with assistance from an outside consultant.
Before Randalls put its category management system in place, beer was managed as a single entity. Now, the chain has three main formats, depending on the size of the stores. Each format is then customized to individual locations.
"Our sets run anywhere from a 20- to 90-foot cold box, with the largest in our Dallas store, which is our category leader. Since we have store-specific data, we look at demographics of each store, and the competition around the store. We're then able to build store-specific plans."
One of the most important parts of category management is knowing the customer, Kemp said. The retailer tends to be more upscale, so they buy more craft beers and imports. As a result, Randalls concluded that it must offer them a wide variety of products.
"You have to determine what's driving customers into the stores. Are they regular buyers or seasonal? What are the geographic differences?" he said. "Beer can draw customers into the store, so we put it on the front page of our ad sections. And once they're in the store, they'll buy other things. Cross merchandising is great with beer."