There are high stakes in the perishable food world for getting supply and demand predictions right. Stock up on product too aggressively, and there could be expiring food on the shelves; don’t stock up enough, and there won’t be anything to sell.
Land O’Lakes partnered with Kroger to use daily data analytics to make more informed decisions to benefit both the manufacturer’s and retailer’s business.
As a result of these efforts, out-of-stocks for Land O’Lakes products are down 50% at Kroger. In addition, Land O’Lakes worked with Kroger to make category butter sales exceed the average rate across the grocery industry.
“We’re always looking at: How do we as a manufacturer work with Kroger to get more efficient? How do we do promotions better? How do we get the right product to the right store? How do we end a promotion with less inventory?” said David Stearle, team leader at Land O’Lakes.
“So what this data lets us do is granularly look at it and say, ‘Here are some concrete changes we feel we can make based on the data we’re looking at that we think can drive sales for Kroger, share for Kroger and then profit for Kroger, and then it has to be good for Land O’Lakes, too.’”
Over a year ago, the supplier started working with Kroger’s retail analytics partner Market6, which provides daily reports on data and insights.
“Grocers have a ton of data about their products, their stores, their transactions, their customers, and then all the stuff associated with that — what price, what assortment, what promotion did we run, how are we using space in our stores,” said Barbara Petrocelli, marketing director at Market6.
“And the challenge for them is being able to call out the potential business insights from that massive volume of data and put it in the hands of their merchants really quickly,” said Petrocelli, noting that there’s a limited amount of time that the data can be useful and acted on.
Although Land O’Lakes is one of hundreds of suppliers that access this data, Petrocelli said Stearle and the Land O’Lakes team stand out because they recognize that analytics and data can really differentiate overachieving suppliers.
One area the Land O’Lakes team focused on, with the assistance of the broker Crossmark, is using product during demos.
During a recent demo, Stearle said, Land O’Lakes was able to pull items from shelves that were closer to their expiration date to use for the demo, while filling the dairy case with new product. This move avoided waste and made plenty of fresh product available for customers to buy after trying the demo.
“Everything we sell expires — whether it be a month to three months to nine months — so before, we wouldn’t even get store level data, so I couldn’t even look by store,” said Stearle.
Land O’Lakes has also worked to better match inventory levels to consumer demand around promotions.
“So what we really tried to work on is getting the product to the distribution center a few days earlier and out to the store two days earlier, because the insight we found is that when a promotion starts is when we have a lot of our out-of-stocks because they print a really good price in an ad, everyone sees it, buys it up quickly and then you don’t have any product left on the shelf,” Stearle said.
Land O’Lakes drove a substantial increase in volume sales during a recent promotion.
“So really every time you don’t have the product on the shelf you lose an opportunity to sell it. So how do you have the right amount of product to start the promotion?”
Land O’Lakes has evolved its approach to problem solving and working with Kroger. Each day, the Land O’Lakes team starts by reviewing its daily data “report card” to look for places to improve sales.
“If sales are going well, let’s figure what’s going well and do more of it. If something doesn’t work out quite like we thought, what happened and how do we make sure we don’t do that again?” said Stearle.
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