Countdown started to moving towards a segmentation model over the past few months, reducing the number of SKUs on its shelves while ensuring increased availability across lines that are popular within a store’s customer base. All-in-all, this strategy gives the business more flexibility and allows it to support local suppliers that wouldn’t be able to supply on a large scale. Looking at figures and demographics, the company has made sure that stores catering to a more affluent customer base had more natural yoghurts and dairy alternatives available in-store.
“The key is to go with no presumptions of what will sell well, and look at all available data—a store’s location, proximity to other supermarkets and major transport routes, as well as the local age, ethnicity and what local customers typically spend, all need to be factored in,” Chris Fisher, Countdown’s general manager of Merchandise, told us.
The benefits are three-sided. The customers get the products they want and need, the stores improve their sell rate without wasting shelf space for low-performing items, and the suppliers get their products stocked where they are in demand. According to Fisher, this approach has been particularly successful for local suppliers the likes of Wooden Spoon Boutique Freezery (ice cream), Made That Way (brownies), Bonnie Oatcakes and Blooms Buttery (pretzels).
“We identify the stores where their product is most likely to be popular, ensuring a good sell-through rate and dedicated customer base,” Fisher said, adding that not every range needs to be segmented. Some products (i.e. shoelaces) are in demand everywhere, and their sell-through doesn’t correlate to any particular shopper attributes.
For the multitude of smaller, local and even artisan producers out there, ‘segmentation’ is certainly great news, and Countdown is making an effort to get them on board. Fisher invited new suppliers to visit their website first, www.countdown.co.nz, and click on supplier information to get in touch with the relevant category manager.
“The best thing you can do is come to us with a business plan that explains why your product is unique and where you believe it sits in the market. Be up front about your ambitions, whether that’s to be a small local artisan producer or a nationwide supplier.”