Like every year, your agreements with central distributors have been reviewed. If you've succeeded in increasing the number of items on your distribution partners' shelves, congratulations!
But be careful... Now you'll have to optimize the product flow, i.e. make sure that the new references appear on the shelves as quickly as possible.
Today, Sidely tells you all about this crucial subject for achieving your sales objectives!
Every year, the agreements between you and your distributors have to be renegotiated. Your main objective, as a brand, is to maximize the number of products listed in your points of sale. Not an easy task! Especially since the Bruno Le Maire law tightened negotiation deadlines with your distributors.
And once you've done that, there's no question of resting on your laurels! Communication from the head office to the points of sale can take time, and that time can cost you dearly (besides, winning listings has probably already cost you, so every day your products aren't on the shelves is lost sales!).
In addition to this "top-down" communication delay, stores may be hesitant about the layout of their shelves, particularly in view of space constraints. Finally, your competitors may also have negotiated their new assortments well...
In short, there can be a big gap between the "theoretical" agreement you've signed and the optimal distribution you're dreaming of. That's why you need to check right away that the new products you've negotiated with the head office are actually on the shelves, and where they're supposed to be.
And if you're not proactive on the subject, you may be in for a surprise at the end of the financial year, because it's the number of sales that will suffer!
💡 The solution?
Get involved immediately by taking four strategic steps:
Getting the GO from your distributor for your new assortment has cost you dearly. To ensure that this investment pays off, you need to check that the products are present on store shelves.
However, if your distribution network is extensive, you won't be able to visit every point of sale immediately.
Our first piece of advice is therefore to send your area managers on visits to your "top stores", i.e. those with the highest stakes (significant market share). If necessary, find out how to optimize your route plans. This step will enable you to carry out your shelf surveys on a non-representative sample that is crucial to achieving your objectives. Checkouts can also give you a clearer picture of what's being sold at store level, rather than at head office level.
However, the integration of new products on the shelves changes the information to be collected, reported and analyzed. As a result, your sector managers risk losing a lot of time, or reporting out-of-date or erroneous information. It is therefore vital to update your forms, so as to optimize all shelf-space surveys, from presence to merchandising, to adapt them to the new agreements. This can be a time-consuming task for the sales department, especially if you need to customize the statements according to strata, stores, banners etc.
Once you've taken stock of the situation, it's a logical step to roll out a global strategy, i.e. to ensure that your products are correctly referenced at all points of sale.
It's at this point that we speak of a "product downturn" in supermarkets.
In fact, once the number of product references per brand has been updated, the sales department must ensure that the stores will list the relevant products as quickly as possible.
There are a number of best practices you can incorporate into your sales strategy:
In order to ensure that the commercial agreements signed with the central distributors are respected by the sales outlets, and above all that the presence and availability of products will enable consumers to buy them when they do their shopping, you have certain reporting and performance indicators at your disposal.
Numerical detention measures the number of products present in a store compared with the number stipulated in your agreements with the central purchasing office. All brands present in supermarkets must monitor this fundamental indicator, as it reflects the proper execution of agreements signed with the chain, and ensures that product availability is optimal at the point-of-sale level.
However, the numerical holding (D.t.N) changes each year to adjust to the number of references updated in the agreement with a chain via its central purchasing office.
In order to maintain maximum sales levels, brands must therefore make sure to update their sales targets and measurement indicators immediately after the agreement with the buying group changes.
Why?
Imagine that your 2023 agreement with central X covers 5 products. Let's assume, for the sake of argument, that this target is achieved across the entire network, i.e. that all the products concerned are available on the shelves of every outlet covered by the distribution agreement. Your D.t.N. is 100%.
Now consider that the new agreement for 2024 commits stores to stocking 10 products. If you don't update your objectives, compliance with the agreement (10 products on the shelf in a store) will result in a N.T.D. of 200%. In the end, this over-performance proves to be false, since 10 products listed at the point of sale now correspond to an N.T.D. of 100%.
By resetting the number of products in the assortment as soon as new agreements are signed, area managers will find themselves at the first post-negotiation visit with a numerical holding of 50%. They will then be able to see the curve climb during their surveys. As well as being a closer reflection of reality, this can also be a source of motivation for them. It's always more fun when the numbers are in the green!
To ensure that you're tracking the right figures and making your reporting accurate and comprehensible, you need to make a clear distinction between the number of products and numerical holdings. That's why we advise you to track your holdings in weighted terms (as a percentage) as well as in absolute terms.
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Let's continue with the same example. During the post-negotiation visit, your area manager finds only 8 products out of the 10 negotiated. This brings his holding to 80%, which is lower than in 2023. However, it's not all bad news, since you've managed to place 3 more products on the shelf than last year.
Analyzing your presence in absolute terms is also useful on the downside.
Let's take the example of a medium-sized outlet in your strategy, which is only visited once a quarter. During his last visit 9 weeks ago, the area manager noted the presence of 4 products on the shelf, against a target of 5 (mandatory assortment). The CRM therefore calculates a N.T.D. of 80%. In the meantime, the number of mandatory products has been increased to 10 (thanks to new agreements). You can then modify your assortment in your CRM, i.e. 10 products in 2024, instead of 5 in 2023. In this way, the number of products observed 9 weeks ago will not change (it's still 4!), but on the next visit, if the number of products present is still 4, the N.T.D. will increase to 40% (4 / 10). The area manager will therefore have an up-to-date view when preparing his next sales meeting.
You now have all the tools you need to optimize and accelerate product sales at the point of sale. A well-mastered plan that involves preparation and evaluation, maximizing sales impact, then monitoring with reliable reporting.
