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Retailer Program: Food Lion

Improving Retail Execution for Promotions

Vendor Pulse Supplier of the Month:
February 2009

The goal:

Improve retail execution to drive incremental sales during pizza category promotional events by reducing store outs.

Kraft Foods frequently promotes its Pizza portfolio at Food Lion, and decided to implement a 3-stage approach to maximize the in-store availability of the items on promotion.  This approach, covering all stages of the promotion, from ordering and store-level inventory monitoring all the way to in-promotion replenishment, is now being implemented for all pizza promotions.

This process is a collaborative effort among Kraft’s Sales team, Kraft’s Retail Team, Food Lion Category, Food Lion Supply Chain, and Food Lion Vendor Collaboration.   Collaboration among these partners allows for optimal execution of each promotion at Food Lion down to the district and the store level.

Data leveraged:

To power this process, Kraft leverages the following Vendor Pulse data:

• Sales by day, by store and by SKU for prior comparable promotions
• Inventory level by day, by store and by SKU a week before the promotion
• Sales and inventory level by day, by store and by SKU two days into the promotion

Business process:

• Stage 1: 3 weeks prior to the promotion, Kraft Foods now systematically sends its sales team comparable promotion sales for prior events to determine the target store-level inventory for the items on the upcoming promotion and to prepare the supply chain for promotion volumes.
• Stage 2: the week before the promotion, Kraft Foods sends its sales team the most current inventory levels, once again at the store level, to ensure the initial orders cover the sales targets. Based on the latest numbers, the final promotional orders are computed to ensure each store has the target quantity on-hand.
• Stage 3: on Friday, the third day into the promotion, Kraft Foods sends its sales team the results for the first two days of the promotion, as well as the remaining inventory level for the promoted items at each store. 
• In analyzing past promotions, Kraft Foods central merchandising team developed models to predict, based on the first few days, how a promotion will perform for the remainder of the period.  Using up-to-date store level sales and these models enables the sales team to reliably assess whether there is a need for additional order or whether the quantities in-stock are sufficient for the last four days of the promotion.
• Leveraging a prioritized list of these “at risk” stores on an exception basis, Kraft supply chain is then able to process emergency orders to deliver additional quantities to the store within 24 to 36 hours. This ensures a continuous high level of availability for the promotion, especially on the highest days of sell-through, Saturday and Sunday.

The outcome:

• Using the in-promotion process, Kraft supply chain is typically able to correct the in-stock situation at 5 to 8% of the stores, avoiding lost sales for both Food Lion and Kraft
• For a recent specific event, sales increased by 23% versus a comparable event run the prior event (same product, same price point, same week) that did not take advantage of that process
• For that same event, store out of stocks decreased by 60% compared to the prior year
• The pizza category at Food Lion gained 0.6 share point in unit share of market compared to the prior year

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