“Seasonal” can be something of a dirty word in the beverage game, summoning images of everything from decaying eggnog to left-over pallets of Jones Soda’s Thanksgiving feast flavor bonanza.
But seasonality doesn’t have to revolve solely around a few dodgy product offerings designed to spur interest in established lines. In fact, learning how to handle changes in your beverage sets on a seasonal basis can be a great way to tinker with your SKUs and ramp up your profits. But you don’t have to go overboard, retailers suggest.
Seasonal sets are a basic of category management, according to Brian Woolf, president of the Retail Strategy Center in Greenville, S.C. But what works for one store might not be a fit for all.
The most basic adjustment many stores make – particularly smaller retailers, like convenience stores and small groceries – is in the weight they give to beer in the cold vault. With the highest demand for beer coinciding with later spring through summer (the traditional Memorial Day to Labor Day period), convenience stores often add another door or two in their drink coolers for beer displays in late May.
“Smaller format stores have to have a mechanism for those adjustments because of their limited space,” said David Bishop, a partner at the retail consulting firm Willard Bishop.
But that doesn’t mean you should only think about categories, either. For example, Hal Adams, the merchandising manager for Valero Energy Corp., says that many Valero stores increase the size of their RTD beverages during the summer months, even though they rarely make cold vault adjustments because most of the company’s convenience locations are in the always-warm Southwest.
“We may not carry 64 oz. Gatorade all year long, but in the spring and summer, we’ll put it in more,” Adams said, adding that customers come in thirsty from yard work or outdoor exercise.
Category adjustments aren’t made seasonally in grocery, either, notes Bishop.
“In larger format stores, most beverages aren’t merchandised in adjacent spaces, so it’s just not necessary,” he said.
Even a smaller grocery chain like Texas-based United Supermarkets, which fights for every edge against larger chains, doesn’t pay attention to seasonality when handling its stock. But it will make other changes.
“We do not adjust our sets for seasonality,” said Eddie Owens, a spokesman for United Supermarkets. “We use additional displays instead.”
Of course, many retailers would love to have enough of a surplus of space to take the careful balancing of profit-per-spot off of their todo lists. But the tightrope that comes with limited space can also be a boon, particularly if you reset seasonally.
“With a small box, you see things,” Bishop says. “Obviously, one of the most remarkable changes is the continued growth of energy drink sector. With the continued expansion of that shelf space, first there might have been a few shelves, now it’s potentially two doors in these markets. Retailers have used their reset schedule as a way of trying out the effects of those changes. Some of those scheduled resets are used to reallocate space on a more permanent basis. Energy drinks have benefited, as have water – mostly at the expense of the soda category.”
In fact, checking in four times a year on the weight retailers give to different beverage categories will give them an advantage when dealing with marketers and distributors, Bishop added.
“From a retailer perspective, as they look at the allocated space, they know the value of having their products in that space to a manufacturer,” he said. “A retailer recognizes that and understands that at those points, that if the trends aren’t playing to the manufacturer and his product lines, that might motivate the manufacturer a bit with regard to negotiations for merchandising or promotional support.”
That’s important, because seasonal changes are also notorious for bringing out “limited run” products (i.e. Pepsi Spice, Mountain Dew Code Red). For retailers large and small, a seasonal change or large holiday can mean pressure from manufacturers to run a series of temporary line extensions or special flavors out to a public that may or may not be receptive. Even in larger grocery stores, where there is separation between products, certain “Octoberfest” or “Winter Warmer” brews might be high priorities for manufacturers.
In cases like that, consultants say, be careful that the product has a reason to be on the shelf, and, no matter how good a deal you get from marketers, order carefully. Otherwise, the retailer runs a two-edged risk: overbuying a seasonal product, and then being forced to make deep discounts after the holiday, or else under buying and chancing the disappointment of out-of-stocks.
One way to handle the risk is to be in communication with the manufacturer or a wellinformed distributor. At Valero, for example, regional merchandising groups and local buyers are aware of planned-for short term line extensions, and they are factored into shelf sets annually. That allows the unexpected ones to be dealt with as they come in without much upheaval.
“Our local merchandisers make that decision on a case-by-case basis,” Adams said.