Diageo makes it easy

Beers, wines and spirits account for 20% of sales at Batleys’ West Bromwich depot in the West Midlands. The wine department had been relaid courtesy of Pernod Ricard so next it was the spirits department’s turn and that job fell to Diageo.

The company’s category development manager Natalie James explains: “The main problems in this depot were that the spirits sales weren’t growing and the layout of the spirits department was very old fashioned. It was pretty basic and in desperate need of a facelift.

“We wanted to reflect customer shopping trends and make it easier for retailers to shop.”

There was an initial meeting in April where James explained how Diageo was planning to approach the work, and then the depot general manager, Paul Rabone, sent James reports listing the sales and SKUs.

“I compared these with Nielsen market data. I could immediately see what was selling and what was not and could then decide what to keep and what to delist. We knew what space we had to work with and we needed to use that space much more efficiently,” she explains.

“I sent over my recommendations and they were discussed. We then worked out a layout working from light spirits to dark. We break these down into three categories: ‘release’ which includes vodka; ‘reward’ which includes whisky; and ‘relax’ which takes in rum and gin. We also lay them out by price so we have value, standard and premium lines.”

James was given increased space to work with, to prevent out of stocks – about four to five bays extra.

She’s keen to emphasise that the exercise was very much a category initiative. “For instance we knew how important own label lines were for the depot so they were included throughout.

“For retailers, ease of shopping was our primary focus and a big part of that was communications. We put in lots of signposting to help retailers find what they want. The point of sale we used needed to be more durable and it needed to do its job better by navigating customers round the department.”

For the depot it was all about improving efficiencies and not tying up cash in stock that was not getting through to the sales floor.

On the shelves today, retailers will find single bottles and blister packs of six. On the opposite shelves are cases of the spirits so they can immediately decide whether they want to buy one, six or 12 bottles. Before, the cases were out in a stockroom and staff had to be called to go and collect them. However many customers just did not realise they were available. The change has led to upselling – because retailers can see that lines are cheaper by the case.

“It’s much easier for staff now to fill the shelves as they can use the cases on the opposite shelf. Out of stocks are managed much better as the depot has enough stock on shelf to cater for a week’s worth of Features > Business,” says James.

Suki Johal, supervisor on wines and spirits, has been behind the initiative 100%. He says: “For staff the new layout is much easier and faster to fill up and it gives them extra time to concentrate on other things.

“The biggest help has been more stock of split packs as the packs of six sell very well.”

The depot’s general manager, Paul Rabone, adds: “We actually took two staff away from the department and standards improved.” He says feedback has been good – that it’s much easier to shop. “Before, some customers said they couldn’t find what they wanted but now it is a straightforward, much more simple layout.”

Another example of that is for on-trade customers – where all the sundries are now merchandised next to the spirits so they can easily find what they need.

And the sales results? James says both brand and own label sales have increased.

Displaying malt whiskies using a ‘flavour map’ has been a particular success. Before the single malts were just mixed in with the blends. Now the malts are laid out by flavour type. The range has been increased to include all the flavours and sales are up 157%.

“This has been done by displaying them more prominently and by giving customers more information and letting them understand what whiskies there are.”

Sales have improved each month; the discontinued lines have not been missed. Johal says: “One or two customers have asked about them but once we have explained that they were slow sellers, the customers have agreed that they were slow sellers for them too.”

Rabone says: “A lot of the time I used to go with my gut feeling on what to stock but with proper data it’s all much more precise. Some lines we thought had sold well didn’t and likewise I was surprised by some lines that were selling really well.

“Only 1% of stock on spirits was delisted; when we remerchandised our wines department, 33% of SKUs were delisted so we weren’t doing too badly on spirits. The 35cl and 20cls, for example, were far bigger players than I realised. They are massive sellers. I knew they were good sellers but I didn’t realise how good.”

For Rabone, the sign that the relay has been a success (apart from the impressive sales figures) is the fact that he’s not had one single complaint from a customer. What is more, the results have been so positive that other Batleys’ branch managers are clamouring to have Diageo work its magic in their depots.

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=== the depot ===

At 125,000sq ft with a 25,000sq ft extension just for pet food, West Bromwich is Batleys’ biggest and busiest depot.

Paul Rabone is the general manager. He started at the depot 21 years ago, in charge of provisions. He went off to other depots but returned six years ago as general manager.

In those 21 years he reckons it’s not changed much: “We have a very loyal customer base. We operate an Xtra Local club for retailers and have about 100 members who get special deals. And we have just started free deliveries to caterers, which is already proving popular.”

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