By Bill Kraich
Vice President of eCommerce for Encompass Technologies
Out-of-stocks in the BevAlc industry have become a more common occurrence in recent years. The industry has been plagued with labor and packaging shortages, there is a lack of visibility into retail inventory data across the three tiers of the supply chain, and traditional straight-line forecasting is based primarily on distributor sales to retail from the previous year. None of this works well to support today’s highly unpredictable and fast-changing consumer demands.
The supply chain’s goal is focused on making products that consumers want available, when and where they want to buy these products. When a consumer walks into their local liquor store and finds empty shelf space where their favorite product should be, who is at fault? If the demand is there and the product isn’t, it’s not a blame game as much as lack of transparency and data sharing, and the need for modern demand planning practices across the three-tier system. Suppliers, distributors, and retailers need to be digitally connected.
The BevAlc industry has a wealth of data and insights trapped at the retail level, particularly retail inventory. Imagine the innovation, business growth, and consumer satisfaction that sharing live retail inventory data and insights from the retailers’ point of sale (POS) systems unlock. The good news is that the technology and process to make this happen is now available and already making an impact. The distributor sales teams’ ability to leverage this information in working with the retailers is key to driving meaningful change.
Spend less time counting and more time growing the business
Today, a distributor sales representative spends an average of 45 minutes of every hour-long store visit counting inventory while freezing in the back cooler. At best, they end up with an educated guess about how much of each product a retailer needs. Sales and purchasing decisions are made purely based on week-to-week comparisons of manually recorded product counts. There is no way of determining whether a product sold out on Day 1 or on Day 6.
It’s time to get reps out of the cooler and into revenue-driving sales conversations with the retailer. With access to live retail inventory data from the retail POS, the sales reps can finally understand how quickly a product is selling to the consumer. Sales reps can now make data-driven decisions to advance business from an individual retailer all the way up the supply chain.
Minimize empty shelves and pinpoint fast-moving products
In 2019, White Claw was taking the market by storm, but the innovative hard seltzer ended up out of stock for weeks because its success was entirely unexpected. Revenue was then left on the table for everyone up the supply chain because it wasn’t understood that this product was moving much faster than others and needed to be stocked at a more rapid rate.
In response, White Claw cast a wide net by limiting supply to all areas in order to serve their entire market. Stores across the country were buying a steady amount of the beverage, but distributors shipments to stores ran out. As a result, there wasn’t enough liquid being produced and circulated to the right places to satisfy the demand for the product.
Whether it comes from industry innovation or unpredictable consumption patterns, out-of-stocks are a frequent issue. With data aggregated to immediately identify out-of-stock products, a distributor sales rep and a retailer can collaborate to maximize shelf space for fast-moving products like White Claw before the consumer trend wins out against the industry’s demand-planning abilities.
Identify stagnant products to reduce product excess and waste
Unpredictable consumption patterns are an increasingly relevant force in the BevAlc industry. The lifespan of consumer trends is shortening. Over the last few years, we’ve seen the explosion of completely new product categories like hard seltzer, surges in unexpected categories like no/low-alc products, and rapid growth in previously unpopular categories like RTDs.
With consumer behavior driving categorical fluctuation, there hasn’t been a way to anticipate which products are going to bear the brunt of these changes. When distributor sales reps are notified about stagnant products in a timely manner, they’ll be able to help retailers make the necessary adjustments to get these products off the shelves and reduce waste.
Measure product performance to capitalize on growth potential for new products
The desires of the individual consumer are more diverse than ever. People want more choices, and the three-tier system needs to work together to ensure the consumer has access to the right products at the right places. At the retail level, the trends become even more nuanced.
The hard seltzer boom has triggered a cascading effect of consumer demand for more options. Most recently, the RTD (ready-to-drink) category has been on the upswing. The category was projected to grow 11.4% between 2019 and 2024. The industry knows this category is on the come-up, but, until now, there hasn’t been a way to forecast product popularity to the detail of the individual retail store.
The detailed insights a distributor sales rep has into the way these products move at the retailer enables them to pinpoint the products that are moving more quickly than others. For example, Retailer A might sell a ton of canned margaritas while Retailer B sells a ton of canned rum and coke. With comprehensive and granular insights into retail inventory, sales reps can see and understand these consumer trends in a much more intimate way, enabling them to keep popular products stocked.
Make more strategic decisions and solve new problems
There is no lack of opportunity for where we can go from here. We should be able to leverage these data and insights to change demand planning practices and inform production, optimize and mix product placement, understand the minute details of consumer behavior, diversify product portfolios based on trends at the individual retailer versus trends seen across the industry, identify timely promotional opportunities, and beyond.
This level of insight hasn’t been possible until now. Retail data transparency is the core of a digitally connected supply chain. As an industry, we can all work together to leverage data-driven decision making to bring the three-tier system into a future where unpredictable consumer demand will not be met with clunky troubleshooting practices, but rather with creativity, agility, and unity to consistently get the right products into the hands of consumers.
Bill Kraich is VP of eCommerce with Encompass. Providing live visibility to retail insights through POS system connections is already fueling Encompass’ vision for a digitally connected supply chain. Launched in February, Encompass’ Retail Insights solution allows distributors and retailers to streamline how they operate and work together to minimize empty shelves and product waste.