DairyMEAL SolutionsMerchandising WorksBY Rebecca MacKayVice President, Strategy, Insights & PlanningDairy Management Inc./Innovation Centerfor U.S. DairyWith the changing consumer landscape and the growthopportunities identified in previous research related to thereinvention of the dairy department, the Innovation Centerfor U.S. Dairy ® , which was founded by America’s dairyproducers, decided to embark on a focused exploration ofdairy merchandising. Through comprehensive pilot testing, weshow that creating innovative displays that provide true mealsolutions for consumers can garner double-digit incrementalunit and dollar sales increases and that dairy categories area key component in consumer-centric merchandising. Thefollowing provides pilot test results as well as an overview ofkey trends, dairy’s contribution to a store’s performance andother applicable research findings that serve as a foundationfor this work.Consumer PerspectiveConsumer needs are driving evolutionin the retail landscape:Home-prepared meals are resurging,but meal planning is not the normAlmost half of all grocery trips are quicktrips, and consumers are predicted tobecome even more mission-focused inthe futureConvenience is king as consumers lookto make thoughtful purchases amidtime constraintsNow, more than ever, foods andbeverages are being looked at as criticalfactors impacting health and wellness78 OnTREND May/August 2013
Plus, competitive pressure from superstores and the declineof the traditional grocery is polarizing the retail landscapeinto high-end and value-driven outlets. All the while, theconnection between grocery and health and wellness providersis becoming stronger.So what does this mean for grocery retailers? It has never beenmore important to build a relationship with your customers.The retailers who have the strongest connections with theirshoppers are those that have the best understanding of whattheir customers need and how to fill those needs.Meal Solution MerchandisingMeal solution merchandising can serve as an important toolthat satisfies the shopper’s need for solutions and hits onkey consumer drivers including health and wellness benefitsand a desire for homemade meals and convenience, whilealso providing retailers the opportunity to differentiate fromthe competition. Additionally, meal solution displays provideshoppers with added value outside of cutting prices, whileworking to encourage cooking at home, which is an importantstrategy for maintaining sales as the economy strengthens.Key meal occasions include:• Breakfast: Currently just 8 percent of store sales, breakfastfoods may be an overlooked opportunity among retailers.Largely a ritual meal, this eating occasion has strong potentialto drive repeat sales.• Snacking: 87 percent of consumers snack, and 78 percentare snacking at home. When all snacking behavior is addedup, it’s $90 billion in annual sales — and that is growingThis meal occasion is a key opportunity for grocers, astheir shoppers increasingly look to eat multiple mini mealsthroughout the day.• Dinner: Dinner generates the most sales for grocers and isthe strongest traffic driver of any of the meal occasions. Infact, dinner sales can generate increases of more than $5,100per week for the average storeRecipe For SuccessThe Innovation Center for U.S. Dairy developed andexecuted consumer insight-driven merchandising conceptsthat leveraged the meal solution approach and focused onbreakfast, snacking and dinner. Each of the concepts testeddrove incremental sales gains, without the use of promotionalpricing or additional marketing support. Outside of the testingenvironment, meal solutions merchandising would typically besupported by other tactics and marketing vehicles; as such, wefeel that the upside potential for any of the pilot concepts ishuge. Again, without any other support, our pilots drove:• 19.2 percent average incremental increase in units sold acrossthe displays (milk-based dairy products saw 28.8 percentgains on average)• 20.5 percent average incremental increase in dollar salesacross the displays (dairy products outperformed in generaland saw an average increase of 29.8 percent)How Dairy FitsIncluding dairy products in thesolution set is a critical factor in successfulmeal solutions merchandising:Key TakeawaysDairy outperforms every other departmentwith its profit-to-space ratio(which is almost double that of produce)Dairy products are included in moregrocery trips than items from nearly everyother aisleMilk, cheese and yogurt are keycomponents in meal-building basketsConsumers inextricably link dairy to healthand wellness: Fluid milk is second only toproduce as a top category that consumersinclude in their daily health and wellnessregimen. <strong>Yogurt</strong> and cheese are alsostrong performersThe pilot executions heavily leveraged consumer research.Shopper intercept surveys uncovered additional key learnings:1. Convenience: Include convenience as a core considerationfor all meal solution merchandising executions, as consumersdemonstrated a strong interest in convenience.2. Location: Situate displays earlier in the shopping processto position them as a solution provider versus a niceafterthought. Location is a key success factor, as displaysneed to be in places that make intuitive sense to the shopper.3. Visibility: Ensure that consumers can clearly see all signage,which will help grow their understanding of the concept.Display visibility has a key role in performance.4. Specificity: Identify and include only products that trulyaddress the merchandising concept’s specific need-state.Extraneous SKUs are a distraction.5. Simplicity: Keep the product mix and the number of SKUssimple to help enhance consumer acceptance.6. Long-term solution: Initiate a long-term meal solutionsmerchandising program that is refreshed often versus ashorter campaign. It takes time, exposure and planning forconsumers to adjust their behavior.Sources cited: NPD Group, Eating In: Growing Sales by Helping Customers Eat atHome More, 2010; Innovation Center for U.S. Dairy, Snacking White Paper, 2010;Innovation Center for U.S. Dairy, Willard Bishop SuperStudy and Top ShopperInsights, January 2012; Kraft Foods, Dannon, Dairy Management Inc. The Future ofthe Dairy Department is Now!, October 2009 May/August 2013 ONTREND 79
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