“More products being sold in more channels and smaller format stores becoming the new normal means that space is at a premium and optimizing your case packs is more important than ever,” said Jim Wisner of Wisner Marketing, during an Ask the Expert webinar, Tuesday. In partnership with the SFA, Wisner authored a study that shares industry beliefs regarding case packs, identifies the costs of case-pack conversions for manufacturers, retailers, and distributors, and provides a tool to help make case pack decisions quickly, efficiently, and accurately. Wisner discussed the findings of the study and highlighted why the case pack situation is more of an opportunity than a problem.
SFA Case Pack Study
Through manufacturer visits and interviews, retailer visits and store tours, distributor visits and interviews, as well as data analysis, case studies, and activity costs, this study found that ultimately, reducing case packs yields results all around, said Wisner.
According to the study, smaller packs generally bring in more revenue and are cost effective, result in a broader distribution of specialty items to more stores, and improve code-dating and rotation. Wisner said that distributors offering smaller case packs are able to get them into more retailers, and manufacturers with smaller case packs consistently report improved sales. In addition, as SKU rationalization continues to happen during the pandemic, case pack size will be a deciding factor for retailers looking at new vendors.
Though there may be upfront costs, the study also found that reduced case packs improve profit performance. The incremental gross profit per unit is estimated to be 29 cents for manufacturers, 3 cents for distributors, and 14 cents for retailers, said Wisner.
Ensuring a Successful Case Pack Reduction
For manufacturers, case pack reduction is most successful when the category contains multiple varieties or flavors with multiple facings, or larger products are involved. However, Wisner warns that some items cannot be optimized, like very small items, cases provided by glass manufacturers for low volume items, or manufacturing and fill processes that require significant capital investment.
In addition, it’s important to note that it may take a while to see results, said Wisner. He said that companies that reduce case packs will see a sales decline in the first quarter before seeing recovery in the second. Then, in the third quarter, the company will see the growth, which will eventually plateau and become the “new normal” in the fourth quarter.
How to Make the Decision
The SFA offers a Case Pack Optimization Tool, which helps companies determine if the switch is worth the cost. The tool was developed in Microsoft Excel, providing the opportunity for easy updates and the deconstruction of individual components.
The tool features customizable values, side-by-side comparisons, situation- and user-specific results, and is easy to use. Download the full SFA Case Pack Study and Case Pack Optimization Tool
Related: Specialty Food 101: Common Distributor Deductions; Specialty Food Growth Forecast Adjusted Up, Driven by Essentials.