New Karabus and Willard Bishop Study Identifies Best Practices of Leading Grocery Retailers to Drive Enhanced Financial Results

"In the battle to get ahead and compete in today's highly competitive industry, many grocery retailers are not making the tough decisions to differentiate themselves from the pack," explains Marty Weintraub, Managing Director of Karabus Management. "Those succeeding are focused on effectively and efficiently using technology and sound strategies to tailor assortment and pricing practices to address the specific dynamics of the markets they serve. The opportunity is significant for those grocers who implement leading practices - at least a 5% sales opportunity which, in today's competitive marketplace, represents the difference between success and mere survival."

The Karabus Management/Willard Bishop "2008 Grocery Retailers Point of View Study" identified key practices at leading retailers which, when undertaken, resulted in significant financial and operational returns such as:

-- Private Brands are Critical: While more retailers are focusing on private brand offerings in light of the current economic environment, over 75% of study participants don't feel they are using concepts effectively as a differentiator.

-- Effective Use of Price Optimization Tools Enable Sound Strategies and Business Practices: While two thirds of participants noted that effective pricing is top of mind, fewer than 30% of the retailers surveyed have been using price optimization technology for three or more years, and their satisfaction with the various tools is mixed.

-- Focus on the Shopper not the Product: Almost half of study retailers are using advanced techniques such as store clustering, ad versioning and shopper segmentation to fine-tune offers that better meet shopper needs, and are employing new, efficient vehicles to deliver targeted offers including email and website offers.

-- Limit Priorities: 80% of grocers surveyed were more successful by focusing on one or two priorities - quality, promotion, differentiation, variety, service, store format, price - rather than trying to be the best in all categories.

-- Tailored Assortments and Space Optimization Tools Maximize Performance: However, less than 50% of respondents utilize space optimization tools to help plan assortments and drive sales.

"We found while no single retailer does everything well, many do some areas well. More often than not, retailers are executing tactics, not developing strategy, and expecting an ROI," said Jim Hertel, Managing Partner, Willard Bishop. "Leading retailers understand the need to take a holistic approach to its supply chain, pricing and merchandising strategies to best understand and respond to the needs of customers, with the most successful focusing on a few areas in which they can lead."

Leading Grocers Trends

In addition to the above statistics, the Karabus Management/Willard Bishop survey also uncovered specific best practice findings surrounding the areas of strategy, merchandising, pricing and supply chain that will aid grocers in their quest to successfully compete in today's marketplace:

-- Strategy: -- Nearly 75% of leading grocers focused on taking a total-store view of how they'll win with shoppers rather than by focusing on specific departments.

-- 65% of survey participants are employing new, efficient techniques to reach customers through websites and email to deliver targeted offers and drive traffic.

-- Merchandising: -- Leading grocers are incorporating software into their merchandising strategies that reviews store departments and trade off decisions to determine department size to support ROI decisions on space changes.

-- 75% of retailers surveyed said they were over-SKU'd because they were attempting to meet the needs of everyone, rather than offering a focused assortment for their specific customer base.

-- Pricing: -- Only 29% of leading retailers are using advanced promotional strategies based on customers' wants and needs as opposed to relying on weekly ad and vendor driven promotions.

-- Few retailers are using advanced promotional strategies based on customers' wants and needs as opposed to relying on weekly ad and vendor driven promotions.

-- Supply Chain: -- 17% of leading retailers have formalized collaboration structures with suppliers that outline specific responsibilities and focus on mutual shopper wins with collaborative product development around customer needs.

-- Out-of-stocks remain a significant issue in grocery averaging approximately 8% of sales.

Notes on Methodology and Analysis

Karabus Management and Willard Bishop surveyed 15 leading grocery retailers to understand how different retailer strategies and software are being used to optimize financial returns. As part of the study, Karabus and Willard Bishop discussed each company's merchandising, pricing and supply chain practices to determine which practices are most commonly used by leading retailers.

The survey findings provided by Karabus Management and Willard Bishop are solely intended for informational purposes. Any actual application of best practices to a particular organization requires consideration of many organizational specific issues such as quality of leadership and talent, culture, strategy and organizational lifecycles. In addition, the statements above speak as of the date of this release. Factors could arise after this date that could affect the outcomes and forecasts set forth above. Karabus Management and Willard Bishop shall have no liability to any party for any action taken or not taken, or results obtained, in reliance on this information.

About Karabus Management Inc.

Karabus Management Inc. is a leading North American retail advisory firm that helps retailers significantly improve their operational and financial performance and profitability. The firm's more than 50 dedicated retail consultants work with many of North America's leading supermarket retailers. Karabus has led many successful profit improvement and turnaround engagements for supermarket chains in North America For more information, please visit the company's website at www.karabus.com.

About Willard Bishop

Willard Bishop is a consulting firm working with retail and foodservice companies to solve business problems and identify opportunities to drive profitable growth. For over 30 years, we have helped clients in the United States, Canada, Europe, Asia, and Latin America implement go-to-market strategies that improve both top-line sales and bottom-line profits. We do this by going beyond research to develop strategic implications and actionable recommendations for our clients. www.willardbishop.com

SOURCE: Karabus Management Inc.

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