Store Audits: Merchandising the Low-Carb Craze

Nearly 1,200 products making low-carb claims have been launched since Jan. 1, according to Mintel International Inc., Chicago.That number compares with 307 products boasting low-carb benefits in 2003, and just 28 in 2000 -- back before the low-carb craze was anything but a twinkle in the eye of executives at Atkins Nutritionals Inc.Sales of low-carb brands reached $518 million in the 52 weeks ended April 18, according to Information Resources Inc., Chicago. That figure has nearly quadrupled since calendar year 2002, according to IRI data.Retailers commonly use manufacturer-supplied displays as a way to assess the viability of new products without incurring the costs involved with adding them to shelf sets. New product displays also can help position a store as willing to adapt to changing shopper needs.This display strategy took on greater urgency last fall as the low-carb wave broke, because retailers needed a fast, simple way to establish a low-carb presence -- without, in many cases, really knowing how well the avalanche of new products would sell. Thus, floorstands from Atkins became nearly as common in food stores as carbonated soft drinks on endcaps.Several quick-thinking chains developed cohesive plans. Among the notable ones were 7-Eleven, which had an Atkins-dominated merchandising unit in all 5,800 locations in January, and Albertsons, which began testing a 16-foot destination center in 250 stores that same month.Most chains simply devoted existing fixtures to as many low-carb products as they could find, or relied on shippers supplied by manufacturers to provide the presence. Thus, brands such as Unilever Bestfoods' Carb Options were able to gain significant footprints inside stores.By mid-February 2004, literally all food stores were allocating display space to low-carb products, according to audits conducted by Mosaic InfoForce, Chicago. The average number of displays per store was 4.5, most of which could be found in high-traffic locations. Manufacturer-supplied shippers accounted for nearly one-third of all the displays, according to Mosaic data.There is, of course, only a finite amount of store space for vendor-supplied displays. In an analysis of the cold cereal category, Mosaic found that Atkins products had a 5.4% share of display in January 2004 -- compared with no display presence in January 2003. Atkins' gain encroached on the display shares for three of four brands and private label offerings within the category (see chart at right); only the category's leading brand was able to withstand the onslaught, and actually improved its share of display for the month.Mosaic's audits also found that the average store had more than 48 different low-carb items on displays and that the average display carried about 11 distinct products. These facts illustrate two trends Mosaic has been tracking.One is the increasing use of endcaps and other prominent display space for stocking multiple brands and product types. The other is a gradual trend toward displays that don't simply stock a particular product or category but instead address lifestyle, life-stage or ethnic needs.The first can be detrimental to both manufacturer and retailer because it leads to a cluttered appearance and reduces display effectiveness. (It also increases the potential for out-of-stock situations, because fewer units of any one product are on the display.) The second, if done correctly, can improve the store environment as well as the shopping experience.Executives at Mosaic InfoForce suggest that forward-thinking manufacturers can improve their relations with retailers by helping them address these issues.Some Lead, Others FollowRetailers are of two minds when it comes to reacting to lifestyle trends such as the move toward low-carb dieting.In one camp are the companies looking to stay ahead of the curve and beat the competition to the merchandising punch. Speaking at an IRI conference in February, 7-Eleven chief executive Jim Keyes boasted that his chain foresaw the low-carb trend two years earlier, when sales of beef jerky snacks and Miller Lite began to spike. The company almost immediately began prodding manufacturers to develop low-carb products.In the other camp are retailers more willing to follow the wave. Speaking at a Promotion Marketing Association conference in May, Wal-Mart marketing chief Bob Connolly said, "I am sure that some place in this country, right now, there are merchandising people sitting around trying to figure out the 'trend' in low-carb and where it is headed. We don't really care. We want to go where the customer is going, not take them. We just try to fill the shelves and get out of the way."Both camps, however, are looking for manufacturers to assist them in capitalizing on such trends.