Nolans Finest Foods

By Group 4 Abhishek Machama Ankita Kunwar Ashok shashidharan Dhiraj doley Kranthi Rayapati Rohan Kulkarni Sanjay OS

Case Facts
Nolans Finest Foods is a high-end food-and-drug combo stores. Located in San Francisco Bay area. Chain features a variety of high quality products. To face the anticipated competition from Valumart Grocery Chain, Nolans Finest Foods is experimenting with category management. Nolans decides to do pilot test category management in Shampoo category before implementing it for all other categories. Hal Jeffreys suggested Knock out the slow sellers approach.

1: What are the national sales trends in the shampoo category? Total U.S. Supermarket Dynamics: Shampoo
Exhibit 1 52 Weeks Category Brands Private Label Generic #Active SKUs 1,974 1,714 241 19 % New SKUs 15% 16% 12% # SKUs Handled 235 229 5 1 SKU Dollar Velocity $ $ $ $ 1.64 1.65 1.33 1.00

There has been an increase in the % of New SKUs at Nolans. There has been an increase of 15% in Overall (Category) at Nolans. There has been an increase of 16% in Brands at Nolans. No change in Generics observed.

1: What are the national sales trends in the shampoo category? Shampoo Dollar Share
Exhibit 2 Trade Channel Food Drug Mass Merchant 12 M Last Year 51.7% 25.6% 22.7% 12 M This year 50.5% 25.0% 24.5%

Mass merchants gaining prominence over the last year compared to Food and Drug stores in the US Supermarket. There has been +1.8 percentage points increase in the dollar sales of Mass merchants.

1: What are the national sales trends in the shampoo category? Shampoo Growth
Exhibit 3 Trade Channel Dollar Sales % Change Compared to a Year ago

Food
Drug Mass merchant

0.9%
4.2% 8.1%

Mass Merchants shown higher growth in sales of shampoo compared to Food and Drug Stores. From Exhibit 3 & 4, we can infer that sales of shampoos in Food and Drug stores is increasing at a lower rate when compared to other categories at Food and Drug stores.

Q2: What are the differences in shampoo sales trends at Nolans compared with national trends? Dollar Sales: Percent Change versus a Year Ago
Exhibit 4
Market 13 weeks Total dollar sales Health Beauty Dept. Shampoo category 0.1 1.5 - 3.5 52 weeks 1.2 4.2 0.7 13 weeks - 10.6 - 8.5 - 19.6 Nolan's 52 weeks - 4.5 - 4.3 - 9.7

In the last quarter the overall market has not performed well but over a period of last year, market has just managed to cross the sales figures of last year. Nolan's shampoo category is performing worse than the overall market. Last year the % increase in dollar sales of the overall market is 0.7 but Nolan's under performed in that period. HBA department sales are increasing in the last quarter as well as in the last year but shampoo category is not performing at the same rate. Assuming Shampoo category is the sub set of HBA department.

Q3: What would be causing these differences?

Nolan products are expensive compared to other stores in the market. Exhibit 5 Mass merchants and Food #2 sell at a lower price than Nolan.
Mass merchants sells 103 items at lower price than Nolan. Food #2 sells 44 items at lower price than Nolan.

Nolans brand ranking is slightly different than the rest of the market.

Nolans product mix is slightly different than the rest of the market.
From Exhibit 2 & 5, we can infer that Mass merchants are the only stores which are performing well in the shampoo category in the US market because of their lower prices. From Exhibit 6 & 7, We can say that important and preferred "Items carried" and "Types carried" are less for Nolan's as compared with the remaining market.
Bargain Bubbles ranked #2 in the market but Nolan carries lower percentage of these brand items. This may be due to lack of their shelf space.

Q4: Suggest a plan of action? We partially agree with the advice given by Hal Jefferrys i.e., knock off the slow seller approach and below are the items which needs an action by Nolans chain: 1st Impressions have to change their SKU because even though "1st Impressions" ranked #2, it is the slowest selling SKU at Nolan. (Refer Exhibit 6 & 8) Silky Style SKU needs to be removed as it is ranked #5 and even it is the slowest selling SKU at Nolan. (Refer Exhibit 6 & 8) Suds SKU should not be replaced, even though it has less market share but the remaining market growth is higher i.e., 107.1%. (Refer Exhibit 8) Gentle gold should not be replaced as it is being completely consumed at Nolan which means this product is only available at Nolan. (Refer Exhibit 8)

Thank you!