Four metres of cereal and a 2% rebate
A 400 m² neighbourhood store has exactly 4 m of shelving for breakfast cereals. The symbol group's planogram sets 2 m for the national brand (8 facings), 1 m for the group's own brand (6 facings) and 1 m for value bags (4 facings). Full compliance earns a 2% annual rebate worth €3,400.
Scan data for the last 12 weeks is as follows. National brand: €1,420 of sales in 2 m. Own brand: €3,180 in 1 m. Value bags: €980 in 1 m. That is €59, €265 and €82 per metre per week respectively.
About three customers a week ask for gluten-free cereal and the store stocks none; a competitor 800 m away does. Two cases of the national brand in the back store expire in 21 days.
The area manager visits in three weeks. The group accepts planogram variations only through a written 'local variation' request, which must keep at least 4 facings (about 0.8 m) of the national brand and takes about a month to approve.
1. Propose a shelf allocation for the 4 m, with figures and reasoning. Show how you weigh sales per metre against the rebate, and say what you would do about the expiring stock and the gluten-free gap.
Read the worked answer
Read the data per metre, not just in total. Own brand returns €265 per metre per week against €59 for the national brand - about 4.5 times the return for the same space. Total sales alone would hide this, because the national brand occupies twice the space.
Proposed allocation (subject to approval)
- National brand: 0.8 m - the 4-facings minimum, no more until it earns more space. Estimated €47 a week.
- Own brand: 1.9 m - the proven performer. At the current rate, about €504 a week.
- Value bags: 0.8 m - still better than the national brand per metre, about €65 a week.
- Gluten-free: 0.5 m - a small range for a demand the store currently loses, and a reason for those customers to shop here rather than 800 m away.
Estimated total: roughly €615 a week against €465 now, an uplift of about €150 a week, or around €7,800 a year in sales. Even at a 30% margin that is over €2,300 of gross profit, before counting the gluten-free customers' wider basket.
Two honest caveats. Per-metre rates measured in cramped space overstate the gain when space is added, so treat the uplift as an upper bound, not a forecast. And the rebate at risk is €3,400 - unless the written variation is approved, the change could cost more than it earns, so submit the request first and do not break compliance in the meantime.
Expiring stock: rotate the two cases to the front, reduce the price on one case as a visible 'short date' offer rather than letting it expire, and return or swap the second with the supplier if the trading terms allow.
Gluten-free: start with four or five lines from the group's own range, positioned with the free-from sign at eye level, and review after eight weeks on rate of sale.
2. How would you test and measure the change, and how would you present the case to the area manager?
Read the worked answer
Before the change: baseline. Record 12 weeks of unit sales and sales value per line, the current sales per metre per week, the number of gluten-free enquiries per week (ask staff to tally them on a sheet at the till), and the current rate of sale on the national brand.
The proposal pack for the area manager should be one page:
- The data table - space, sales, and sales per metre per week for each of the three segments.
- The proposed allocation with the 4-facing minimum respected, showing that compliance is retained.
- The cost of the rebate at risk (€3,400) against the expected gross profit uplift, so the trade-off is explicit and the decision is the manager's, not hidden.
- The reason for the gluten-free space - recorded customer requests, not a hunch.
- The review date and the measure of success: sales per metre per week, availability, waste and short-dated stock, and the number of gluten-free enquiries converted.
During the trial (8 weeks)
- Keep the shelf edges labelled with the plan so it can be audited.
- Check availability daily; a gap on an own-brand line destroys the case for giving it more space.
- Record out-of-stocks separately from poor sales - the two look identical in scan data and mean opposite things.
- Watch for cannibalisation: is the own brand simply taking sales from the value bags?
After the trial compare like with like. A week with a promotion or a bank holiday is not a fair comparison; use a matched period last year or the 12 weeks before the change, and adjust for any price change.
If the uplift does not appear, revert to the planogram, and say so - the credibility of the next request depends on this one being reported honestly.
3. A customer asks where the gluten-free cornflakes are. Walk through the selling conversation you would have, including how you would handle price and any add-on.
Read the worked answer
Open with a question, not a pitch. 'Are you avoiding gluten for medical reasons, or is it a preference?' The answer changes what I recommend: someone with coeliac disease needs certified gluten-free products with no cross-contamination risk, while a preference customer may accept a 'no added gluten' claim. Getting this wrong is a safety issue, not a sales issue.
Show, then explain features as benefits. Walk her to the free-from section rather than pointing. 'This range is certified gluten-free and produced on a dedicated line - so you are not gambling on cross-contamination.' Mention the price per 100 g, because free-from shoppers are used to comparing and value trust over a few cents.
Handle the price honestly. If she says it is expensive: 'It is more than the standard line, yes - the certification and separate production are what you are paying for. This one works out cheaper per 100 g than that one, and it is the one we sell most of.' Do not invent a health claim, do not say it is 'healthier for everyone', and do not pretend it is on offer when it is not.
Complete the basket without pushing. Ask what she usually has with cereal - milk, yoghurt, fruit - and point out the free-from alternatives in the chiller if she has not found them. One relevant suggestion is help; five is pressure.
Close the loop. If the line she wants is not stocked, write it on the customer request sheet, tell her when the order goes in, take her name if she wants to be called, and feed the request into the range review. That is how the three requests a week become evidence instead of lost sales.