Good advice increases profitability

Text: Sigrid Elsrud

Strong growth is reported by two Coop obs! shops in Haugesund and Trondheim. Lilleborg has acted as advisor to both shops.
"Increased sales for the customer means increased profitability for us, at any rate in the long term," explains Asgeir Hansen, Category Development Manager at Lilleborg Home and Personal Care.
After extensive consumer interviews, the personal hygiene and cosmetics department at Coop obs! in Haugesund was restructured as a "shop in shop ". Since the changes were made in May 1999, sales have increased substantially, also in relative terms compared with other product groups. The products' floor space and location in the shop were not changed.
"We assume responsibility for the entire product group, and we measure the growth of the whole category, not only that of our own products," Asgeir Hansen emphasises. Like his colleague at Nidar, Astrid Østmoe, he is concerned to ensure that category development is a new way of thinking that will gradually come naturally to everyone in the company.
"Externally, we serve as an advisor who works with and for our customers. At the same time, category development affects the entire organisation internally. It's a new way of working," says Astrid Østmoe. She heads a department with a staff of 11 who are currently participating in interdisciplinary development projects at Nidar.
"Chains choose their partners on the basis of who can make the biggest contribution. We have succeeded in enhancing our input to that level," explains Østmoe.
Nidar applies four main principles for category growth:
- Needs-based segmenting. While products used to be classified as "bars, sweets, liquorice, etc.", examples of main groups today include "For myself", "Children", "For sharing" and "Gift".
- Simplification. Grouping products into needs-based segments makes it easier for the consumer to find what he or she is looking for. A customised assortment simplifies operations for both retailer and supplier.
-Exciting shop displays. Product displays should be designed to create a centre of enjoyment, pleasure and excitement.
- Accessibility. Each channel should have products for all types of uses. Products should be accessible both in the store and in the home.