Intelligent Retail Distribution at Søstrene Grene
Every week, trucks from Aarhus, Denmark, embark on a journey to distribute a myriad of new products to approximately 250 Søstrene Grene retailers across Europe. The distribution’s precision, both per item and per store, is attributed to the Intelligent Retail Distribution system pioneered by AGR. This system has heralded a new age of accuracy, leading to increased turnover, reduced lost sales, and optimised inventory management throughout the supply chain.
Søstrene Grene’s distinctive business model ensures that most of their stores introduce around 100 new items each week. This approach is designed to consistently present customers with a renewed shopping experience, motivating them to visit the stores regularly. A pertinent question emerges: how does the supply chain team determine the exact number of items each store should receive, especially when 60% of the weekly consignment is brand-new?
Transitioning from Sales Budget to Forecast-Based Distribution
Historically, the allocation was rather linear, predominantly driven by the overarching sales budget. It was a one-size-fits-all approach where stores with high turnovers were allocated larger quantities, while those with lower turnovers received fewer items.
This methodology underwent a transformation with the introduction of the Intelligent Retail Distribution system. The retail chain now ensures each store is supplied with quantities that align with its specific sales figures and requirements. Such precision is advantageous not only for the individual stores but also for the central warehouse in Aarslev, located west of Aarhus, and the purchasing department.
The cornerstone of this precision? The distribution now relies on sales history and forecasts. While a significant portion of the items is new, they are categorised into three distinct levels. For instance, for a dining room chair: Level 1 is Furniture, Level 2 is Seating, and Level 3 is Dining Chair. The sales forecast for a new product is then derived from the sales history of analogous items within Level 3.
The Smooth Integration of the New System
The shift to the AGR solution, initiated in 2019, was seamless. The primary challenge encountered was the inconsistency and lack of data. To counteract this, the company invested in a Product Data Management system. This system ensures uniformity in the creation of product master data and upholds high data quality standards.
The Impact on Retail Outcomes
The introduction of this system has had profound effects on the retail outcomes for Søstrene Grene. By basing distribution on sales history and forecasts, the company can be more agile in its response to market demands. This agility is crucial in the ever-evolving retail landscape, where customer preferences can shift rapidly, and staying ahead of the curve can be the difference between success and stagnation.
Furthermore, the Intelligent Retail Distribution system has allowed the company to reduce wastage and overstock. With more accurate distribution, stores can better cater to their customer base, ensuring that products are available when and where they are needed. This not only enhances customer satisfaction but also optimises the sales potential for each product.
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