Want $1 Billion? Reinvent the Dairy Case

And the winner at Shopper Insights in Action 2010 sponsored by IIR US for the biggest dollar impact in their industry is… Bruce Vierck, RTC and Rebecca MacKay, Dairy Management, Inc.! At least that’s what I’m guessing. And, yes, the result of the action they took on key insights if fully rolled out would be $1 billion.

Dairy is in an interesting situation in retail. It drives 19% of store profit in only 3% of the store space. Reallocating dairy to the center of the store increased single store profitability by $43K. So, obviously dairy is REALLY important in the overall retail grocery mix.

But unfortunately, the dairy aisle suffers from benign neglect and has for the last, oh say, 50 years. It is one of the least compelling areas in the store in desperate need of reinvention. So that’s what RTC and Dairy Management did. They formed a coalition with Kraft and Danone to cover the major category bases (RTC represented fluid milk, Kraft was cheese, Danone was yogurt, and Dairy Management provided the objectivity) and then began a process to see what could be done.

They conducted a path to purchase study comprised of journal studies, shop-alongs, and observation. From the information collected, they developed insights and implications. Those implications for the dairy aisle were in turn translated into a design that was then tested in a number of retail outlets.

The results were impressive. Instead of short “grab-and-go” behavior, consumers spent on average 2.4 times more time in the dairy aisle and made 30% more purchases. Combine that with more traffic and higher conversion, and the result was a 1.6% increase in dollar sales on average. While that might not sound like a huge percent increase, it translates into $1 billion for the industry.

So, I’m nominating RTC and Dairy Management for the “Largest Impact Award”. And if no one offers up a trophy, they can call me and I’ll buy them a cold bottle of chocolate milk. Thanks for your work Bruce and Rebecca.