Direct store delivery rewarding both retailers and manufacturers
Seventy-seven per cent of US-based retailers indicate that in 2008, they expect their use of direct store delivery processes (DSD) will increase or remain constant, representing a significant opportunity to drive sales growth, according to a study released by the Grocery Manufacturers Association (GMA).
DSD, which revolves around the supplier delivering directly to the retailer, has reportedly become increasingly prevalent as focus on more demand-driven supply chains is heightened.
The research, Powering Growth Through Direct Store Delivery – which was conducted by AMR Research and Clarkston Consulting, suggests retailers and manufacturers can derive benefit from the process. “Direct store delivery improvements represent manufacturer-customer collaboration at its finest,” claimed Stephen Sibert, GMA senior vice president of industry affairs. “This study indicates that both retailers and manufacturers are being rewarded for DSD innovations – from enhanced promotional effectiveness to increased brand and store loyalty.”
As evidence of the sales opportunity that DSD can create for retailers, the study suggests that sales of DSD products account for 24 per cent of unit sales and 52 per cent of retail profits in the grocery channel. Seven of the top ten largest grocery categories employ DSD, and these categories experienced a nearly 15 per cent growth in sales from 2003-2007.
By placing supplier representatives in the store, the DSD model not only helps ensure proper execution of trade promotions but also contributes 25 per cent of total store labor in the North American market. “DSD offers unparalleled capabilities to meet shoppers’ needs,” noted Ann Dozier, The Coca-Cola Company’s vice president, collaborative customer capabilities and chairman of the GMA Direct Store Delivery Committee. “By collaborating with DSD suppliers, retailers can maximize operations while delivering a unique shopper experience at every store.”
The analysis, based on quantitative and qualitative research of DSD and non-DSD company environments, is available for download at: www.gmabrands.com/publications/DSD_Report_FINAL_0808.pdf.