The produce manager put on a brave smile but said forced allocations were killing him.
You probably know what he was talking about. Sometimes called distributions, or plus-outs, the term “forced allocations” describes inventory sent to stores from a distribution center that the store doesn’t order. This is done for several reasons.
The first and perhaps more acceptable form of forced distributions take place before an ad breaking. Rather than wait for stores to begin ordering, a chain may arrange to send out a prearranged allotment of ad items, typically based on a store’s volume.
At one point, we designated stores into four segments — with “A” stores getting the highest distribution. For example, if gala apples was the lead ad feature, all “A” stores might receive four pallets on the Monday before the ad breaking, with three pallets for “B” stores, two pallets for “C” and a single board for the lowest-volume stores. Other primary ad items would follow suit.
The distribution schedule was sent the week before so stores could adjust inventories and labor schedules. The advantage to this system was to alleviate warehouse space while encouraging produce managers to get an early start building displays, with plenty of produce in reserve for Wednesday’s heavy ad shoppers.
After this initial distribution, the stores ordered as normal.
The less desirable form of forced distributions typically occurs towards the end of an ad period. Perhaps, due to any combination of factors, ad sales fall short of expectations: price, quality, competitive factors, short-dated items, or simple misjudging the whole shooting match.
To avoid sitting on an aging inventory, the only course of action a chain has (short of returning merchandise to a supplier) is to send the excess out to the stores.
Ideally, it’s up to the warehouse buyers to rely on records and other factors for how much to buy. The same principles apply at store level.
But, even in the best circumstances, excess inventory sometimes results and is forced out to the stores.
When this happens, the best reaction is for produce managers to get the items out of the back room.
Build large or secondary displays, perhaps keep the ad price active for a day or two beyond the expiration date, sample the item(s) and merchandise your way out of potential shrink.
“What can I say?” the manager said, shrugging. “It’s part of the produce business.”