- Al Carey, PepsiCo’s chief executive officer of North America, said the company is a big believer in direct-store delivery (DSD), according to Food Business News.
- Some CPGs are moving away from DSD, such as Kellogg Co., which said it was moving from that system to a warehouse model earlier this year.
- Vivek Sankaran, president and chief operating officer of Frito-Lay North America, said that PepsiCo’s commitment to its DSD system provides advantages since e-commerce is becoming a more significant part of the company’s business.
Earlier this month, Kellogg said it was going to redeploy resources in its DSD distribution system to different forms of marketing that company president Paul Norman said “can more effectively and efficiently reach today’s consumer.”
Analysts say DSD provides greater opportunity for sales because there’s more control over retail shelf space. Companies can provide additional services to their retail partners, including in-store forecasting, store ordering and shelf inventory management.
PepsiCo finds value in its DSD model because it helps to solidify the customer relationship and get better execution at the store level. It’s able to respond to problems quickly and accurately.
The Grocery Manufacturers Association reported that DSD represents approximately 24% of unit sales and 53% of profits in the grocery segment. Out of stocks for DSD items are usually 2% to 4% lower than products distributed through warehouse centers.