The Retail Shelf - The Underestimated Power
19/03/2004
By Vaggelis Mattheopoulos, ECR Business Manager MENA for MEMRB Retail Tracking Services
So what is the significance of the shelf? Apart from ideally being aesthetically attractive, it is the point where demand meets supply, or to put it in a more simple way it is where the customer (demand) meets the product (supply). With this in mind, manufacturers & retailers, must deliver the right product, in the right volumes, to the right customer at the right time at an appropriate price……..Enter Merchandising!
Before the process can even start there has to be a common level of understanding between all business partners, this is attained through the sharing of information relating to strategy, goals and objectives. It is how well retailers and manufacturers apply the relevant information and execute against the opportunity that will determine whether sales are won or lost.
At MEMRB Retail Tracking Services we believe the value of the shelf is paramount, therefore exceptional management of the merchandising process is the key to success. We believe our step by step, cyclical, logical process offers a framework for growth no matter what the capability or objective of the corporation. Importantly it offers a common language enabling manufacturer and retailer to jointly execute against customer demand.
There are four major areas to success:
Data is the fuel to drive efficient and effective merchandising. Understanding what information to integrate within the process to support the required business decisions is no simple task therefore this is a critical starting point; accuracy here delivers meaningful results at the customer interface. Pinpointing and matching data from multiple sources is crucial for results. Most retailers and manufacturers, in the Middle East are short of resources that are crucial to pinpointing and matching data from multiple sources. Those companies are outsourcing to category management agencies who assist them in the organisation of hierarchical databases to meet business needs enabling easy comparison of competitor, store and product performance.
The ability to carry out analysis at SKU, shelf and store level is critical to the merchandising process. By combining relevant scanning, consumer and demographic data, the resultant information becomes powerful in driving store ranging decisions reflecting both local consumer need and individual category purchase patterns.
A typical ‘power ranking’ report will answer questions such as:
An assortment optimisation process takes this analysis to the next level by enabling process stakeholders to make informed business decisions with the objective of increasing productivity, profit and sales. These improvements will be achieved by offering informed consumer choice, achieving profitability and meeting joint category strategic objectives.
Creating an effective and balanced assortment at the start of the planogramming process will help maximise sales, however this needs to be presented effectively to the shopper in a logical and aesthetic manner to capitalise on the sales opportunity. By carefully integrating strategic category planning into the assortment and planogram process, it reinforces brand and product roles to the consumer at the shelf. This will also include the introduction of new products reflecting Marketing & New Product Development (NPD) strategies, or the repositioning on shelf of brands as category strategies change and products advance through their respective retail lifecycles. While assortment in Europe and the US is driven primarily by sales and profit measures in the Middle East it is driven by linear brand exposure and space rental. As with all performance measures, linear brand exposure is a curve and while a certain number of facings will increase return on investment, too many facings will negatively affect the return. The excessive space taken by one brand can be utilised for a brand of the same or different manufacturer that is underspaced. Various case studies, undertaken by MEMRB Retail Tracking Services, have shown that if a Brand Leader is underspaced by only one facing over 80 Categories in a chain of 40 stores over a 52 week period, it results in a loss of profit as high as US$ 1,647,000.
Once the strategic planogram layout has been identified it must be communicated to the relevant stakeholders. These will normally include marketing, operations, store and departmental managers. The ability for each manufacturer and retailer to implement a process whereby planograms are built, analysed, delivered and implemented quickly and efficiently directly affects how quickly retailers and manufacturers achieve target ROI. Substantial savings can be made by automating non-value adding elements of the process and simplifying planogram production. By utilising leading edge technology manufacturers and retailers can substantially reduce the time allocated to planogram production, customisation and distribution. Furthermore, a printed planogram eliminates human error at the in store implementation. Merchandisers have an exact depiction of the shelf in front of them and only need to follow that picture.
Within merchandising the total store layout, planogram and product are completely
integrated. Product performance is directly affected by category location, which in turn is impacted by the appearance and location of other sections surrounding the fixture and the overall store ambience. Macro analysis is as significant as micro analysis although it frequently receives less attention. Total store projects offer a degree of insight equal to the level of information available at a micro level. The ability to view all merchandising solutions in the virtual world and move between product, fixture and store adds significant value and facilitates cost effective decision making.
Finally….even when Planogramming has taken place, there is no improvement in ROI without on-shelf implementation. Non-compliance is a hot issue in the FMCG industry and according to MEMRB Retail Tracking Services, a significant cause of revenue loss – between six and ten per cent of all sales.
Leading Edge Technology products assist in the identification and resolution of non-compliance issues such as out of stocks and overstocking, missing shelf tags - all critical issues in increasing sales and profit.
So we have created the assortment, merchandised, analysed the category and total store performance and checked compliance, what next? Merchandising is a cyclical process, which continually seeks to improve product performance at the shelf ……..Back to step one then!
For further information please contact:
Vaggelis Mattheopoulos, MEMRB Retail Tracking Services
Website: www.memrb.com
Before the process can even start there has to be a common level of understanding between all business partners, this is attained through the sharing of information relating to strategy, goals and objectives. It is how well retailers and manufacturers apply the relevant information and execute against the opportunity that will determine whether sales are won or lost.
At MEMRB Retail Tracking Services we believe the value of the shelf is paramount, therefore exceptional management of the merchandising process is the key to success. We believe our step by step, cyclical, logical process offers a framework for growth no matter what the capability or objective of the corporation. Importantly it offers a common language enabling manufacturer and retailer to jointly execute against customer demand.
There are four major areas to success:
Data Integration
Data is the fuel to drive efficient and effective merchandising. Understanding what information to integrate within the process to support the required business decisions is no simple task therefore this is a critical starting point; accuracy here delivers meaningful results at the customer interface. Pinpointing and matching data from multiple sources is crucial for results. Most retailers and manufacturers, in the Middle East are short of resources that are crucial to pinpointing and matching data from multiple sources. Those companies are outsourcing to category management agencies who assist them in the organisation of hierarchical databases to meet business needs enabling easy comparison of competitor, store and product performance.
Data Analysis / Shelf Planning
The ability to carry out analysis at SKU, shelf and store level is critical to the merchandising process. By combining relevant scanning, consumer and demographic data, the resultant information becomes powerful in driving store ranging decisions reflecting both local consumer need and individual category purchase patterns.
A typical ‘power ranking’ report will answer questions such as:
- Which products are performing best in the category?
- Which products are growing slower than the category?
- Are products in this assortment affected by regionality?
- Are there products missing which meet the selection criteria and are stocked elsewhere locally?
An assortment optimisation process takes this analysis to the next level by enabling process stakeholders to make informed business decisions with the objective of increasing productivity, profit and sales. These improvements will be achieved by offering informed consumer choice, achieving profitability and meeting joint category strategic objectives.
Store Planning / Visualisation / Store Distribution / Store Execution
Creating an effective and balanced assortment at the start of the planogramming process will help maximise sales, however this needs to be presented effectively to the shopper in a logical and aesthetic manner to capitalise on the sales opportunity. By carefully integrating strategic category planning into the assortment and planogram process, it reinforces brand and product roles to the consumer at the shelf. This will also include the introduction of new products reflecting Marketing & New Product Development (NPD) strategies, or the repositioning on shelf of brands as category strategies change and products advance through their respective retail lifecycles. While assortment in Europe and the US is driven primarily by sales and profit measures in the Middle East it is driven by linear brand exposure and space rental. As with all performance measures, linear brand exposure is a curve and while a certain number of facings will increase return on investment, too many facings will negatively affect the return. The excessive space taken by one brand can be utilised for a brand of the same or different manufacturer that is underspaced. Various case studies, undertaken by MEMRB Retail Tracking Services, have shown that if a Brand Leader is underspaced by only one facing over 80 Categories in a chain of 40 stores over a 52 week period, it results in a loss of profit as high as US$ 1,647,000.
Once the strategic planogram layout has been identified it must be communicated to the relevant stakeholders. These will normally include marketing, operations, store and departmental managers. The ability for each manufacturer and retailer to implement a process whereby planograms are built, analysed, delivered and implemented quickly and efficiently directly affects how quickly retailers and manufacturers achieve target ROI. Substantial savings can be made by automating non-value adding elements of the process and simplifying planogram production. By utilising leading edge technology manufacturers and retailers can substantially reduce the time allocated to planogram production, customisation and distribution. Furthermore, a printed planogram eliminates human error at the in store implementation. Merchandisers have an exact depiction of the shelf in front of them and only need to follow that picture.
Within merchandising the total store layout, planogram and product are completely
integrated. Product performance is directly affected by category location, which in turn is impacted by the appearance and location of other sections surrounding the fixture and the overall store ambience. Macro analysis is as significant as micro analysis although it frequently receives less attention. Total store projects offer a degree of insight equal to the level of information available at a micro level. The ability to view all merchandising solutions in the virtual world and move between product, fixture and store adds significant value and facilitates cost effective decision making.
Compliance Assurance
Finally….even when Planogramming has taken place, there is no improvement in ROI without on-shelf implementation. Non-compliance is a hot issue in the FMCG industry and according to MEMRB Retail Tracking Services, a significant cause of revenue loss – between six and ten per cent of all sales.
Leading Edge Technology products assist in the identification and resolution of non-compliance issues such as out of stocks and overstocking, missing shelf tags - all critical issues in increasing sales and profit.
So we have created the assortment, merchandised, analysed the category and total store performance and checked compliance, what next? Merchandising is a cyclical process, which continually seeks to improve product performance at the shelf ……..Back to step one then!
For further information please contact:
Vaggelis Mattheopoulos, MEMRB Retail Tracking Services
Website: www.memrb.com
