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Get closer to customer with next generation planogram White Paper

Techwave

White Paper Get closer to customer with next generation planogram

Introduction

Today’s consumer goods market is flooded with

products has given choices to consumer than ever

before. And growing customer’s exposure to highly

fragmented media passes the pressure on retailer

as a channel to reach consumers. Retailer also in

an attempt to give more choices to its consumer

ends up with 1000’s of SKU’s on shelves without

regards of its operational effectiveness and space

productivity.

As 80-20 rule says that only 20% of SKU’s generates

80% of business, does it mean that retailer should

knock out all SKU’s which are not contributing

majorly in his business. “NO” In today’s competitive

environment where consumer is king, retailer dare

not choose to cut choices and feed only with few

fast moving SKU’s. This 20% contributing SKU’s, is

the differentiator between retailer and his closest

competitor. As research says that 70% of

customer’s purchase decision are made in the

store.

Your customers are forced to make an

in-store decision in the situation like ,

If the purchase of one triggers the desire

for a related product

An out of stock situation of SKU force cus-

tomer to purchase substitute

And consumer’s increasing attitude of

“Try something new” also generates de-

sire if they encounter new taste /flavor on

the shelf.

The growing number of choices available in

the market, space availability at store and

profit margin are placing significant pressure

on retailers for being a customer centric and

profitable. A mechanism or solution which

can balance between assortment that meets

consumer demand, productive space plan,

and intact profits is the needs of the hour for

most of the retailers.

This paper will demonstrate how retailer can

use best of his space and inventory through

collaborative space planning methodology.

Techwave

White Paper Get closer to customer with next generation planogram

Key Features and Benefits

Facilitate collaboration

Integrate space allocation with inventory,

assortment planning and replenishment process,

facilitating higher level of collaboration between

space planner and merchandising team.

Fast and Realistic

Generate 1000’s of planogram in significantly lesser

time.

Tool create virtual realistic planogram with exact

specification of fixture/products for feasible

implementation of the same.

Automated, optimized and store specific planogram

Integrate category strategies, merchandise guide-

lines and space optimization in product placement

process.

Automatic product positions and space adjustment

to achieve merchandise and space objectives

Space & Inventory performance analysis

Performance report of productive usage of each

shelf space based on SKU sale in visual, chart and

table options.

Calculation of used space VS capacity available for

financial performance of shelf space.

Financial performance affected for SKU due to

availability and visibility

Planogram Publishing

Planogram generated in tool publish in pdf format

Easy to understand for floor staff to implement the

same

The Roadblocks to Planogram

From the time of local mom & pop store to

corporate retailing, Space, Inventory and

Labor is most important assets for a retailer

and the best use of these three is the most

challenging task in all time. Complexity of the

situation has risen all time high in recent years

when handling 1000’s global store and more

than million’s of SKU. Achieving maximum

utilization of space and inventory is a difficult

and challenging task in this scenario due to

lack of understanding or limited

understanding of store specific needs. This

in-turn leads to mis-or non-alignment of

corporate driven category and space plan and

performance goal with store level executions.

The result is failure of store level space

compliance.

There are many reasons why it is difficult for a

retailer to develop an ideal space plan and

achieve store level compliance.

Improper space allocation

Complexity in space allocation due to conflict

of limited shelf space availability and the large

number of product that needs to be displayed

leads to improper space allocation.

Labor intensive and time consuming

Creating store specific planogram is not an

easy and quick task, it requires significant

number of resources and 100’s of hour to

develop planogram that account store specific

customer’s product needs and fixture

dimension.

Techwave

White Paper Get closer to customer with next generation planogram

Every category is different and should be

treated differently

When it comes to display on shelves every product

has its own characteristic to be sold in distinct

manner. Merchandise attribute constraint like

adjacencies, facings and sub categories hierarchy

makes space management even more challenging

and complex.

Every store is different

Every store is differ by its customers profile so as

sale performance of SKU’s also differ, it require a

very in depth caution in assortment building

process that suits store specific needs. Space

availability and fixture dimensions also vary store

by store cause big challenge for space planner to

create store specific planogram.

Lack of collaboration and visibility

Traditionally, Space planner develops planogram

sitting at corporate office in a fairly isolated

manner without regards to actual space

availability in store and their specific product

requirements. The development process lacks

inputs from category, manufacturer and store and

thus serves no purpose of this initiative.

>> Take your space management to next level

The industry has come a long way from the days

of handdrawn planogram laid out on makeshift of

two-by-four shelves in the backroom to systematic

diagram.

According to a recent study, when customer cannot find the products they need at their choice of store, the cost to retailer can represent as 40% of intended sales. 31% customer will purchase it at a competitor, 15% will delay the purchase, and another 9% won’t purchase the item at all. Source: out of stock study funded by P&G,

sponsored by FMA, FMI and NACDS and

conducted by Thomas W. Gruen, Ph.D.,

University of Colorado and Dr. Daniel Corsten,

IE Business School Madrid

Tec

White Paper Get closer to customer with next generation planogram

And another recent development in the same

direction is that many global retailers are realizing

the need to move further from cluster level

planogramming to store specific planogram in an

attempt to keep the cutting edge in present

competitive scenario. But successfully winning over

real time challenges and hurdles for store specific

planogram is not an easy task without the help of

contemporary technology solutions. Moving ahead

in the same direction retailer and IT solution

provider are working together to win over

traditional labor intensive and time consuming

planogramming process to automated and

integrated space planning.

Planogramming is just not a diagram of product

placement on shelves; it is the tool which gives

reality to corporate category’s strategies and plan.

And technology’s role in this transformation Is

unprecedented, has helped many retailers to take

their space management to new high and manage

store shelves in a better way.

In below part of the paper we have explained how

retailer can achieve optimization objective of space

and inventory by collaborative planning.

Become customer centric at shelf level

An IDC global retail insight survey indicated that

majority of retailers and manufacturer rank

customer centricity as a top three success factor”.

What is customer centricity? How one successful

retailer /manufacturer is different from others when

we say customer centric? In real term Customer

centricity is company’s ability to execute its top-level

category plan down to individual store’s shelves and

this ability distinguishes them from its closest

competitor.

In simpler words it is nothing but keeping

merchandise on shelves which match your

customer’s taste and preferences. It looks

simple for few store but complexity multiply

when category team has to build store

specific assortment for multiple store and for

1000’s of SKU’s. With no or little technical

capabilities, retailers find it difficult to

incorporate multiple store specific customer

buying trends into assortment building

process leads to improper space allocation

and thus defeat the purpose of whole space

management.

Improve sale and reduce markdown

with better matching demand and

supply

Techwave’s space planning solution enables

the high level of demand and supply

coordination. It track the target stock at

shelve, its daily movement and quantity

required to replenish in the given date. Given

the capability of target qty and re-order point

tracking, retailer can also generate report or

analyze visually and can better monitor the

stock movement of SKU placed on planogram.

Create the best presentation of mer-

chandise by visual capability

Aesthetically well maintained shelves attract

customer and influence their purchase

decision. It’s discovered in various researches

on customer and their movement in retail

store that customer always tends to spend

more time on shelves which attracts them

aesthetically.

Techwave

White Paper Get closer to customer with next generation planogram

With 3D Visual capabilities retailer can manage

realistic planograms that include custom fixtures

and curved shelves, as well as slat walls complete

with signs and textures. Beyond merchandising

aesthetics, the solution helps you match

merchandise strategy with the way that consumers

shop – by brand, flavor, product complement or any

other key product attribute.

Realize greater agility

With the solution’s rapid processing speeds, planner

can quickly calculate/recalculate and review result of

optimal set of space planning as rules and condition

are changed. And because it is centralize, strategic

changes from the corporate-level can be

implemented in all categories across the enterprises

in fast, yet precise and control manner.

Maximize ROI of every inch of store selling

space

For a retailer, shelf cost varies from lower for

dry shelf to higher for dairy shelf space to

exorbitant high for categories like frozen food.

And to get the maximum out of every inch of

retail space is one of the prime objectives for a

retailer.

But, complication in space allocation cause

great impediment for this objective. On one

hand, shelf space is an expensive and scarce

resource for retailers. They would prefer not to

increase the store size due to the high costs of

construction as well as maintenance. On the

other hand continuing rise of retailers attempt

to diversify their product lines in a bid to lure

consumer

Space elasticity is the term use by researcher &

solution provider to measure the

responsiveness of the sales with regards to al-

located space or change in allocated space of

products and is getting recognition by the

industry as a solution of conflict between space

and growing number of choices.

Determining and analysis capability of space

elasticity of SKU in planogram through visual,

chart and table option, gives retailers an

opportunity to optimize space by shifting

product placement or increase /decrease

facings of SKU’s in planogram.

Techwave

White Paper Get closer to customer with next generation planogram

Reduce cash flow blocking by inventory optimization Efficient Cash flow in any business is as crucial as smooth

blood circulation in a human body and inventory is one of

the most crucial investments for a retailer which every

retailer wants to circulate as quickly & efficiently as

possible.

Inventory optimization has always been in highlights and

many solutions have been evolved to counter it efficiently.

But controlling and managing inventory effectively on

shelves is another effort by solution providers in this

direction, in the recent years.

This is the first time in history of space management that

space planner, merchandiser and replenishment executive

are on the same page with regards to inventory and has

given complete visibility to retailer and facilitate improve

decision making with greater precision in making inventory

Techwave

White Paper Get closer to customer with next generation planogram

Planogramming Approach

Techwave’s approach to planogramming and

space optimization solution incorporate all

merchandising and store specific attributes to

facilitate best space planning decision quickly and

efficiently. The solution support and incorporate

large-scale macro space planning objectives into

micro space execution. The above chart clearly

shows that how data from various sources flow

through the Intactix knowledge database and

pass the relevant data. If we can further elaborate

in steps approach whole planogramming process

will have following steps.:

Step 1: Store specific assortment

In the first step towards efficient and executable

space plan. One needs to know store specific

customer profile and their current and future

demands. Build assortment specific to local taste

and preferences in sync with category objectives

and strategies.

Step 2: Store specific planogram

Next step is automated creation of store specific

planogram based on actual fixture and SKU’s

physical details like (SKU’s and fixture size

dimension, weight of SKU, weight holding

capacity of fixture, multi dimensional pictures of

SKU’s etc). Also accounts SKU’s financial

performance and deliverable margins for

revenue optimization.

Planogram generated meets the three key

objectives are space& Inventory optimization,

increase revenue and aesthetic appeal to product

in line with its merchandise guidelines and best

practice.

Step 3: Publish and share planogram

After successfully creating store specific

assortment and planogram, the same will be

publishing in easily understandable pdf format

and share to stores through web interface.

Techwave

White Paper Get closer to customer with next generation planogram

Step 4: Collaborative execution and

communication

The success of this initiative lies with flawless

execution at store level. And to achieve this, it

requires collaborative efforts from

merchandiser, store execution team and vendor

through regular communication in execution

process.

Step 5: Enhance productivity through regular

analysis

After flawless execution, it requires performance

review of the same at store and corporate office

level. With the analysis capabilities, space plan-

ner can generate reports in regular interval and

analyze space and inventory performance and

share with merchandiser, store and vendor.

Road Ahead

With the leading cutting edge technology

capabilities, years of working experience

with top global retailers and in-depth

expertise of different retail formats and

vertical, Techwave is committed to

provide innovative solution. In precise,

Techwave’s client can place right product,

in the right store, in the right position at

the right time- every time.

White Paper Get closer to customer with next generation planogram

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