The Branded Pantry

Instant Planogram Access, Part of the F.I.X. approach to salvaging Category-Space Management. 

In our last blog we outlined a process, based on documenting the causes for the gaps between the plan for the shelf, and the actual shelf, for salvaging the current approach to category-space management.   We also covered the first element in the salvage process.   We said:

Our recommendations for salvaging the current category management/ shelf management model contains three process improvements. 

We call the approach the F.I.X. process:
F.I.X. stands for
• Fresh Start to the store POG
• Instant access for all parties who need to comply
• X-refer (cross refer any changes that are planned for the pog with the shelf status.)

Today let’s deal with the second element of the F.I.X. process, providing instant access to the planograms for all parties who need to comply.   In the newly released study, Optimizing the Value of Integrated DSD, from the GMA DSD committee one of the surprising findings was how difficult it was for trading partners to gain access to what was believed to be the current and store planograms.   The report indicates that access was unavailable for the store resources charged with maintaining those planograms at the shelf over 40% of the time! 

Having easy to use, perhaps even picture based, POGs available to anyone working a store shelf section is a critical step in creating an expectation that the shelf will be maintained as the trading partners have agreed.  If they cannot see and understand what the plan is, they cannot execute the shelf.  Seems obvious but in conducting the GMA study,  we ran into a number of cases where even headquarters staff had trouble laying their hands on what they believed to be the current, agreed upon planograms for a particular store.  In one case we were told by a retailer that they “thought they had some PDF files showing the plan but they were about 5 years old.”

This issue is clearly costly to both trading partners.  At the very least they cost:
• Sales for the items which are not treated as they should have been in the plan
• Sales for the items introduced but not in the plan (therefore there is not plan for them)
• Sales for a category sub-optimized on the fly by personnel who do not have the expertise or data on hand to effectively deal with introducing products, deleting products or changing facings or shelf positions, based on whatever criteria they use in the absence of an available plan
• The labor costs involved in constantly adjusting space and assortment, from the conditions encountered upon arrival at store.  In many cases these adjustments are redone by the next person addressing the shelf.  
• Ongoing credibility gap between the field and HQ on the plan vs. execution issues.
• Ongoing inability to be able to effectively measure the impact that plans are having on sales.

Recommendations:

The retailer needs to keep up-to-date planograms available right in each section.  That way stockers, brokers and others can readily refer to the set as it is meant to be.

Reading the pogs if they ARE available.
Not only do the planograms need to be easily available, they need to be readable.  I was in my local superstore the other day, which is being transformed into an even bigger superstore.  There were extra personnel wondering around trying to finish some of the aisle to aisle and within aisle changeouts.  It was pretty obvious that the plain text POGs were pretty cryptic for even experienced folks to interpret, and harder still for the unskilled.  Up to date product pictures would have helped this. 

None of this is easy, but perhaps most difficult of all is trying to match a fully filled section with a planograms and determine what is set according to the plan, what things are missing and what things are on the shelf but not in the plan.  The human eye-brain combination is not really built to generate this comparison, at least according to the Harvard Visual Attention Lab.  However, between this process and the use of ShelfSnap understanding compliance, and fixing it are well within reach for the first time. 

We will describe the third leg of this stool in an upcoming blog.  It will describe cross-referring agreed upon changes and keeping the planograms up to date so that all parties can agree on when something is not in compliance. 

ShelfSnap was asked recently to help a retailer to bring their space management and category management from their self-assessed state of 1985 into the state of the art as it is now practiced.

Based on over two years of documenting the promotion and planograms compliance levels of the industry (well documented in a variety of our newsletters (http://www.shelfsnap.com/news-events.php) and in my blog (brandedpantry.com) we have no small body of understanding that should prove valuable.

As we have reported ShelfSnap finds that planograms compliance to plan is typically below 50%.  Type 1 compliance (ShelfSnap’s term) looks at both the items called for in the plan and the number of facings prescribed for each of those items.   The poor level of compliance is equally accounted for by assortment voids and by facings discrepancies vs. the plan.

Why this process has gone so far off the rails?  Cannondale – Partnering Group studies put the impact of a well implemented category plan at 8% for the manufacturer and 14% for the retailer.  Yet no one gets these types of increases.  With compliance at the levels we have documented it is probably a wonder if much benefit at all accrues.

So ShelfSnap sifted through findings and came up with two approaches.

•    Salvage the current category management – shelf management model with better practices.
•    Start over with a new process.

The retailer had asked for our advice on salvaging the current practice which will form the basis of this and the next blog.  Then we can touch on some ideas for starting over.

Our recommendations  for salvaging the current category management/ shelf management model contains three process improvements.

We call the approach the F.I.X. process:
F.I.X. stands for
•    Fresh Start to the store POG
•    Instant access for all parties who need to comply
•    X-refer (cross refer any changes that are planned for the pog with the shelf status.)
Fresh Start to the Store POG: 

Most current plans for a given category are built upon historical plans.

Going back to the beginning, plans were started years ago when there were few store variations and almost no knowledge of what the actual section looked like in any given store.

Each year that plan, with last year’s modifications built upon every proceeding year’s modifications, becomes that base for the plan which is to come for next year.

Very few manufacturers or retailers check the actual shelf configuration, the product flow or the assortment and/or facings in any given store.  If they do check, they have done so once and make the assumption that the set stays in place.

At some point additional segmentation or versioning has been done to account for what is thought to be store size variations, or demographic or socio economic variations between stores.

In the last 5 years, store specific planograms are being built adjusting assortment, facings and location based on actual POS sales, loyalty data and on demographic information more specific to that stores trading area.

This historical foundation issue is the primary reason that plans are almost never implemented as designed.    The impact of using the historical foundation or “last year’s plan” is that the set team:
•    Almost never runs into fixtures set up as specified by the plan.
•    May run into a section that is smaller, larger than the plan calls for.
•    Almost always runs into products not accounted for in the plan or in the “drop” instructions.
•    In many instances will run into product flow set ups that differ from the very specific plans given to them.  In some cases the set is on the opposite side of the aisle anticipated in the plan.  In others the product flow (front-back of the aisle traffic) is set up differently.

All of these are costly issues for trading partners.  At the very least they cost:
•    Time for the set team to make adjustments to the plan
•    Time for HQ and regional personnel to try and “consult” on the fly to deal with the changes, if they are consulted at all.
•    Sales for the items which are not treated as they should have been in the plan
•    Sales for the items unaccounted for in the plan (therefore there is not plan for them)
•    Sales for a category sub-optimized on the fly by personnel who do not have the expertise or data on hand to effectively deal with the discrepancies encountered.
•    Ongoing credibility gap between the field and HQ on the plan vs. execution issues.
•    Ongoing inability to be able to effectively measure the impact that plans are having on sales.

Some Findings (from the top two grocery sellers in the U.S.):
•    Plan calls for 14 refrigerated shelves in two doors for creamers.  In fact almost all stores only had 13 shelves.  Efforts to fix this saw labor install a 14th shelf with not nearly enough room to hold stock in any merchandisable position.
•    Plans called for 15 shelves across three segments for bagged salads. 15% of the checked stores had either fewer or more shelves.  Range was between 10 and 17.
•    Plan called for 16’ set across a group of stores.  Just under 5% of stores had 36’ sections.
•    Stores were mirrored in over 25% of the cases for major category.  Retailer claimed mirroring never happened in their stores.
•    ShelfSnap have found that actual shelves are out of compliance immediately after set up to almost the same degree as shelves checked 6 months after the set.  The changes are different but the magnitude of gap is almost the same.

Recommendations for initiating a Fresh Start to Each Store POG:
1.    Have store personnel capture digital pictures of the set in each store, it takes just a couple of minutes.
2.    Have ShelfSnap turn the picture into a Snapogram which documents products, positions, facings and conditions.
3.    The Snapogram exports directly into your space management software of choice, this too takes just a couple of minutes ending hours of manual prep work.
You are now ready to begin building your plan with a current list of products handled, a clear and accurate view of brand blocking and flow and an unassailable view of the space and fixture configuration available.  And you will provide a plan that can be translated directly to the shelf by any team, quickly and reliably.  Your chances of getting you plan on the shelf just increased 90%.

In our next blog we will cover the I and the X in the F.I.X. process.

There has been a decent amount of hype about Amazon and Walmart fighting over the bones of the traditional grocery industry, at least in the digital media.  In the face of this onslaught it is easy to lose track of the efforts that those traditional grocers are making to win the digital war for the weekly (or more often) grocery chore.  

 Perhaps more accurately it is hard to find meaningful gains made by traditional grocers.   Most of the efforts are concentrated on: mobile offers and coupons, generation two of web applications, monetization of web traffic through advertising and of course social media.    

In my opinion, and with no small amount of experience in this area there has been a good deal of incrementalism passing itself off as innovation when it comes to applying a cohesive technology, process and data approach to the grocery consumer.  

Still, there have been some meaningful improvements advanced by traditional grocers.   One of those was a business decision to allow online grocery shoppers to shop as many times as they wish for one monthly fee.  Harris Teeter was an early adopter of the online grocery channel option.   They allowed consumers to shop online and pick up their already shopped items at their local H-T store as early as 2000.    

H-T traditionally charges a shopping fee for each order, as do almost all retailers offering an online grocery shopping option.   That fee is to help offset the labor costs of picking the customer’s order for them in the low-margin, high-labor cost grocery environment.    In addition to offsetting a small chunk of the additional labor, the fee encourages the shopper to time their purchases and bundle their orders to offset the cost of the shopping fee.    Thus online grocery orders are typically huge, much larger than normal grocery orders.

Since shoppers focus their online efforts on their “big, stock up orders” they still go to the store for their secondary or top off orders.   In a typical month the average shopper may make 2-4  of the “big, stock up trips” but they make an additional 6-10 trips to stores to grab milk, meals, tissue and many other things of which they have run short.   The idea behind a single fee with no limits on shopping frequency has been an effort to capture more of the shopper’s share of stomach and therefore loyalty.   Frankly the purpose is also to keep the shopper for visiting other stores where they may become enamored with other features of those retailers and abandon the primary grocer.   One of H-T’s primary competitors, Lowes Food Stores had also entered online grocery shopping early and pioneered the fixed monthly fee approach long before Amazon ever thought about Prime.     

Both of these grocers have been at the sharp end of many of the advances in the online grocery shopping and marketing arena. 

Early efforts with this ”one fee” approach were pretty successful at converting a group of shoppers, and heavy analysis of the data (by yours truly back when I was President of MyWebGrocer) indicated that the technique indeed had captured  a share of stomach/daily needs much higher than even the most effective of loyalty programs.  

Even with all of this activity I am still not seeing the next great leap forward in harnessing the digital grocery arena as part of a cohesive multi-channel effort.   The fully integrated approach to satisfying the needs of what I call Shopper 5.0 in a manner that earns that shopper’s loyalty in ways unheard of in any shopper loyalty program today or in the past.   But that ….is for another day.