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.