Leading supplier supports retailers with an improved category understanding, driving targeted and customer focused insights.
In an industry that remains ever challenging, tobacco goods manufacturers must strive to differentiate themselves from their competition to provide retail partners with credible and accurate category advice, tailored to suit customer demand.
A recognised Global Leader and the largest tobacco manufacturer in the UK, Imperial Tobacco works in collaboration with a variety of retail partners across 160 countries worldwide, offering a portfolio of successful brands including Lambert & Butler, JPS, Golden Virginia and Gold Leaf.
Imperial Tobacco has a rich history of working successfully with retailers to offer category management advice across cluster, assortment and space planning; ranging from national level recommendations through to retailer specific for key multiple accounts.
With rapid market evolution, Imperial Tobacco continually strives to maintain and grow its thought leadership and support to retailers through improved category excellence, offering the most credible category analysis and advice.
In a bid to remain competitive, Imperial Tobacco realized a key requirement in the next stage of its journey; to become more customer focused by adopting a more granular and automated behavioral clustering approach.
This would provide an improvement to the existing methodology which saw Imperial Tobacco utilize EPOS data analysis to generate bottom-up clusters but proved restrictive due to taking weeks at a time to conduct manually and without providing the true level of granularity required to yield the best insights for the cluster. What’s more, the existing approach lacked the flexibility for Imperial Tobacco to quickly react to retailer requirements within a short time-frame at key category review periods.
Imperial Tobacco analyzed a number of options, including the possibility of building a solution in-house and after careful consideration determined that the best approach would be to select a forward thinking partner who could offer both industry experience and a software solution to provide automated customer focused analytics and accurate store groupings.
Partnership Success with Behavioral Clustering
In june 2013, Imperial Tobacco began working with RELEX Solutions, the leading provider of integrated retail and supply chain planning systems that delivers impressive results for customers around the world. RELEX Solutions is trusted by leading brands including WHSmith, Morrisons, AO.com, Coop Denmark and Rossmann, and has offices across North America and Europe. Part of RELEX’s offering includes consumer focused solutions for clustering, automated assortment and space optimization supported by detailed analytics and reporting tools designed to meet the needs of retailers and suppliers.
Working in collaboration with the RELEX Professional Services team to implement its behavioral clustering functionality gave Imperial Tobacco the ability to efficiency create store and category level clusters based upon consumer buying behaviour, identifying like-stores and providing fast, actionable insights tailored in line with the strategy and objectives of each retailer.
Eliminating the need for weeks’ worth of manual data analysis and complex spreadsheets, RELEX provides Imperial Tobacco with the ability to automate performance based analysis for each retailer’s store estate across all channels through rapidly evaluating all available product attributes. With the creation of a consumer decision tree, Imperial Tobacco were able to identify key variation and efficiently generate consumer focused store clusters.
The behavioral cluster functionality provided the perfect fit by giving:
- A more granular category understanding, providing valuable insights for key multiple accounts as well as the independent store estate
- An efficient approach to clustering, removing the need for manual spread-sheet analysis
- A method to combine performance analysis with demographic and geographic overlays to give a true customer understanding
- A credible and fact based approach offering transparency to retail partners with easy to understand calculations
- The flexibility to combine bottom-up performance with top-down constraints for customer focused clusters which remain in line with Imperial Tobacco’s individual retail partners strategies
- A fast implementation; taking just 4 days to get up and running
Seeing the Benefits
Below are just a few examples of Imperial Tobacco’s use of RELEX’s behavioral clustering capability to gain a more granular category understanding in order to work more collaboratively and support its retail partners:
Improved Operational Efficiency
Imperial Tobacco was approached by a large retailer to reduce its current cluster volumes in order to streamline the category management process and to make implementation more sustainable. Using RELEX, Imperial Tobacco were able to reduce the overall category cluster count from 12 clusters to 6. This resulted in a much more manageable category to maintain, simplifying the overall planogram count and achieving the retailer’s objective for a more sustainable yet targeted approach.
The solution is utilized to gain a valuable insight into the competitor clustering model and was able to quickly highlight a missed cluster opportunity where there were clear differences in customer purchasing habits in comparison to all other clusters. Imperial Tobacco was able to clearly illustrate this to the key multiple account and this new cluster was recognized and added to the existing clustering solution.
Improved Customer Understanding
With thousands of independent stores throughout the UK, Imperial Tobacco recognized that improving category understanding and becoming more customer focused with clustering was a key priority to its retailers’ development. Using RELEX, Imperial Tobacco were able to cluster the entire independent store estate, building cluster profiles and gaining actionable insights in just a couple of days. 28 distinct clusters were identified, showing clear variation in customer purchasing patterns enabling Imperial Tobacco to tailor assortment and planogram recommendations in line with demand and arming field sales reps with valuable and credible customer insight for improved partnerships.
Targeted Assortment and Space
The solution was utilized in collaboration with an existing key multiple account where Imperial Tobacco had a long history of producing over 800 individual store planograms. The existing model was time consuming and labour intensive when it came to planogram creation and maintenance, and what’s more, the retailer itself were struggling with the required resourcing levels to cope with on-going range and planogram maintenance.
The RELEX solution was utilized to gain a better category understanding and to illustrate the similarities in customer purchasing patterns with targeted store groupings. The account was so impressed with the findings that they progressed with a trial of one cluster driving better targeted assortments and planograms. This gave such successful results that the cluster solution was implemented across all stores and the planogram volume was reduced from 800+ down to 75. Overall feedback from this project sees that not only has the retailer’s resource decreased substantially, but sales have remained flat, so this simplification has reduced labour cost with no impact to sales.
As for the future, Imperial Tobacco continue to leverage the benefit of improved customer insight with targeted clusters and better credibility with retailers by offering targeted category management advice in line with customer demand.