Imagine you’re a store manager standing in front of a freshly reset category in your store. You’re 100% compliant with the planogram and it looks great. The only trouble is the planogram has been built using cluster data rather than store data. You know that, in your store, a few items will sell through much faster than others that take up the same shelf space. Now imagine a diktat from headquarters telling you to not only be compliant with the corporate planogram but also spend 30-60 minutes refining the set to apply what you know about your store’s sales.
How would you go about that?
The concept of store-specific planogramming has been a reality for almost 20 years now, and has been out there as an idea for a few years longer than that. No retailer has managed to move to completely store-specific planogramming for any category without the aid of some sort of automation solution. Thousands of projects have been undertaken by retailers of all shapes and sizes since the turn of the millennium – some have been highly successful while others… Let’s just say some attempts have been rather less successful, with the retailer in question either abandoning them completely or vastly reigning in the scope of their projects and planogramming.
Those of us working in the RELEX’s space and assortment team know a lot about store-specific planogram solutions. We were the first to synchronize successfully assortment recommendations and space management, and also the first to deliver a store-specific planogram production solution to one of the world’s leading retailers.
But why has a truly localized planogram offering eluded so many of retail’s biggest and most sophisticated operations?
As we advance further into the 21st century, customers are becoming more and more discerning, and bricks & mortar retailers must find ways to be as responsive to consumer needs at the shelf edge as the Amazon app in the consumer’s pocket. With an estimated 1 million calculations to produce 1 meter of store specific space across a large retail estate, it’s easy to see how the complexities can grow and grow until stakeholders lose heart as the promised value of localization seems to recede ever further into the distance.
At the root of the trouble with store specific planogram solutions lies a paradox; either you simplify your planograms such that they can be produced by a generic and easy-to-use solution, or you hire highly-skilled and technically-trained people capable of producing complex scripts. Both options are far from ideal as a planogram is a very sophisticated thing; the final tool for engaging with your customer at the shelf edge. In other words, through assortment, layout and use of space, retailers meet the needs of customers at a specific store. However, the people capable of visualizing the store and getting creative with the space in a way that drives the engagement with the customers, have one complex and subtle set of skills, whilst the people who dive deep into the sort of complex code and scripting needed to automate the process, often lack the creative, visual and physical panache that create that great visual offering.
At the root of the trouble with store specific planogram solutions lies a paradox; either you simplify your planograms such that they can be produced by a generic and easy-to-use solution, or you hire highly-skilled and technically-trained people capable of producing complex scripts.
Returning to my original question to that store manager given 30-60 minutes to optimize the fixtures for his store; what’s the first thing he’s going to do?
The chances are that he’s not going to take all the products off the shelf, line them up on the floor and attempt to put them back on again at the right quantities for his store. What is far more likely is he will identify the SKUs that have been given too much space, reduce their facings, and then increase the facings of items he knows will sell better. If we’re honest, this is a process we know store managers, and even store clerks, are still doing today – I certainly used to.
Now imagine for a moment that you are a space planner in a similar scenario. You’re sat in front of your space-planning application looking at a planogram built with cluster data and you have just loaded up data specific to that same store. Just like the hypothetical store manager, you have been given 30mins to adjust it. You would almost certainly follow a similar process to your in-store colleague.
So why has it always been that Store-Specific Planogram solutions are focused on optimizing the whole planogram, an approach also known as trying to ‘Eat the whole elephant’?* By focusing on the most important 20%, the Pareto principle (a.k.a. the 80/20 rule) tells us we can harness 80% of the benefit.
And yet there hasn’t been a solution that takes our carefully crafted planograms and applies store specific data to adjust them for us.
Cutting-edge tools automate and optimize planogram creation
In 2015, RELEX launched a planogram-creation tool completely rebuilt from the ground up. It uses what the industry has learned over the previous 30 years about planogram software, and combines it with the latest technology.
Whilst using the latest 3D technology and a familiar Windows UX to make producing planograms manually easier than it’s ever been, RELEX’s space planning solution also contains fully customizable automation and optimization workflows that enable anybody to begin a journey of localization.
What does this mean…
This means that with RELEX, any retailer can go store-specific before they’ve even gone off for lunch.
RELEX’s space planning solution contains fully customizable automation and optimization workflows that enable anybody to begin a journey of localization.
Existing planograms are imported into the solution from legacy planogram tools. These plans are then applied to specific stores and updated to contain that store’s own data. The plan can then be analyzed to see how far away from an optimal localized plan the current generic offering is. Facings of over-spaced products are reduced; those of under-spaced products are then increased.
Within a morning store-specific planograms can be created for any category that maintain the merchandise principles defined by the merchandiser who built the plan, yet which are each individually tailored to the store they are assigned to. Better yet, the assortment hasn’t been changed! So, there’s no extra pressure on the supply chain or difficult conversations with category management as the existing distribution profile is maintained.
To date, RELEX customers have found that approximately 30% of their planogrammed product positions change as they move from those built-on average data to those adjusted to store-specific data. Products failing to meet defined minimum days of supply on store shelves can be reduced by over 50% across a 250-store chain and investment in stock that is sitting on-shelf for more than one month is typically reduced by over 1%.
And this is before the planogram has even been implemented in store! Once customers have shopped the category in store, RELEX customers can see margin increases of over 2% due to decreased out of stocks.
*And let’s not even think about trying to shelve a whole elephant!
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