The Branded Pantry

Day after day, week after week category and shelf plans are made.  Plans are communicated to the store, brokers and reset teams.  Team supervisors lead the charge and changes are made at the shelf.  What does the space management team know about each store’s shelf set?  What decisions does the store manager override?  What decisions are the reset team leaders forced to make during the reset?  What unplanned changes occur to this carefully orchestrated plan in the weeks and months following the reset?  Do any of these changes work their way back up the line?  Or is the whole process more like a game of Telephone?Planning, implementing, maintaining and running the store’s business is expensive.  Money is spent creating and implementing the plans.  Hopefully, money is made when the plans are complete.   You are already spending the money, a lot of it.So, here is the question, “How do you know you are spending money effectively?”  Measuring the implementation and maintenance is hard, but critical in managing this money and the results of the investment.Recent research by ShelfSnap evolved the definition of out-of-stocks to include products that are in the PLAN but that are in fact missing from the shelf.  This includes:1.    Traditional Out of Stocks2.    Assortment Voids3.    Short facingsDistribution voids and short facings, have been found to be every bit as big a problem as traditional out of stocks.  While traditional out of stocks affect 8% of products on the store shelf forfeiting 3-4% of sales, assortment voids are at least another 8% or larger and more detrimental to sales because the voids are day in and day out.  

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I read Crossing the Chasm, by Geoffrey Moore a number of years ago.  The book describes the successful introduction of disruptive or discontinuous innovations into a marketplace, and the challenges presented therein.  It also tries to outline the differences between discontinuous and continuous (which do not force significant customer behavioral changes) innovations and the methods and hurdles faced by each.  It is not always easy to determine whether the innovation introduced is discontinuous or not.  Perhaps the audience to which the innovation is introduced may determine the degree to which behavioral discomfort is experienced.

I remember, introducing ScanTrack, Nielsen’s replacement for it’s audit service in the U.S..  John Walling and I ran pretty much for a year from client/prospect to client/prospect meeting and found manufacturers were certainly willing if not eager to accept the innovation.    They did not always like the trade offs (losing inventory and out of stocks, but gaining granularity in both products and frequency), and they certainly hated dealing with the loss of market trends. However, by and large they broadly accepted the switch.    The Nielsen client service executives had a much harder time accepting the innovation as they had become masters at assembling disparate data in order to spin the mundane bi-monthly audit findings to life for their clients.  That set of capabilities and skills became less relevant overnight and so the behavior change required to add value to this new information was dramatic, in many cases very much resented and for some impossible to overcome.

Later at MyWebGrocer the consumers were easy!   Early adopters WANTED to try online grocery shopping and it has evolved becoming more acceptable for the rest of the population.  Most consumer limitations today are because of exposure (it is not offered very widely) and other constraints imposed by the retailers.  However, the bricks and mortar retailers through whom the online groceries are sold (for the most part) have been very cautious about signing up.   That caution may be due to reluctance to invest in labor “on the come” which is necessary to support picking orders.  Those that have taken the plunge have generally found it worthwhile, but it is a leap in a time when retailers are trying to squeeze as much as possible from labor costs.  The current pressure of Amazon and Walmart aimed at establishing a significant beachhead in this arena should ease some of that grocer reluctance to participate.

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Meet the Out of Stock Family.  You DON’T want them in your neighborhood!

ShelfSnap, working with its leading clients, has identified not one but four basic types of out of stocks!  In a number of studies covering both DSD and Warehoused products in the top four grocery sellers, we found 25% of the planogrammed SKU’s effected by at least one of the following out of stock conditions.Of course, it doesn’t really matter if the number is 8% (as usually reported) or 25%, if you aren’t equipped to fix the problem.The Out of Stock Family Tree

1.     Traditional Out of Stocks:  Products that are clearly supposed to be in a space on a particular shelf in the store.  This was the type of out of stock that the industry identified and quantified in over 54 International studies done since the early 1990’s.  The results of those studies are consistently 8% of the SKUs in any given category.  Scores of “solutions” have been offered and billions of dollars have been spent . . . the out of stock results have not been helped at all.

2.     Distribution Voids.  An Out of Stock is defined as a product being absent from a shelf and distribution voids are very much a type of Out of Stock.  Business plans rely on a product being exposed to enough consumers to generate expected sales.  If those products are in the plan, but not on the shelf then they cannot contribute to the expected sales results.  Some industry experts believe that distribution voids are quantitatively, as great a problem as traditional Out of Stocks.  Our experience is that voids are a much bigger problem than Out of Stocks.   In order to understand assortment voids ShelfSnap evaluates the plan in addition to capturing the in-store conditions upon which our assortment measurements are built.

3.     The third Out of Stock involves a product that has Fewer Facings than Planned.  Facings are not only part of the greeting that a product is supposed to offer to a consumer . . . they are part of the supply chain requirements to KEEP the product in front of the consumer.

4.     The fourth type of Out of Stock is an Under-Stock.   This is a condition where a multi-faced item is totally out in one of more of its facings.  When a multi-faced product has holes on the shelf it looks incomplete, unable to greet the shopper-consumer.  It may also be an indication of inadequate facings.  This is an important condition to quantify and report.Multiple Out of Stock Conditions Typically Exist in the Same Store.

In this particular category the number of products with under-stocks was equal to the number of products with out of stocks.  And the stores that had high out of stocks tended to also have a high number of under stocks.

Fix the ProblemOut of Stocks continue to be a vexing problem for this industry.  Understanding the type of out of stock with which we are dealing is important in identifying how to solve the underlying problem.  Traditional Out of Stocks are complex and hard to fix.The good news in almost every case is that it is possible and profitable to fix the out of stock conditions at the shelf. 

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Recently, I called a quiet industry titan, Bob Cohen, and asked if he could spare a bit of time to have lunch and review ShelfSnap.  Bob is the inventor of Spaceman, one of the first space management applications which forever changed the way products are set on the grocer’s shelf.  For those who do not know Bob he is smart, committed, innovative, reflective, and oh, did I mention smart?   He is still toiling in technology mostly because he loves a challenge.  His first love is the merchandising art and it took him seconds to understand and appreciate ShelfSnap.

Bob discussed a store specific planning program he wrote that utilizes all available data, in a unique rules-based environment to pinpoint assortment, facings and space to yield whatever financial targets the client wished to achieve.  At the crux of this system exists data-based refinement capabilities including a compliance feedback loop that ShelfSnap would make economically feasible. 

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Sometimes companies are faced with new process or technology decisions where the criteria for judging alternatives are difficult to comprehend and are made confusing by the propaganda offered by vendors.    This can be particularly daunting in the retail arena.   So many of the technical choices can offer slim feature/benefit differences.  Others offer real differences but the expertise of the buyer is limited and so the “claims” that each vendor espouses, makes the vying products “look” similar.      (more…)

The idea of aligning category space, product assortment, product space, shelf location, facings and section “flow” with store sales, loyalty data and demographic profiling has been around for a number of years. 

The benefits are customer satisfaction, inventory reduction, lower out of stocks, increased sales, freed up space, lower restocking costs and others.  Store specific planograms done in lab circumstances almost always yield impressive results, particularly in the sales, inventory reduction and OOS reduction areas. 

The adoption of this practice has picked up by both retailers and manufacturers.  This comes at no small cost as special software, additional data and in many cases additional labor is necessary to accomplish this effort . . . and that effort is ongoing and expanding.

However, it turns out that store specific planograms are subject to the same pitfalls and challenges as the category planograms.

We reviewed Snapograms collected by ShelfSnap across a number of categories from three or the top four grocers in the U.S.  as well as from some small format stores (gas and convenience).  These Snapograms are the actual shelf sets based on digital images of the planograms from scores of stores.  ShelfSnap then used their proprietary image recognition  and spatial analytic engine to identify products, locations, shelves, facings and OOS from those pictures.  ShelfSnap has developed a planogram compare production facility it calls King Compare, and it used that facility to compare the Snapograms against the store specific planograms for those stores.

Results:

• Not one store complied with it’s POG.  Not one.  Orientations, positions, flow, facings and assortment all had substantial variences in virtually every case. 

• Products that were in the POG but not in the Snapogram accounted for up to thirty percent of the intended range.

• Unexpected assortment ran to upwards of 25% of the total range.

• By and large the number of SKU’s underfaced (vs. the plan) ran about equal in number to the SKU’s with the correct facings. 

We talked to one company who spent a great deal of time and money developing store specific planograms for a variety of top accounts.   We asked how they measured compliance.  They mentioned that they had not started to measure compliance, but hoped that the reset teams would take the expensive store specific POGs as more than “suggestions.”  Turns out this is not the case. 

Curiouser and curiouser. 

A bevy of articles written by a variety of folks in the last 60 days point out the pickle in which advertisers find themselves. 

The subjects range from the claim that the future of advertising is in Print, TV and perhaps online (Advertising Age) to a BrandWeek piece talking about the superiority of in-store signage and displays to the article on How Mobile Makes Bricks-and-Mortar Retail Accountable for advertising and for operations. 

The article from Ad Age cites the ARF and a Wharton School study findings about how traditional media drives word of mouth advertising and there has been “no erosion of TV advertising sales impact over the years.”  Similar comments are made about other traditional media including print.  Much of the research backing this up however is from the 1990’s which gives one some pause.  (more…)

 Not just any word though. 

We have had discussions with a variety of manufacturers, retailers, brokers and others who work day in and day out to carry out the four major in-store efforts in order to build sales. A surprising number take pictures of their efforts.  Not so surprising was finding that most of those pictures are quickly forgotten after they were captured.  While there is certainly the “ooohh and ahhh factor” in having pictures of real in-store conditions the systematic analysis for action process of those pictures is nowhere to be found.  

Why is that?  Well pictures contain an incredible amount of information: presence, facings, assortment, holes, out of stocks, shelf location, proximity, signage and shopability.  Information that you cannot discern from hand-held scanned data.  What is more information derived from these pictures is accurate and generally undistorted.  And when pictures are taken in lieu of HH-scanned information, data collection times are dramatically reduced.  However, without a process to pull that data out of the picture, organize it, roll it up with all the other pictures of the same event and then generate the exceptions to the planned execution those pictures are worthless.  They are akin to those boxes and or jump drives of family photos.  While each image is precious, together they are overwhelming, unmanageable, frustrating, under-informing and ….well you get the picture.    This is one of the reasons that ShelfSnap is meeting with such an enthusiastic reception from manufacturers, retailers, brokers and others.  We recognize that the picture has three roles in the process:1.    A very efficient data collection device, that cannot distort the truth.2.    Raw material for the ShelfSnap Image Recognition system which identifies products in the picture, and the SS Spatial Analytics Churn Engine which counts the facings, identifies the shelf on which the product resides, understands the out-of-stocks and the like.3.    The picture also validates the interesting status miscues (or successes) or the exceptions to the plan that ShelfSnap identifies. The value that the unique ShelfSnap service brings is the ability to understand what is in the pictures, and then the ability to inform you of the important news in and across pictures.  The WORD that is worth a thousand pictures is exception!  The ShelfSnap process reports the exceptions and therefore the yields ability to direct action to the stores where conditions warrant.

Bill Pearce, CMO of Del Monte Foods company recently gave some advice to his peers in a talk.  He suggested that they “spend on marketing, capital investment and innovation or risk losing your business in the next 5 years.”  He did this in the face of an environment where the management (mostly through avoidance) risk is the name of the game. 

Part of the advice was to review what was working and what was not in this new environment.  Using a historical viewpoint is a mistake because the “revenue stream now is not where the stream was 12 months ago.”    Mr. Pearce intoned that “now is NOT the time to shy away from new ideas” further suggesting that you fund them by cutting current practises that worked in the past, but look dubious now or are break-even.   “The companies that invest in innovations and roll out…new services now will reap disproportionate benefits when the economy makes a turn.“  (more…)

We did a bit of work recently looking at a major retailer display program in a top 3 retailer across the stores in a top ten marketing area.  The retailer accounts for almost 50% of FMCG (Fast Moving Consumer Goods) sales in this market so, if the manufacturer is going to succeed in using display in this market, either standalone or in conjunction with other in-store media . . . they need to succeed with this retailer. 

Some interesting findings based on the ShelfSnap analysis.  The retailer took pictures of all of their displays, uploaded them to our service and we identified the products, facings, OOS, assortment etc. on the displays.  Some findings:

1.    All stores that had the display up.

2.    58% had the two brands included in the promotion that were specified . . . wow!

3.    All stores that had the display had an endcap.  Of those stores:

a.    20% had a 7 shelf endcap  (why do we care?, it affects assortment of flavors!)

b.    42% had a 6 shelf endcap

c.    38% had a 5 shelf endcap (more…)