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‘SENSE & PERFORM’
VISUALIZE BEST PRACTICESFOR IN-STORE
IMPLEMENTATION
V 1.0 2011 VSN strategies Sept. 19, 2011
Pre-Conference Workshop
About Today’s Workshop
Agenda/IntroductionsISI Performance Management
Conceptual FrameworkVisualize Best Practices
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Thanks to Our Workshop Sponsor
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Agenda
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• Situation Review• DIMES: The Five Senses of In-Store• The Habits of Highly Successful Store Managers• Compliance in Action – Space Management• What Constitutes Compliance? [Lunch]• Planogram Integrity Best Practice• Culture of Performance [Roundtable]
Workshop
An ISI Conceptual Framework
Situation Review
The Retail Performance ChallengeOpportunity for New Practices
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Dis-Economies of Scale?
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Sources: Monthly Retail Trade Survey, Census Bureau; Company annual reportsNote: Sales based on North American Industry Classification System (NAICS) From: Economic Research Service/USDA, http://www.ers.usda.gov/Briefing/FoodMarketingSystem/foodretailing.htm
199219931994199519961997199819992000200120022003200420052006200720082009
0
10
20
30
40
50
60
70
80
Top 4 Top 8 Top 20
U.S. Grocery Retailing Concentration, 1992-2009Grocery retail consolidation has concentrated 64% of U.S. grocery sales within the top 20 chains; 37% within the top four chains.
Along with scale economies and buying clout, however, comes intensified store operational complexity and remoteness from HQ.
How has this combination affected profits?
%
Situation
Profit Picture Post-ECR
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1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Industry Net Profits (% of Sales)
Source: “Supermarket Facts,” Food Marketing Institute, 2011
“The historical mean annual change in return on investment has been insignificant for both retailers and manufacturers since the early 1990s.”
Source: Bjornson, B. and Kaufman, P. (2004), “Change and
Firm Valuation in U.S. Food Retailing and Manufacturing,”
Journal of Food Distribution Research 35(2).
Situation
Performance Gaps in Grocery
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56% Items sell <1 unit/wk.
78% Items sell <3 units/wk.
58% Unprofitable SKUs
Out-of-stocks continue to run at 8.2% - unchanged in 15 years,Yet, within the assortments:
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Situation
Source: Willard Bishop Consulting (May 2011) Competitive Edge
Global Challenge at Retail
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Overstock$343.1B
44%Out-of-Stock
$435.4B56%
Total Inventory Distortion 2010 - $778.5B Worldwide
Source: Holman, L. and Buzek, G. (2011), “Inventory Distortion – Retail’s $800 Billion Global Problem,” IHL Group
Inability to maintain consistent in-stock levels plagues retailers in every category and every country.Hypothesis: The problem may be rooted in the huge differentials in item turn rates?
Situation
Taking Off The Blinders
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• Despite retail industry consolidation…– Industry earnings and ROI remain flat– Operating complexity is increasing
• Despite notable progress in supply chain effectiveness since 1996…– Store-level inventory performance is unimproved
• Store-level performance may be slipping…– But we can’t really be certain, because we don’t yet have
the tools or practices in place to assert control over In-Store Implementation
Situation
Industry Demands Improvement
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38% Plan-O-Grams
27% Promotions
15% Displays
ISI 30-Sec Polls: 35% indicated no process to track compliance, the remainder rely on spot-checks and manager sign-offs
Which of the following In-Store Implementation practice areas is of highest importance within your organization today?
Sense & Perform
Source: ISI Network
Situation
How Well Do You Implement?
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Less than half the time
50% - 74% of the time
75% - 99% of the time
All the time
0% 10% 20% 30% 40%
38%
33%
23%
4%
How often would you estimate that your in-store promo-tions, resets and other merchandising activities are
completely and accurately implemented?
n=176
Source: Supermarket News (2009)
Situation
24%64%
12%
Yes and it's very effectiveYes and it isn't very effectiveNo
Q. Do you have an internal process that is used for execution of
shopper marketing programs?
Shopper Marketing Challenge
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Situation
One of the reasons why some retail marketers may struggle with converting insights into effective programs is a lack of internal processes for execution.
76% of shopper marketers report that a process does not exist or is not very effective.
Source: “Retailer-Activated Shopper Marketing Program Survey,” Marketing Lab 2010
How Well Do You Measure?
Other
Rely on program vendors' "self audits"
Use an independent 3rd party firm
Do not measure in-store execution
Make assumption that the job got done
0% 10% 20% 30%
13%
17%
21%
23%
28%
Four out of five respondents to a prior poll said they expect 90-100% execution of their in-store programs.
How do you measure execution in-store?
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Source: CPGmatters.com
(2008)
Situation
Shopper Marketing Limitations
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Situation
9%
13%
10%
20%9%
15%
4%
10%
10%Upper level buy inMerchandising alignmentVendor collaborationExecutionComplianceMeasurementVendor sell inConcept developmentObtaining actionable insights
Q. What are the hurdles in getting a program launched within your organization?
What is limiting shopper marketing success? Take your pick. Execution, compliance and measurement account for 44% of responses.
Source: “Retailer-Activated Shopper Marketing Program Survey,” Marketing Lab 2010
Top Store Business Challenges
Need for more con-sistent store execu-
tionNeed to improve customer service while holding the
line on payroll costs
Store managers lack information they need
on the selling floor - too much time spent in
the back room
0%5%
10%15%20%25%30%35%40%45%50%
37%43%
19%
45% 49%
22%
20112010
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Source: “The 21st Century Store: the Search for Relevance” RSR Research 2011
Situation
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“The ISI Sharegroup estimates that the total cost to the U.S. RCP industry of sub-optimal merchandising performance (actual and opportunity costs) is approximately 1% of gross product sales, or $10 - $15 billion of the $1.5 trillion total annual sales across the food, drug and mass channels.”
Source: “In-Store Implementation: Current Status and Future Solutions” (2008)
Situation
Industry Opportunity
Agenda
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• Situation Review• DIMES: The Five Senses of In-Store• The Habits of Highly Successful Store Managers• Compliance in Action – Space Management• What Constitutes Compliance? [Lunch]• Planogram Integrity Best Practice• Culture of Performance [Roundtable]
Workshop
An ISI Conceptual Framework
DIMES: The Five Senses of In-Store
“Active Sensing”A New Metrics Framework
Storecards
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Sensing = “Ability to Listen”
ExecutionShopper/ Consumer
Insights Ability to Listen
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
73%
58%
71%
68%
88%81%
What Category Management activities will differen-tiate companies in the future?
RetailersManufacturers
Source: 2011 Category Leadership Benchmarking Study, Kantar Retail
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The Five Senses of In-Store
What is “Active Sensing”?
• Plan – Put measures and methods in place with specific intent to monitor the voice and behaviors of the shopper and the store
• Do – Methodically capture and track data on the desired dimensions
• Measure – Use embedded analytics and collaborative tools to extract insights and distribute them to relevant decision makers
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The Five Senses of In-Store
Source: In-Store Implementation – Current Status and Future Solutions, In-
Store Implementation Sharegroup (2008)
DIMES: The Five Senses of In-Store
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DEMAND: Detailed understanding of POS transactions by basket, shopper and segment and correlation with the other in-store senses
ITEMS: Status, condition and in-stock position of product on display throughout the store, including planogram compliance
MESSAGES: Delivery, views and responses to digital and traditional shopper media, signage, promotions and compliance
EMPLOYEES: Direction and task performance of store associates, brokers, DSD reps, jobbers and third-party merchandisers
SHOPPERS: Detect, track and analyze what shoppers do, including who, what, where, when, why they shop and buy
Effective management of retail performance requires continuous intelligence about implementation, compliance and conditions. Sensing is needed in five key areas:
The Five Senses of In-Store
DIMES: Five Senses Gap Analysis
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Demand
Items
MessagesEmployees
Shoppers
-4
1
6
4.01
4.58
3.603.90
3.93
3.29
3.66
3.023.22
3.14
How Important?How Well?
Source: In-Store Implementation Network “30-Sec Poll” 2011
N=103
The Five Senses of In-Store
Why We Need Better Sensing• At best, most present tools measure outcomes (sales data)
without an understanding of causality• Time lag on most reports makes them un-actionable;
most/many issues detected are also un-correctable.• Wild misinterpretations are also possible (i.e. was a non-
selling item out of stock, or out of date?)• Correlation with demand model (POS T-log) allows for some
useful inference (i.e. promotional lift, ROI)
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The Five Senses of In-Store
Perilous CrossingOperating a chain of retail stores based only on sensory information derived from the POS is a bit like trying to cross a street safely based solely on yesterday’s traffic reports.
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The Five Senses of In-Store
DIMES: Demand SensingSolutions Providers
Price Optimization and Demand Modeling KSS Retail, Demandtec, Revionics, SAP, Oracle, etc.
T-Log and Basket Analytics JDA, Teradata, various others
Frequent Shopper Data Analytics dunnhumby, various others
Syndicated Data Nielsen; SymphonyIRI
Coupon Redemptions Processors and Manufacturer Agents
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The Five Senses of In-Store
DIMES: Items SensingSolutions Providers
Digital Image Audits ShelfSnap, NeuralID
POS Demand Signal Monitoring KSS Retail; Standard Analytics; IRI
Manual Audits Multiple vendors, Brokers and MSOs
Shelf Sensors & Product Pushers BVI-RockTenn “Shopper Gauge”
DSD Store Visits Hand-held scanners from various vendors
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The Five Senses of In-Store
DIMES: Messages SensingSolutions Providers
Manual Audits Various custom market research firms
Digital Signage Screens that watch the watchers
Coupon Downloads/ Redemption Data Processors/ Manufacturer agents
Kiosk Interactions Various
In-Store Coupon deliveries Catalina; Acuity AisleCaster; SmartSource
In-store media NewsAmerica /SmartSource
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The Five Senses of In-Store
DIMES: Employees SensingSolutions Providers
WFM/SEM/MPM Reflexis, RedPrairie (StorePerform); Natural Insight; Dayforce; Infor (Workbrain)
Store Check-In/Out Systems Synergy Systems, StorePort
Online Reporting Portals RetailTactics, Driveline, Acosta, Crossmark, various retailers
Store Manager Systems RedPrairie (StorePerform)
Mobile Devices Quofore, Airwatch, Honeywell,
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The Five Senses of In-Store
DIMES: Shoppers SensingSolutions Providers
People Counters Shopper Gauge, PRISM’s concept
Loyalty Card Programs dunnhumby, Circular Logic, Brick Meets Click, and many others
Video Videomining; Lighthaus
Path-Tracking TNS Sorenson; 3GTV; Cabco USA
Mobile Media google; comscore
Conversions, shopper movement Euclid elements; T-log analysis
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The Five Senses of In-Store
DIMES Solution Portfolios• Each firm will require a set of in-store sensing tools
and associated practices to support its performance goals – a solution portfolio
• That adds up to a good many players and moving parts
• How can you keep them straight without a scorecard?
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The Five Senses of In-Store
ISI “Storecards”• Industry-wide there are no acknowledged scorecards
for In-Store Implementation• Scorecard: A tool that defines, records and monitors
performance versus plan• Storecards drive retail performance dashboards and
benchmarking• An ISI solution portfolio must develop and
incorporate these to support routine measurement and evaluation
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The Five Senses of In-Store
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SAMPLE CATEGORY RESET PERFORMANCE STORECARD Week 23, 2012 Target Actual Gap
Number of Projects# Store Visits% On-Time CompletionsTotal Linear FeetTotal Labor HoursLabor Hours Per Linear FootReset Accuracy Index% Issue-Free CompletionsAverage # Issues/ResetRe-work Hours
An ISI Sample StorecardRESETS
This high-level storecard
is designed for tracking performance across common center-store reset projects.
Versions might be created for each major project, for each reset provider, etc., to permit post-hoc performance comparisons, goal-setting and benchmarking.
The Five Senses of In-Store
Better Stores Sell More StuffPersistent disconnect between operations and merchandising
goals continues to plague chain retailers; it limits their merchandising performance and financial success.
Best practice leaders will incorporate store-to-HQ alignment:• End-of-day conditions• Start-of-day conditions• Marketing/merchandising plan• Supply chain monitoring• Strategic financial plan
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The Five Senses of In-Store
Source: Dawson Thoughtware
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SAMPLE SHOPPER MEDIA PERFORMANCE STORECARD Promotion Week 23, 2012 Target Actual Gap
Messages delivered/hour% system downtimeRedemptions/store# Stores ImplementedTotal weekly store trafficWeekly category/aisle trafficWeekly Category Sales UnitsWeekly Brand Sales UnitsWeekly Category BasketsWeekly Brand Sales $$
A DIMES Sample Storecard
MESSAGES
This high-level storecard
developed to track an in-store Shopper Media implementation.
In a Web Service-based system, the storecard cycle may be as rapid as every 15 minutes, with updates reported via dashboards and automated alerts
The Five Senses of In-Store
Proposed DIMES Index
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Demand
Items
MessagesEmployees
Shoppers
0
5
10Chain A
Chain B
The Five Senses of In-Store
37Sense & Perform © Copyright 2011 VSN Strategies
Thank You!
James Tenser, Executive Director
http://instoreimplementation.com
info@instoreimplementation.com
520-797-4314