Since the end of the pandemic, Artificial Intelligence (AI) and Machine Leaning (ML) are on everyone’s mouth. With our retailer’s client, assortment management, promotion, pricing, and CRM are among the most popular requests for automation.
As we are addressing these requests, we often see a gap between the clarity of the client’s objectives and the existing assets required to achieve them.
In practice, and to work properly, an AI or ML algorithm, be it applied to supply chain, CRM or assortment management, needs to be established on business rules. These business rules are themselves driven by parameters and conditions.
The missing assets often are these rules, parameters, and conditions. In this business case, we illustrate how these gaps can be identified and filled. We were working with a client establishing a model to manage its core and optional assortment.
Challenges
The lack of clarity in the product selection (or deletion) decision process across the Teams resulted in the unhealthy quadrant of decreasing sales, increasing inventory and out-of-stock, and decreasing profitability. This was due to 3 missing fundamentals.
Challenge 1: missing quantified rules on core assortment selection guidelines
Everyone was aware of the importance of the core assortment, and there were no business rules defining either how to build it or to maintain it.
Challenge 2: missing quantified rules on selecting stores to create clusters
The existing store clusters were defined based on geographies, and it was not sufficient to organize structured assortment clusters.
Challenge 3: missing quantified rules to select optional assortment by store cluster.
The same was also true for the optional assortment. In practice, out of the 50,000 products available in the database, it was up to the store manager of each of the 50 branches to make the products’ selection.
Actions
As the end goal was to build an assortment management model, both for core and optional assortment by store clusters, our first approach was to help the Client’s Teams to find the answers required to address the3 challenges.
Step 1: Build Answers
Questions on Core Assortment
What sales quantity benchmark does an item need to meet to be included in the core assortment?
What sales value benchmark does an item need to meet to be included in the core assortment?
What range structure rules need to be applied (number of brands, item by brands, price point)
What profitability benchmark does an item need to meet to be included in the core assortment?
What basket indicator benchmark does an item need to meet to be included in the core assortment?
What average level of sales contribution do we want to achieve with Core Assortment?
What components of supply chain need to be considered (service level, stock days, …)
Questions on Store Clusters
What elements of a store format need to be integrated in building the sore clusters?
What elements of a store size need to be integrated in building the sore clusters?
What elements of the store catchment area need to be integrated in building the sore clusters?
What elements of geography need to be integrated in building the sore clusters?
What elements of shopper insights need to be integrated in building the sore clusters?
What level of Stack ability do we want the core assortment to have across store clusters?
Questions on Optional Assortment
What elements of a store cluster need to be considered?
What minimum sales quantity needs to be achieved?
What elements of the supply chain need to be considered?
What shopper insights need to be considered?
Step 2: Filtering & Building
Once these answers were found, we simply applied them to the existing stores and existing assortment. Some adjustments were then made to both be simple and logical as well as incorporate existing commercial agreements with suppliers.
Step 3: Solidifying Maintenance Rules
The last step was to ensure these rules were implemented and executed, with a planned review of all their corresponding parameters.
Beyond the transcription of these rules in the black box to then generate automated alerts and reporting, a major effort was allocated to communication, training, and coaching. As changes do not work overnight, the implementation schedule was articulated across categories groups, providing enough time to both Merchandising, Operations and Supply Chain teams to adapt and adjust their routines.
Results
Over the next 6 months of implementation, as an average over the concerned categories, our client’s Teams could achieve some key breakthrough: Out of Stock reduced to 5%; sales grew by 6.2% with a total assortment that decreased by 32%, and stock days were reduced by 6.8%.
What does this show?
Any successful efforts in digitalization must start by reinforcing the missing fundamentals of business rules(that once digitalized can support automation), communication and training. In addition to delivering impressive results, this approach also reinsures teams and decrease the natural opposition to change.
About the author
Frederic Klein is Hypertrade’s Operations Director. With his Team, Frederic oversees the implementation and support of our Merchandising, Category Management and Retail CRM solutions with our clients. Before joining Hypertrade in 2019, Frederic held various senior positions across South-East Asia. Today, Frederic and his teams ensure the success of retail players in 8 different markets across 3 continents. Frederic can be reached at f.klein@hyper-trade.com
Being aware of data and its importance in both your decision-making processes and your collaborative approaches, you have decided to equip your Teams with the right tool. For each point, we have associated the most common related risks. The weighting of these risks depends on each organization’s specific settings
The following 10 Tips apply to both internal development options and solutions provided by third parties. A simple selection grid is provided at the end of this article.
FOREWORDS
WHAT IS CATEGORY MANAGEMENT ANALYTICS PLATFORM
A category management Analytics platform is a tool to aid in the analysis of the sales data, consumer behavior, demographics, market trends and other information to support the decisions that will improve sales, increase efficiency and optimize stock management.
It typically includes three main components: the types of data it can ingest, the analyses it can deliver and the recommendations it can build. Nowadays, the most powerful and advanced Category Management Analytics Platform are cloud based
WHAT ARE THE KEY DELIVERABLES FROM A CATEGORY MANAGEMENT ANALYTICS PLATFORM The most sought-after features form a Category Management Analytics Platform are:
It’s important that the system is easy to use and intuitive, so that your team can quickly and easily access the features they need. The flexibility of the user’s management is also part of this easiness to use, as allTeam Members might not require an access to all the functionalities and data. Ease of use should also integrate the easiness and speed of setup, both for technical teams and users.
Related risks:
failed onboarding
slowed adoption
2. Integration with Other Systems
If you have other systems in place, such as a CRM or an e-commerce platform, or various data sets coming in different format and shapes, it’s important to choose a category management system that can easily integrate with those systems. Internal or external capabilities of developing automated data flow is also an important factor to consider
Related risks:
incomplete data sets leading to additional work
additional costs
3. Scalability
Scalability is the ability for your selected solution to be able to ingest, crunch and manage an increasing number of data without endangering the stability, security and efficiency of the solution. As your business grows, you’ll want to choose a category management system that can scale with you. Scalability should be understood both from a technical and a service perspective.
Last, but not least, the innovation capabilities of the selected system should support your business growth and its evolution across several retail environments.
Related risks:
system failure
loss of Teams’ confidence
loss of Time and decreased agility
4. Customization
There are 2 approaches to customization. The first one is to consider how much customization is possible with the system, as this will allow you to tailor it to your specific needs. The second one is to consider how much your existing reporting can be adapted to make the most of what is already available. The balancing of these 2 approaches will not only impact costs, but also the time required for your selected solution to go live.
Related risks:
incomplete solution
additional costs
low ROI
5. Data Analytics & Reporting
A robust data analytics and reporting capabilities are at the core of a Category Management system. What needs to be considered here is the balance there is in the selected systems between informative reporting(it tells me what is), predictive reporting (it tells me what could be) and recommendations-oriented reporting(it tells me what could be done). Once again, the balance among these 3 aspects will depends on both theexisting Teams’ capabilities and the clarity of the expected deliverables.
Related risks:
reporting Complexity
additional costs due to unused reports
slow adoption
Decision-making process quality and speed
6. Built-In Retail Expertise
There are 2 ways to evaluate the built-in retail expertise. The first 1 is linked to the reporting: the more expert the system is, the more it will offer functionalities that fits the Teams’ business needs and will help them save time. The second one relates to the existence and quality of the supporting knowledge base, where users can refer to when they want to not only better understand the system, but also gain knowledge in understanding their role and their customers better.
Related risks:
require additional development costs
slow adoption
decreased Teams’ capabilities growth
7. Support & Training
Choose a system with a track record of providing excellent support and training, so you can get the help you need when you need it. The support & training should not only be about the technical aspect of the system, but also about the job Teams need to perform and their customers’ environment.
Related risks:
loss of faith in the system
ROI
8. Pricing
Consider the cost of the system, including any ongoing subscription fees, and ensure that it fits within your budget. The pricing aspects al relates to the system’s scalability: the evolution of costs depending on data volume, number of users, and any other variable parameters should be crustal clear and transparent.
Related risks:
costs
ROI
9. Security & Privacy
Data security is critical, so choose a system that has strong security measures in place to protect your data. Still, bear in mind that no system is 100% secure. Each additional % of security costs much more and necessarily impacts easiness to use and access.
Related risks:
data breach
system hack
10. Mobile Accessibility
Several teams will be using your Category Management system. Some of them are rather desk-bound while others are on the field. If you or yourteam need to access the category management system on the go, make sure the system has a mobile app or is mobile-optimized.
Related risks:
low usage from field-related teams
decreased optimization of internal collaboration
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Implementing category management in a retail setting involves several key steps. These steps need to be carefully planned and will help retailers to effectively analyze and organize their product & promotion offerings, optimize their operations and resources, and stay ahead of market trends. Here are five steps for implementing category management in a retail setting.
0. Reminder: What is Category Management
Category management is a strategic approach to managing and organizing products. At its core is the idea of segmenting products into distinct categories and then managing each category as its own business. This approach allows retailers to focus on the specific needs and characteristics of each product category, rather than treating all products as a single entity.
It involves analyzing data and market trends to determine the most effective way to select, distribute, promote, price, present and sell products within a particular category. The goal of category management is to increase sales and profitability by ensuring that the right products are in the right place at the right time, and by tailoring the shopping experience to meet the needs and preferences of the target customer.
1. Define and segment product categories
The first step in implementing category management is to define and segment product categories. This involves dividing products into distinct group of categories, then categories, sub-categories and segments, based on similarities in product characteristics, consumer needs and preferences, and market trends. This segmentation is also called Merchandise Hierarchy or Merchandise Structure.
Though it appears simple, this first step is critical for the success of the Category Management implementation. An improper or inaccurate segmentation means that Teams won’t be able to manage categories. Imagine – a common case actually – that Skin Care products are present both in the Beauty Category and in the Import Products Category. Not only do shoppers not necessarily care whether the product in locally manufacturer or imported, but the Team in charge of the Skin Care products will need to gather data from both categories to understand what the dynamics and performance of the Skin Care Products are.
2. Phase the Key Processes implementation
An effective management of the category requires a certain number of actions to be performed. Each of these actions reflect the Retail Mix:
Decide how the product assortment must evolve [Product]
Decide what products to promote, when and how [Promotion]
Decide how and where to display the products [Place]
Decide how to define the selling price of each item [Price]
Each of these actions are the results of thought processes and decisions, hence the name of process. And because each of these processes regulate the heart and lungs of the category, they are often called Core Processes.
Because each Core Process requires its own RACI1 approach and own tools – which implies building, training, coaching, and adjusting – it smart to phase the implementation2 of each process with selected group categories over a period of time.
3. Schedule the data analyses
To understand shopper behavior and identify market trends and patterns within each product category, a certain number of data analyses must be done. To save time and increase teams’ efficiency – which translates into faster decisions (agility), these analyses are best when pre-formatted and automated.
In a first step, sales data are the best sources. In an advanced stage, POS data can also be added to the analyses. At an expert level, additional data sets like customer surveys, and market research, to gain insights into consumer preferences and needs, must be added.
To successfully implement this step, and following the phasing defined in Step 2, 3 steps must be taken:
Train the teams on the metrics (and their reading) required to take decisions relative to the selected processes
Define the specific analyses relative to the relative to the selected process
Define precisely when each analysis must be done, and the corresponding decisions taken as defined in the company’s RACI
This information can be used to make informed decisions about which products to carry, how to price them, and how to present them in the store.
Before going to the next steps, we recommend ensuring that all categories representing 60% of the sales value have already been through the steps 2 and 3.
4. Develop category strategies
Based on the data and insights gained from the previous step, retailers can develop category-specific strategies to meet the needs of their customers and optimize sales and profitability. These strategies might include promotions and marketing campaigns, product assortment and placement, and pricing strategies.
These Strategies will support the key objective assigned to each category, which are summarized in the below table
At a more advanced stage, retailer can introduce the concept of category role. The role that is referred to corresponds to the shopping need the category must address. There are in general 4 commonly accepted roles, to which specific strategies can be assigned:
5. Collaborate with internal & external stakeholders
Effective category management also involves collaboration and communication with suppliers and other stakeholders.
Internally, the stakeholders are Operations (for execution), supply chain (for availability), Marketing (for communication), CRM (for assortment, promotions, and pricing). For the collaboration to be effective, a clear communication structure (i.e., contents, media, meetings, frequencies…) must be added to the RACI.
Externally, retailers should work with suppliers to ensure that they have access to the products and brands that consumers want, and that these products are of high quality and delivered on time. Such collaboration can be formalized through Join Business Plans, Category Captainship and Data Collaboration Programs.
Common Traps to Avoid
Below are the most common traps we have seen happening during a Category Management approach implementation
Inadequate Merchandise Hierarchy
Unprecise Core Processes
Lack of decisions criteria for each Action
Insufficient internal communication
Lengthy and administrative decision-making process
Inadequate Retail BI Tools
Lack of Training
Too short Phasing
Weak involvement of stakeholders
Fear of Failure
Beyond the technique and processes, Category Management is above all a mindset. This mindset is built around 4 pillars:
Customers are the final decisions makers, the judges, and the jury of all decisions
Execution is as important as strategy
The truth is in numbers. Planned quantitative monitoring and adjustments are critical
Category management is a collective work
By following these five steps, retailers can effectively implement category management, and improve their sales and profitability. Teams buy-in will be as strong as the phasing is timely and as the priorities will allow the capture of low hanging fruits.
Appendix: Category Management Implementation Schedule – Example
Brand analysis is the process of studying a brand and its performance in the market. It is an important tool for businesses to use to understand the strengths and weaknesses of their brand and identify opportunities for improvement. There are several reasons why businesses may need to conduct a brand analysis:
To understand the brand’s market position: By analyzing the brand’s market share, customer base, and competitors, businesses can get a better understanding of their position in the market.
To identify opportunities for growth: Brand analysis can help businesses identify areas for growth and development, such as new markets or product categories.
To inform strategic decision-making: By understanding the brand’s strengths and weaknesses, businesses can make more informed decisions about their marketing, sales, and product development strategies.
To measure brand performance: Brand analysis can help businesses track the performance of their brand over time and identify areas for improvement.
To improve customer satisfaction: By understanding how customers perceive the brand, businesses can identify opportunities to improve the customer experience and increase satisfaction.
Overall, brand analysis is an important tool for businesses to use to understand their brand and identify opportunities for growth and improvement.
1. Brand Health Check
Identify the Numeric KPI to see all perspectives of your brands, then build a scorecard dashboard that you can monitor every month. Brand Scorecard varies depending on the industry and business goals, but some common KPIs for a brand scorecard include:
Financial: Revenue, Profit and Loss
Competition: Market Share, Ranking
Shopper’s Basket: Number of Baskets, Unit per Basket, Penetration, Wallet Share
Shoppers: Shopping Frequency, Shopper Penetration, New Shoppers
Satisfaction: Number of the repeat purchase shoppers
2. Market analysis
The most popular measurement is the growth-share matrix, also known as the Boston Consulting Group (BCG) matrix, which assesses a company’s product portfolio and determines which product or segment should receive the most investment.
The grid is based on the Brand market growth rate and Brand market share and is divided into four quadrants. Brand strategy in each quadrant should be different.
Star: Expand
Question Mark: Invest or Divest
Cash Cow: Harvest
Dog: Divest
The growth-share matrix can help a company prioritize its investment decisions and allocate resources effectively. However, it has some limitations, such as its reliance on market share as a sole measure of a product’s success and its failure to consider other factors that may affect its performance.
Customer analysis: Study the brand’s customer base to understand their demographics, preferences, and behaviors.
3. Opportunity Lost Analysis
Quantifying the number of expected sales would help us know how much we should invest.
There are 2 possible ways.
3.1 Growth opportunity loss
It refers to potential business growth that was not realized due to missed opportunities or poor decision-making. It can be caused by various factors, such as a lack of resources, inadequate planning, or a failure to seize opportunities as they arise.
The calculation is
My Brands Sales Growth = A
My Brand Sales Last Year = B
My Benchmarked Sales Growth = C
Formula = (A-C) x B
3.2 Fair Share Gap
The fair share gap is the difference between a company’s actual market share and its potential market share, also known as its “fair share.” It is typically used to measure a company’s performance in a specific market.
To calculate the fair share gap, you can use the following formula:
Fair share gap = Actual market share Potential market share Potential Market Share can be, for example
-Your company’s market share combining all brands
-Your brand market share on average in many markets
-Your targeted competitor’s market share
4. Competitors Analysis
Competitor analysis studies your brand’s competitors to understand their strengths, weaknesses, and strategies. It is an essential tool for businesses to stay competitive in their market and make informed strategic decisions.
To conduct a competitor analysis, you can follow these steps:
Identify your competitors: Who are the main competitors in your market? Next, make a list of all the companies that offer similar products or services.
Benchmark your brands vs them in terms of – Number of SKUs, – Assortment Variety for different shopper group – Pricing – Promotion: Above the line and below the line
Evaluate their strengths and weaknesses: Identify your competitors’ key strengths and weaknesses, By conducting a competitor analysis, you can better understand your competitors and their strategies, which can help inform your own business decisions.
5. Brand perception analysis
The process of studying how consumers perceive a brand and its products or services. It is to understand their brand’s strengths and weaknesses and identify improvement opportunities.”
There are several ways to conduct a brand perception analysis, including:
Surveys are a common method for collecting data on brand perception. You can use online tools or hire a research firm to conduct a survey and gather data on consumer attitudes and perceptions of the brand.
Focus groups involve gathering a small, diverse group of consumers and facilitating a discussion about the brand. This can provide valuable insights into how consumers perceive the brand and its products or services.
Social media analysis: Social media platforms can be a rich source of data on brand perception. By analyzing social media conversations and sentiments, you can understand how consumers feel about the brand.
Customer feedback: Customer feedback, such as online reviews or comments on social media, can provide valuable insights into how consumers perceive the brand.
Brand tracking studies: These are long-term studies that track changes in brand perception over time. They can be useful for identifying trends and patterns in consumer attitudes towards the brand.
Common Traps to Avoid
Below are the most common traps we have seen happening during a Category Management approach implementation
Relying too heavily on subjective opinions
Failing to consider the competitive landscape
Ignoring the customer perspective:
Failing to update the analysis regularly
Success Factors
What company could help brand manager to successfully implement brand review process.
Solidify RACI (response, account, consult and inform) of each brand review step
Schedule the timeframe clearly.
Action Driven Data Analytic Solution, so that team can build the action plan efficiently.
Arrange the training regular for newcomers and refresher training for the existing member.
Read More about Brand Review and Implementation at Retailer stores
From the very beginning, the products a Retailer offers to its customers are classified based on its Merchandise hierarchy, also called structure or product hierarchy. The Merchandise hierarchy enables Retailers to organize their products into different categories and sub-levels, making it easier for
their Customers to find the products they are looking for while shopping in-store or online. For most Retailers, Products are displayed according to the Merchandise Hierarchy they belong to.
their Operation Team to display products in a logical pattern and quickly identify where a new product should be displayed.
their Analysis, easily identify which Division, Department, Category, or Sub-Category is performing or not based on Sales, Margin, and Inventory.
Ideally, retailers enjoy having several segmentation levels, this creating a granularity that supports finer analyses and better decisions.
Challenge
The lack of granularity was preventing Merchandisers and Buyers to understand customers’ preferences an take the relevant category decisions. It translated in decreased cashflow, and non-optimized sales opportunities.
Due to its ERP limitations to only 3 levels of Merchandise Hierarchy, our Client – an Hyper and Supermarket Chain with a national presence with above 70 stores – and its Team struggled in their product segmentation. Because they had to gather several different types of products in similar groups, they were not able to detect:
Which Sub-Category was the main sales or margin contributor of the Category
Which Sub-category was having too many
Which Sub-category was performing well among other Sub-Categories within the same Category
If the space allocated was sufficient or not to display the number of products belonging to the Category
For example, in the Electronics Division, the next sub-level of Merchandise Hierarchy in our Client Merchandise Hierarchy was TV, Sounds, Computers & IT, Appliances, and Small Appliances.
When drilling down into Small Appliances, the next sub-level was Food preparation, then all products belonging to Food Preparation were attached to it.
Buyers and Category managers were naturally struggling managing the 600 skus of the Food Preparation group, not being able to know sales and margin contribution of, for example, Rice Cooker, Blender, Food Processor, Juicer……
Action
To bypass the limitations of the ERP, a virtual merchandise hierarchy was built in our cloud-based retail merchandising solution, supported by automated mapping of each skus.
Putting the Client’s ERP on the side for a moment,
the 1st step was for our Client’s Merchandise Team to build their ideal Merchandise Hierarchy. It was a practical and detailed approach of What Good Looks Like. The exercise enabled the Team to create 1,927 sub-categories, whereas their ERP was limited to 492.
The 2nd step was to map each existing product from the existing ERP Merchandise Hierarchy with the new one they just built. Using key words in products description, the 80,000 Skus of their current assortment were successfully mapped.
The 3rd step was to automate the mapping from the ERP to our Retail Merchandising solution and ensure this mapping would be flawless.
The 4th step focused on defining the business rules required to map every new product coming into the assortment, from the ERP to the Retail Merchandising solution.
In just 3 months, our client’s Teams was able to reach a level of granularity that was not possible in the past. And they started to immediately see where the improvement levers were.
For instance, and back to our Food Preparation Category example, the Category Manager discovered that its Top Sub-Category was Kettle with 40% of the Share of Sales for 29% of Share of Assortment and only 25% of Share of Space but the Sub-Category Sales growth was at 2.2% when Electronics was growing by 5.1%. Based on Kettle performances the Team then decided to allocate more space and redefined the number of Products for the Kettle Sub-Category.
In opposition to Kettle Sub-Category, Toaster Sub-Category had a Share of Sales of 2% with a Share of Assortment of 7% and a Share of Space of 10% when the Sales Growth was negative. Then the Team decided to reduce the number of Products and space allocated for the Toaster Sub-Category.
The Merchandise Team reviewed their entire Assortment allocation based on those principles:
Share of Sales, Share of Assortment, Share of Space to improve their Assortment effectiveness. They increased or maintained the Number of SKUs for Sub-Category having potential growth but having big gap between their Share of Assortment, Share of Sales, and Share of Space, and they reduced the Number of SKUs for Sub-Categories over displayed and having too many SKUs.
Results
In addition to massive savings in ERP upgrades, The assortment was optimized, with direct and measurable impacts on sales, profitability and cashflow.
After 3 Months for Food Preparation
Sales Growth is + 8.9% and Kettle Sub-Category is having a 17.2% Sales Growth
Margin Value improved by 12.4%
Total Assortment for Food Preparation reduced by 29.6%
Stock Days reduced by 14 Days (12.8%)
What does this show?
Having the possibility to segment and drill down till Sub-Category or segment allows Category Manager to have a more granular vision of its Category and to take actions and decisions based on performances.
Easily and quickly identify which are the Sub-categories underperforming.
Manage Share of Space Vs Share of Sales Vs Share of Assortment
Assign a fixed Number of SKUs by Sub-Category with a basic principle (One-Product-In, One-Product-Out)
On our side, we were of course happy to see that our Tool and Expertise are helping create the right value for our client and help strengthen their Assortment efficiency.
What does it demonstrate?
Effective assortment management requires a certain level of granularity. Investing time in building this granularity deliver almost immediate results for all stakeholders:
Easily and quickly identify which are the Sub-categories underperforming.
Manage Share of Space Vs Share of Sales Vs Share of Assortment
Assign a fixed Number of SKUs by Sub-Category with a basic principle (One-Product-In, One-Product-Out)
The objective of Category Management is to ensure each Category’s performance is maximized to its full potential. Ideally, each category is assigned a specific role. Each role will determine how the range, pricing, distribution, display and promotions will be managed through different strategies and tactics. These strategies and tactics start from purchasing and supplier management to Visual Display and Sales performance management.
In that view, category management is a working approach supporting a business model (a category must contribute to X% of sales, Y% of margin and Z% of cash flow)
In this approach, each Category is considered as a stand-alone business unit managed by a Category Manager. The category manager will pay specific attention to ensure that each product performances is maximized.
Challenge
Our Client’s was aware of the importance of Category Management and how it was critical to implement it. Their struggle was on the execution side. How to make this new working organization work, make people’s life easier and deliver results. Our role in this assignment was to help the team kick it off, in real life.
Action
Obviously, Category Manager’s Team can’t implement Category Management process for all their Categories at once. Then, they selected their Top Categories according to their sales contribution and the least performing Categories. When we follow the book, the category management process includes 7 steps. As our client was at the early stage of implementation, there was no benefit in trying to implement the complete process at once. We preferred a step-by-step approach, with easy wins. In that view, we agreed with the Team to focus on 2 main steps, plan them and define what had to be done.
STEP 1
Ensure all is counted and accounted for: Category Assessment
The first step we agreed to take and later planned recurringly is the Category Assessment. The objective of the assessment is to be able to decide what to do next. Beyond the sales assessment, which the Team was already familiar with, we agreed to add dimensions to the assessment. A Category Management Wheel (see illustration) was designed to help align decisions and conditions.
Sales Quantities: the team defined an average daily sales quantity threshold under which each concerned item was to be challenged: selling price, availability, service level, duplication level, promotion intensity and distribution. Sub-Category effectiveness: the team defined an effectiveness threshold under which each sub-category assortment was to be challenged Brand Effectiveness: the team defined an effectiveness threshold under which each sub-category assortment was to be challenged
For each threshold, a set of checking points were set up in the system, along with defined decisions and actions.
STEP 2
Focus on Action: Tactics
Traffic and Destination were the main roles of the top categories selected by the Team. Depending on the results of the Assessment, we set up a simple table of objectives and corrective action (tactics) to be implemented for each category type, for each sales Driver. These were used as a guideline, with only one rule: Action MUST be taken. An example of this table is illustrated below.
RESULTS
Beyond the progressive improvements of the categories’ key indicators, the biggest success was by far the buy-in from the Teams. They became able to better understand the reasons of the performance, as well as deciding rationally what actions to take. And for each action taken, they were also able to read its impact on their system. It sparked a stronger feeling of ownership of the category and its performance.
AUTHOR’S NOTES
A Retailer can easily manage hundreds of Categories and Subcategories within its Merchandise Hierarchy. It is a real challenge for Category Managers. Therefore, prioritizing Categories is a key success of Category Management.
If Implementing Category Management is not an alternative anymore, its execution must be progressive, documented and coached. Most teams are happy to accept pressure as long as they are effectively supported.
Rome was not built in a day. Ensure that the time allocated to the category management approach implementation matches with the Team’s capabilities.
On our side, we were of course happy to see that our Category Management Experience and our Ariane solution for retailers are helping create the right value for our client and help strengthen their Category Management.
We are in a challenging economic situation where cumulative trends are creating tension for both retailers and their suppliers:
Decreased spending power
Fear of an economic Recession
Cost increases leading to both inflation and availability challenges
Besides, a few new business drivers have changed during the last years, challenging the existing business models:
Rise and fall of e-commerce despite heavy investments
Multiple assortment rationalization
Lower shopping frequencies and basket value
Thinner margins for both Suppliers and Retailers
In such a context, JBPs must ensure they address 5 requirements:
Flexible Range Management to respond to shortages. quick shopper demand’s changes and maximize the sales of existing SKUs
Much higher effective promotion plan to deliver higher returns on investment
Integrate the diversity of each sales channel’s business drivers
Ensure Shoppers (and their characteristics) are truly at the heart of each decision
Your business with the Retailer is B2B, meaning that your JBP must fit in and support their business plans.
Remember that Retailers and Manufacturers are facing similar challenges. A well-planned and executed JBP is one of the difference makers that can promote your company as a Preferred Strategic Supplier. In this article, we share 9 ideas on what you can do to become this Preferred Strategic Partner.
Definition
A Joint Business Plan (often called JBP) is a process that helps retailers, and their suppliers solidify the objectives, the activities they want to execute and jointly monitor to achieve these objectives and their respective conditions for success.
JBP is not new and has been a well-known practice for years, and is part of Key Account Management Activities, as described below by Bain & Company.
9 directions to revamp your Join Business Plan
1. Align your Mindset It’s all About the Category and its Shoppers -Not your Brand
Of course, the JBP you are building is about your Brand. But remember: Retailers’ goal is to increase their category sales by increasing Shopper traffic and spending. Your Brand is just a tool. And you want your Brand to be one of the best – if not the best Tool – retailers will use. What retailers are looking for when they build their categories plan is:
Ensure Range completeness, and appeal to all Shopper Groups by Store format
Product Availability
Attractive Promotions, but not create Promo Picker habits to Shoppers
Price Image competitiveness compared to other Retailer competitors, not necessarily to be cheaper on all items • Make it Easy for Shoppers to find the products on the shelves (physical or digital)
When reviewing your JBP, ensure you are ticking all these boxes and can substantiate each point.
2. Know Your Retailer better than they know themselves Share their performances in the market
Whatever the strengths and depth of Retailers’ research capabilities, they can’t know everything. Still, retailers feed their decisions with numbers and data. And like their manufacturers, gaining market share is part of their priorities.
Every bit of meaningful and quantified information you can share with retailers about their performances and benchmark, from your own Brands to the categories you service, will have 2 benefits:
Increase the Retailer’s perception of the value you deliver
Establish a legitimate and data-based benchmark to substantiate some of the activities and decisions you recommend in your JBP.
Below is an example of calculating Lost Opportunities Values by using other retailers’ performance data.
Such an approach should be applied to other metrics as well: volume, penetration, basket value, promotion intensity, …
3. Put Shoppers at the Heart of the Discussion Share about your understanding of Shoppers Decision Trees.
Shoppers satisfaction is the end goal for Both Retailers and Brands. Sharing critical shopper insights (from the retailer or from other retailers). Such an approach can bring massive value in building the Category together. A robust Shopper Decision Tree with well-defined product attributes and the ranking of their importance is one of the most important insights into each Category.
With such insights, Retailers can identify their Range Gaps (and maybe your range can fill some of these gaps), and improve their displays.
Therefore, you can use Shopper Decision Tree insights to share your proposed action plan on
1. New Items to close Category Range Gap 2. Product Display to ease Shoppers in finding your product on the shelf
4. Strengthen the fit between your range and retailers’ expectations Make Range efficiencies as the Corner Stone of your Approach.
Shoppers visit stores because they want to buy the products that they want. To state the obvious, the range is the foundation of the Category (as well as the majority of its sales and profitability)
With limited space for each Category, Retailers need to ensure that the selected items being displayed on the shelves deliver an optimal good return space.
It’s therefore critical for you to know what is the effectiveness of your Brand’s range. If your Brand’s sales contribution is higher than your SKUs’ contribution, you are in a good place. When your Brand offers products that are present across several sub-categories, you want to know what your effectiveness by sub-categories (see example below) is
The below chart presents Sales Share (Blue) vs SKU Share (Yellow) by subcategory. The higher Blue over Yellow, the better it is.
In summary, you will always want to measure your Brands’ effectiveness in 2 perspectives:
• From a sub-category view, to identify potential new items or items to remove • From a Brand view, to benchmark your Brand with the competitors
Below is the action summary for each
5. Fish in pounds where Fishes are Focus on your Targeted Shoppers
The end of Covid19 restrictions in most markets generated a massive return of shoppers to stores. At the same time, the current economic recession has pushed shoppers to decrease their spending. More than ever, Promotions have become the major tool to entice shoppers and win as much share of wallet as possible.
In this context, traditional mass promotions might not always be the best option: they impact the margin of both Retailers and Brands. Additionally, the return on investment they deliver (in sales, in penetration, in basket growth…) is not optimal.
Therefore, targeted promotions or campaigns can be an attractive alternative to consider for both parties. A collaborative approach using Loyalty data can be easily setup as soon as both agrees on:
• Which customer segment to target (you want both to focus on big spenders) • Which products to select (you don’t want their promo selling price to be too much higher than the average selling price) • Which mechanics to choose
6. Make each planned campaign count Be more precise and quantitative about the objectives and the tactics you choose
In addition to the standard financial KPI you can assign to your campaigns, understanding how shoppers respond to your brand activities can also be very valuable.
The first thing you want to do is to be crystal clear on what you want the campaign to achieve. Do you want to drive traffic to your brand (i.e. acquire new shoppers, even if they don’t spend much, so you can work with them again later)? In that case, penetration and number of transaction growth will be important to measure. Or Do you want to drive spending to your brand (i.e. existing shoppers will spend more)? In that case, the number of items purchased as well as the average selling price of the items purchased will be important to measure.
Once you have solidified your objectives, the 2nd thing you want to do is, with your retailer, ensure that the mechanics you will select will support your campaign objectives.
7. One size doesn’t fit all Strengthen the offer by channel to gain Shopper wallet share.
One shopper could shop for all the store types. However, they chose the store format differently based on their shopping mission. Multi Format Retailers is an excellent place for your brands to please the different Shopper Types. You can drive the commercial offers for
– Family shoppers to do one-stop shopping in Hypermarkets – Household buyers in Supermarkets – Conveniences Shoppers in Convenience stores
The more you study about each channel’s shopper behaviors, the more you can build collaborative tactics that will deliver results. This channel-based approach should ideally be applied to each of your Brand’s sales drivers.
Below is an example of the offer’s differentiation by channel
8. Give meaning & Purpose to Business Reviews Make it collaboratively and ensure it delivers a Win for the Category
Remember that for your retailer counterpart, his or her performances are assessed on the Category growth, not your Brands’ growth. In their perspective, a great JBP is on which clearly explains and details how the Category is going to be (positively) impacted. This fact should be the beacon that drives your approach at each stage of the JBP, from the analyses of past performances to measured deliverables you expect to achieve with your proposed strategy and tactics.
“Them, us, fit and action” is the structure to be systematically applied.
An obvious recommendation: the review of each of the retailer’s business performance you address in your JBP is factual, not judgmental.
9. Leverage technology in the meeting room to accelerate & improve Decision Making Don’t be stalled because you didn’t have the right numbers.
Each of the actions you will propose must be legitimated by numbers. Some of the actions will be agreed, some adjusted, some challenged, some rejected. The point is that for all the arguments you will make, they also need to be supported by data if you want to have a chance to influence and convince. You can prepare some of the objections in advance ,identify some of the decisions you know will be a hard sales. But you can’t prepare them all. Still, you must be ready to provide supporting numbers and analyses at any time. So, bring your online category management tool with you and run, jointly, all the analysis and diagnostics you need in no time. Decide. Move to the net point.
For more than a year now, Assortment Rationalization has become a priority for many retailers. The frequent change of customer behaviors and the fear of a recession looming are being translated in a noticeable decrease in spending. This decrease in spending can be measured by both a decrease in volume as well as a decrease in the variety of products purchased, dragging the profitability per square foot down. Consequently, for cash flow and cost purposes, reducing the number of products in ranges – mostly in physical stores – is on top of retailers’ agenda. While it undoubtedly makes business and customer sense, the way it is designed and implemented can have either the effects of surgery with a chainsaw or laser-precise incisions.
Victims of Rationalization?
Over the last 8months, several manufacturers and distributors were feeling a bit bitter on howsome of their Brands’ product ranges had been brutally reduced without priorinformation or consultation. Their challenge was not necessarily that thenumber of their Brands’ skus was reduced on shelves, but rather that theselection of the removed products was not optimal and ales opportunities werelost. The most frequent feedback we heard – and confirmed through a deep divein their range performances – was
Medium performance skus were removed even though their distribution was not optimal
The products performances analyses were sometimes done across all channels, preventing each channel specific shopping mission to be considered
The Range Effect was being impacted every time only one SKU of that Brand was remaining on the shelf
The Unit of Needs were not systematically considered (like in Tesco’s famous business case: Anchovies might have very low sales performances, but if they are purchased by the top 10 spenders of a sore, it becomes a problem)
The strategic directions of the Brands were ignored (for example, a brand might want to push a specific variant of a product, even though it doesn’t perform well today)
The Previous equilibrium of share of assortment was broken
And to the point of certain manufacturers, the rationalization impact on the category was sometimes affected as well.
How does Assortment Rationalization Work?
The idea behind rationalization is simple: if customers don’t buy a product, there is no need to have it on the shelves. Once again, it makes complete sense. The challenges come from the fact that the retailer has literally tens if not hundreds of categories to rationalize across several channels. As time is of the essence, the retailers’ teams do not always have the luxury of allocating enough time to doit as well as they – or you – wished.
The rationalization exercise is like a major Range Review: it usually starts by setting up objectives and principles.
Rationalization measurements
To drive the rationalization exercise, the retailer is going to select measurement targets. When the rationalization is complete, these measurements must be achieved. The most frequent are: Total number of skus or linear meter. The impact of sales, profitability and inventory will validate the best options.
Rationalization principles
Once the objectives are solidified, retailers are then going to apply, for each category and each channel, a certain number of principles (we can also call them constraints) that will guide the algorithm first – and the category managers – in the final decisions. The most frequent constraints are:
Minimum sales quantities
Facing by product type
Number of products variants & number of products by variant
Number of Brands
Number of price points per selling price threshold
…
Once these constraints are recorded in the algorithm; the machine will propose a list of items to keep or remove store by store. The final validation is often done by the Category Managers. Commercial agreements are often considered at that stage.
5 Actions to avoid being a Victim of Rationalization?
The rationalization exercise itself cannot be avoided. It creates similar benefits to manufacturers as it does to retailers, from supply chain to delivery, merchandising and return costs. There are XXX things to do adapt smartly to the reduction of your Brand’s range:
Be informed about both the objectives and principles of the exercise. It will enable you to run your own calculations and projections
Solidify the definition of “Non-Performing Items”
If you can’t run the calculations, ask how many skus you can keep
Propose your own skus choice and substantiate your selection with numbers
Maintain your existing share of space – even with less SKUs – and propose supporting activities to maintain it
4 Ways to make your Brand win through Assortment Rationalization?
When your relationship with your favorite retailer are collaborative, you have normally been informed in advance about the rationalization exercise and when it will take place. Of course, the 4 actions mentioned above will need to be executed. But you can do more than this.
Easy Approach: Anticipate
When you know what the measurements are selected and their target [ e.g.: we need to reduce the number of SKU by 40%], using simple POS data, you can:
apply these 40% to you range
Count the number of skus you will have to remove
Select the critical skus you want to keep and ensure they are out of the agreed definition of non-performing items.
Professional Approach: Propose an Assortment type by Cluster
The approach is like the Easy approach, with one additional parameter in your selection of sku: baskets details. You will support you selection by integrating what is specific to each channel:
average spending by customer
number of items per basket
Items penetration
This will help you ensure that the items you select to remain on shelves match shoppers’ expectations. Brand’s aspiring to become Category Captain will do the same exercise on their competitors’ Brands and submit their selection as a suggestion.
Expert Approach: Propose an Assortment by Store
In addition to theProfessional Approach, the Brand’s own constraints must be added in thealgorithm. For example: number or type of flavor, associated purchases, packsize, price level, …
In each approach, it is recommended to run a simple projection that will measure the proposal impact on sales, concerned Brands’ effectiveness and inventory.
The discussion was organized by Chutipong Benjasatkul, the CEO of Italent, on 23 November 2022 in Bangkok. Below are the questions and answers that were addressed during the discussion. Frederic Etienbled, CEO of Hypertrade, was the guest of Chutipong.
Question 1: What did you see change on the several retail markets HPT is servicing? Across the markets we serve, while each has its own specificities, we identified 5 major common trends
a. Retailers’ Range rationalization b. Brands’ new approach to shelves effectiveness c. Change in Shopping Behaviors (Frequency and basket) d. Increased usage of CRM and Personalization to not only drive traffic and spending,but also improve Customer Engagement ROI e. Post-covid decline of online for CPG. In is interesting to see that today, at least in the US, Stores have become again the new the strongest media channel is now stores, with an audience almost double than digital audience.
Question 2: What do you see as the main challenges retailers need to solve? In addition to rising costs and economic slow down, I believe retailers need to address 5 key challenges
a. Availability of course b. Cash Flow, due to oversized ranges and lower comsumption c. Profitability (heavy investments to drive traffic & basket and rising costs) d. Omnichannel complexity & decline in digital commerce, where they did heavy investments e. Capabilities & competencies’ Gap
Question 3: What are the common solutions you see retailers implementing?
Each retailer – each company – has of course its own priorities. Still, what we can see is that there are certain priorities that can be found across several retailers, whatever their size. In addition to a deeper integration of technology into the supply chain and ordering more specifically (availability and cash-flow increase), we can see 3 main trends.
a. They are working hard on Range rationalization, to optimize distribution, shelf-space, cashflow and availability. This include the setup or improvement of their current clusterization.
b. They are accelerating Data driven Category management, to not only improve the ROI of each decision in terms of products, promotion, and pricing, but also to increase Teams’ efficiencies. As strange as it may seem, retailers are not always the most advanced companies when it comes to digital transformation.
c. They are looking at all options to improve Suppliers’ collaboration with different objectives in mind: 1) engage suppliers’ capabilities more in their category strategies; 2) build customer engagement strategies; 3) automate as much as possible the creation of all document & information needed in the business relationship.
Question 4: In this context, what are the opportunities for Suppliers?
When one thinks about sales, we know that there are several sales technics used in B2B. There are for example the SPIN (Situation, Problem, Implication, Need Payoff) approach, the Solution Selling Approach, Gap Selling, etc…,
All these approaches have one point in common: they focus on identifying the pain of their customers and then propose solutions to not only cure the pain, but also deliver additional value at the category level
The key opportunity a crisis like this can offer is to elevate your relationship with retailers to a strategic level: support and anticipate their pain and challenges, and highlight the value your solutions can bring. For example,
a. Follow the rationalization trend and anticipate reduced, range and focus on what sells well b. Be pro-active on your Brand’s distribution optimization c. Systematically integrate Shoppers insights in your recommendations to ensure your strategy will address their specific needs in terms of traffic or spending d. Help retailers identify and capture:
i. the category opportunities they can’t see due to a lack of time or resources ii. The channel opportunities they can’t see due to a lack of time or resources
If we come back to basics sales training, it is about re-starting the conversation with a question: How can our Brands help you achieve your business objectives, implement your strategies and address some of your challenges? The ideal stance would be: “After analyzing your data, our understand is that your have Opportunities A & B, and need to address Challenges 1 & 2. Is correct? I believe we can help”.
Question 5: What are your recommendations to Suppliers who want to capture such opportunities?
Building on our experience working with manufacturers, we could summarize this in “Embrace the collaboration opportunities to become a strategic partner”, with all the benefits a strategic partnership can deliver on range, distribution, promotion, display and innovation.
To break this down into action steps, we see 4 directions to make this happen
• The 1st one is a challenging one as it refers to a mindset: Make more efforts to understand not only retailers, but also the person in front of you, their job, their challenges. You need to speak their language
• The 2nd one if that once we decide to speak the Clients’ language, it implies that we are able to measure performances, successes and failures with their own metrics. Their metrics must become part of your KPI. What is success for you can be assessed very differently by them. This direction is critical to enable your company to embrace the Collaboration opportunities
• If one decides to place Retailers objectives at the centre of their decisions and positioning, then the 3rd recommendation is to embrace our new data-driven world: use data and analytics to take your decisions and validate your options. There are always lots of reasons to postpone these decisions, but it comes a time when embracing reality is required. Yes, transforming a company into a data-driven organization is not a picnic trip, nor is it done in a day, neither is it impossible. Different approaches exist, depending on each company’s size and maturity. Yes, it is going to take time, people’s energy and money. But Mistakes, approximation or misfires are becoming too expensive. Data should drive the majority of all the decisions that impact Top and Bottom lines of the company. Instinct or intuition are just the icing on the cake to be used very, very carefully
• Last but not least, and as challenging as it might sound, don’t stop investing, but increase your focus on your Return On Investment, and put this ROI at the centre of your joint decisions with retailers. A recent Mc Kinsey paper shared that companies that continue investing during tough times generate on average 37% more sales growth than their peers.
Question 6: Building on your experience with other manufacturers, what roadmap would you suggest?
In the way we look at it, we see 5 main stages, be it for physical or digital commerce:
1. The 1st step is to map and review key commercial decision processes that impact top and bottom lines. Here we are talking primarily about your Range Management, Promotion Planning and Category Reviews. These 3 processes drive most of business decisions and support the main sales drivers.
2. The 2nd Step is to identify, across these processes, where are the “Rules Gap”, meaning the absence of clear quantified conditions and rules that enable to decide what the next actions or decisions should be. At this stage, companies will usually define what actions the alerts’ thresholds will generate, as well as define the corrective actions to be taken.
3. The 3rd step is to identify, in these “Rules Gap”, where are the “Data gaps”, meaning the quantified information or data that should be used to solidify and fluidify the process
4. The 4th Step is to design, across the organization, what would be the optimal process if we had all the data and information required. At this stage, companies can also identify what are the potential missing competencies and tools required to make this optimal process work.
5. The 5th Step is the piloting, including training and monitoring. We reckon embarking on this Journey is not easy as it is necessary. It corresponds to an important part of establishing the foundation required for digital transformation
7. Question 7: What are the main challenges manufacturers will face if they want to start adapting to this new business approach?
From our experience, – and once again each company is unique – common challenges companies face when undertaking this transformative approach are:
Denial: it takes some time, and financial projections, to admit that:
a. There are no other alternatives b. The investment will deliver one of the best ROI in medium term
Doubt: it is not easy to re-think parts of the company or working habits. Will we succeed? Do we have the right talents? Will the Teams buy in? How much will it cost? Can we afford it? Will I be able to manage this? We have been quite successful so far, why change? These are quite natural and healthy questions to ask.
Fear : a transformation – or evolution – takes time, energy and effort. We are here talking about 3 converging projects: re-aligning working processes, elevating teams’ capabilities and setting up automated technology to make it happen with agility. How will we manage such a journey? What are the risks? Will the teams follow? Are we “ready” enough?…
Resistance: even though we are familiar with the idea that What brought us here won’t get us there. Nobody likes to change. There is an important fear factor here, then often drive resistance at all levels in the Company from Shareholders to Salespeople on the field.
Question 8: What are the most frequent Quick Wins manufacturers can capture when starting this new journey?
There are quite a few: • On financial perspective, the first benefits manufacturers can capture from using data more effectively is the sales growth thru optimization of their distribution. It can generate up t 5% additional sales. These gains also impact the retailers, which reinforce the relationship: • Time saving is obviously a major gain • On the Human side, Teams usually appreciate the fact that efforts will be done to elevate their skills and competencies or compensate a share of the lack of competencies by technology and automation.
Question 9: Can you share a successful Business case of a manufacturer who implemented such changes and what results it delivered?
Yes, absolutely. The company I refer to is a Cookies & Snack manufacturer. The first challenge they tackled was their range Optimization. Data made them realize that they had to optimize their range: some items were distributed in the wrong channels (it was costing them money for nothing) and that some of their top selling items were not in all the channels they should be (they were losing sales opportunities). Sales grew and distribution costs decreased. Overall, they could increase their range effectiveness by more than 10% in all channels. Once they rationalized their range management process by Brand and set up the supporting processes, they tackled the promotion challenges. While they were not challenging promotions investments, their problem was double sided: 1 a large number of promotions were not translated in the expected increased sales and market share, and 2, they had a very limited visibility on the global promotion effectiveness at the retailers’ category level. Poor planning, products, and mechanics selection were at the origin of these challenges. So they started analyzing their performances and the whole category, established promotion planning and selection rules, and set up a very more detailed approach to promotion performances analyses. After 6 months, they could improve the Promotion ROI by 20%Now, they are at the stage where joined internal collaboration between Marketing, Insights and Sales teams are now driving decisions for range, product launches, distribution and promotions.
Conclusion: on the one hand, you say that growth in current times requires more agility for quick and efficient responses in a short time period. On the other hand, you are recommending evolution and changes, from mindset to working processes and tools, that require a longer-term approach and ROI. How do you manage this antagonism between Short and Medium Term?
It is an excellent question. I was reading last weekend another white paper from Mc Kinsey saying that while it was critical to be agile and hyper-reactive to fast changing customer behaviors, it was also worth considering a new approach to Managers’ incentives by creating multi-year incentive schemes. What I believe we all know as businesspeople and managers in this room today, is that it takes time to get the company ready to embrace change. In other words, we need to invest time and effort to be able to save time and gain in performances. When we look at the future, and even now, we are all aware that data and digitalization are only to gain more importance. And that we need to build and develop the capabilities to maximize their usage. We are also aware of the fact that the more we delay our decisions to move towards this data and digitalization direction, the more difficult it will be to make these changes happen. The short-term imperative is to start now, and the medium term imperative is to plan carefully a step-by-step roadmap.
On a personal note, I believe the Formula for Change summarizes the mindset quite well. It says that Change can happen only if the driving force is stronger than resistance. And the driving force is made of 3 components: The awareness of the difficulties, The vision of what a better future can be and the first steps to move towards its. The Long term is the Vision, and it concerns the whole company. The short term – and the gains we mentioned earlier – are the first steps we can do to move forward with Sales & Marketing teams, bringing them closer to a quantified understanding of Shoppers and the actions required to address behavior changes.
Shopper Insights must be integrated into each Category, Brand or Sales Strategies: they are just critical for every Teams. In this blog, we provide a simple and practical approach to understand these insights, decode their meaning and translate them into practical actions. A must-know for Sales, Category, Marketing and Insights Teams
Step 1: Identify My Brand Challenges
Objective
Identify if we have traffic challenges by using the Number of Baskets KPI
Identify if we have spending challenge by using Value per Basket KPI
Methodology
Select the periods to compare
For Traffic challenges identification, we will be comparing My Brand’s Number of Baskets
For Spending challenges identification, we will be comparing My Brand’s Value per Basket
Identify Opportunities
Conclude whether I have the challenge in Traffic or Spending
Step 2: Identify The Scenarios
Objective
Identify why my brand lost shoppers: lost to other brands, or category Traffic decreased, or store traffic decreased
Identify why Shoppers spend lesson my brand: spend less oncategory level or store level
Methodology
Review brand switching to identifycompetitors who gained my Shoppers
Review category & store traffic, whichimpact my brand’s penetration
Review Shoppers’ wallet share & valueper basket, which has consequences onmy brand’s spending
What needs to be done
Identify what impacts my brand’s performance: traffic or spending
Which competitors caused my brand to lose its Shoppers
What amount are my shoppers ready to spend to purchase this type products
Step 3: Select The Right Action Plan
Objective
Gain my Shoppers back
Drive my brand’s traffic
Increase my brand’s spending
Methodology
Review my brand’s promotion performance & activities
Review my brand’s innovation & newitems
Review my products’ availability &visibility
What needs to be done
Build up solid promotion plans: drive traffic or increase spending
Launch new items
Propose cross merchandising: display or selling
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