BrainTrust Query: Are we ready to cure performance anxiety?

Discussion
Jul 13, 2009
James Tenser

By James Tenser, Director, In-Store Implementation
Network

Sure, you can plan alright, but how well can
you implement?

I imagine this question keeps truly conscious
merchants and consumer product marketers awake nights with what amounts
to performance anxiety.

Those of you who follow the work of the In-Store
Implementation Network
may be well aware that members
regard the pursuit of retail compliance as nothing less than an industry
imperative. Our latest work on merchandising performance management (MPM)
drives the point further. Our not-so-hidden agenda: Shift the dialog from
hand-wringing about our challenges to identifying and implementing practical
solutions.

You see, we are standing at the threshold
of the next (maybe the last) great opportunity for retail financial performance
gains – the stores themselves.

Shopper Insights let us design offers tailored
to specific shopper groups.

Automated planogram tools let us tailor merchandising
plans for each category in each store. We can layer on store-specific pricing,
using the latest optimization technologies, and before long we’ve defined
thousands of store-specific matrices of space, mix, price points and deals.

Yes, we make some impressively intricate plans,
but can we implement them? Well,
there’s a dizzying amount of detail to cover, but realistic solutions may
finally be at hand.

Now we are seeing a new class of MPM solutions
reach the market. They are distinct from legacy workforce management and
store execution management solutions in several important ways. First,
they are engineered to manage outcomes,
not just tasks or people. Because they incorporate a two-way platform for
feedback and reporting, they support capture of performance metrics in
real time.

Second, they are inter-organizational
by design. That is, they support interaction from all the parties who plan
merchandising and who touch the merchandise in stores – retailers, manufacturers,
MSOs, brokers. This is most commonly accomplished through establishment
of a secure, web-based portal that is accessible as an online service.
As a result, all parties in the merchandising ecosystem view relevant performance
data and contribute required feedback to the greater information flow.

Intricacy is the enemy. Most of what we try
to do is not that hard. But there is so much detail to cover and those
details are so… relentless.
Performance anxiety must inevitably follow.

MPM solutions hold out the promise of a practical,
every-day, plan-do-measure store compliance discipline that can gain a
grasp on merchandising performance and find hidden profit in the stores
– where it all started.

Discussion
Questions: Can retailers truly perform against intricate plans derived
from shopper insights and planogram automation? Is it time for them
to step up and adopt merchandising performance management (MPM) solutions
or should manufacturers take the lead? What impact would a true inter-organizational
MPM solution have on collaboration?

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14 Comments on "BrainTrust Query: Are we ready to cure performance anxiety?"


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Ryan Mathews
Guest
11 years 9 months ago

The most sophisticated tool in the world is useless unless you have the will and the skill to use it. Retailers should own their stores…period. That means not relying on manufacturers to supply them with systems and processes that benefit a category, but only at the expense of the total profitability of a store. Of course, this means retailers will have to invoke the “I word”–investment. If you want to play in the arena of smart retail technologies, you have to be willing to pay.

Anne Howe
Guest
11 years 9 months ago

If an operational planogram designed from a system was truly planned in collaboration to maximize both manufacturer and retailer insights, then it is just a question of the will and skill to get it done. The reality is that few projects get the benefit of that level of true collaboration. But, if we get to fewer, bigger, better by using a great planning tool, that’s a step in the right direction. Results tell the story, and success breeds success.

Warren Thayer
Guest
11 years 9 months ago

Good points all. Store-level execution also requires sufficient bodies in the store to get the endcaps built, cross-merch signage put up, etc. That’s not happening now, and it’s where there’s a lot of hand-wringing and finger-pointing without real solutions.

Kai Clarke
Guest
11 years 9 months ago

This is a difficult issue since there are so many costs, variables, and really small factors to consider that the data alone on this is overwhelming. Also, you have to truly consider whether this is more important than the basic keys to retailing success of eliminating out-of-stocks at both the store and warehouse levels, price, and product positioning. Most stores are so deficient in one or more of these areas that any other focus on retailing is just a sideshow to the real issues at hand.

Anne Bieler
Guest
Anne Bieler
11 years 9 months ago

The challenges of in-store implementation have been well reviewed. The difficulties reflect staffing, logistics and communications issues.

A new awareness of the value of good execution (and the high cost of poor implementation) is bringing better approaches into the market place. The “wall-to-wall” initiative announced by Kraft is spreading to other brandowners and should be a huge help. By having a single rep in the store several days a week should aid the implementation of CPG promos at many levels. Better way to get that ROI for their marketing dollars!

Ralph Jacobson
Guest
11 years 9 months ago

I find the very existance of an “In-Store Implementation Network” intriguing. This would make one tend to this there is a coordinated effort out there somewhere–but I certainly haven’t seen it in action–with 8-15% out-of-stocks still strangling the industry.

Knowing how inconsistent merchandising execution is across the typical multi-store chain, let alone across different companies, CPGers have the ultimate frustration. All they want is to enhance the shopping experience with a consistent message, look and feel regardless of what store, or in what local market they choose. The resistance for retailers to embrace not only the newest technologies but also even more critical, the industry best practices for in-store execution, will delay “nirvana” indefinitely.

Sandy Miller
Guest
Sandy Miller
11 years 9 months ago

This article is on target in focusing on the requirement for comprehensive installation. However, it misses the simple solution. When retailers or CPGs have in-store promotions, insure that the provider of the graphics or displays guarantees 90% or better installation, which doubles the reach and impact of the program. The typical 30-50% installation rate leaves money on the dock in materials that consumers never see. It’s as simple as that.

Ben Sprecher
Guest
Ben Sprecher
11 years 9 months ago
You can’t improve what you can’t measure, so as a way of measuring store-level compliance with merchandising plans (and hopefully, the associated sales impact of said merchandising), Merchandising Performance Management (MPM) makes sense. However, the effectiveness of MPM systems will always come down to a simple question–what are the incentives for all of the individuals involved? Are chains willing to hold employees accountable for poor compliance at the store or category level (and reward them for exceptional work)? Are brands willing to use past MPM results to cut back on programs when the data doesn’t support their effectiveness? Are brokers willing to be held accountable for the stores where they fail to implement to plan? The beauty (and risk) of having better data access is that you can use it to drive incentives across the board. If chains, brands, and brokers are all on board with that, then I see great value in MPM. However, if the data is just seen as an interesting source for a pie chart on page 3 of an executive… Read more »
Camille P. Schuster, PhD.
Guest
11 years 9 months ago

Implementation is always a major challenge. Whatever the plan, getting it implemented across 2,000 or 7,000 stores determines success or failure. Too often the human resource part of the plan and/or the monitoring functions are left to their own devices. No plan succeeds under those conditions.

James Tenser
Guest
11 years 9 months ago

Thanks all for the thoughtful feedback. It’s no simple challenge to turn this discussion from commiserating about the problems to tackling the solutions.

Nothing works as well as it should without good inputs–not planogram automation, new product introductions, segmentation and targeting, in-store promotion, demand-based pricing, space planning–none of it.

This is why reliable information on store conditions is an important (but too often missing) pre-requisite for effective activities at retail.

John Fermann
Guest
John Fermann
11 years 9 months ago

SPAR certainly agrees with your doubts on the question “can retailers truly perform against intricate plans” whether they are derived from shopper insights or are simply created by the needs to cut several new items into the section.

We have seen retailers send out POGs, with the incorrect linear feet for the store or the wrong shelf height (and number of shelves). Assuming that the individual stores can make the correct modifications would be a mistake. Additionally unless a chain has a traveling reset crew there is no telling when the desired changes will take place. SPAR has been sent in by manufacturers months after a category was to be reset to either fix the mistakes or complete a reset that was never done and cut in new products that are still in the back room or in the wrong location set to the correct POG.

Ted Hurlbut
Guest
Ted Hurlbut
11 years 9 months ago

Doesn’t the issue of execution at store level come back to senior management’s attitudes about store level payroll? You can’t really expect to be able to execute much of anything, software packages notwithstanding, if your fundamental attitude is both to minimize overall store level payroll, as well as per-hour unit payroll. We’re left with too few people, without the breadth of necessary skills, to deal with too many top-down instructions that fail to take into account the realities at store level.

Mark Price
Guest
Mark Price
11 years 9 months ago
Efficient, clean retail execution is no more critical than when a company faces a down economy. Consumers would often be surprised to discover that many of the unique “eccentric” merchandising aspects of their local store are in fact local decisions, not made by headquarters at all, and are not data based. It is critical in this tough economy that retailers leverage all the information that exists to present the optimum product mix and merchandising selection to maximize both revenue and as importantly, customer retention and frequency. Who has that information? The answer is not the manufacturer or retailer–it is a combination of the two that have the capability to deliver the optimum performance for both parties. If retailers do not partner with their key manufacturers and leverage all the consumer insight available, not only will those retailers struggle in the short-term, they will face substantial commoditization in the long-term as well. As the economy bottoms out and begins a slow recovery, victory will be earned by those who can move the most aggressively to eliminate… Read more »
Steven Collinsworth
Guest
11 years 9 months ago
All great comments and all very true. My experience has been one of immense learning of retailer obstacles (perceived, real, and not even thought of) along with the same for the manufacturing side of the desk. The very idea of a Merchandising Performance Management system is long overdue. However, many of the thoughts and ideas expressed are actually recirculated issues with a new label. Over 10 years ago I recall a big issue in food retailing was the out-of-stock issue and the percentages were estimated to be 10 to 15 percent depending upon who you subscribed at the time. Today the same numbers are being tossed about and confirmed via several studies. Most if not all retail stores will change some aspects of planogramming and merchandising in their stores without the knowledge of their own headquarters. The very idea of any HQ office with an inkling of a thought about the store does as they say is extremely naive. So we are left with the disconnection between the HQ decisions and the field/store implementation. As… Read more »
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