BrainTrust Query: What Constitutes Compliance?
Commentary by James Tenser, Principal, V•S•N Strategies
a special arrangement, presented here for discussion is a summary of a current
article from the Tenser’s Tirades blog.
In my role as director
of the In-Store Implementation Network, the challenge of merchandising compliance
is frequently addressed, from a variety of perspectives — both theoretical
Several recent conversations have centered on the question
of measuring the accuracy of a shelf set; that is, its degree of compliance
with the schematic or planogram.
So when do retailers declare a merchandise
set to be “out of compliance”?
When nine percent of items are out of stock (the industry average in grocery)?
When 15 percent of items are present but mis-located? When the number of facings
is off on more than 25 percent of items? Alternatively, what criteria define “in
compliance”? All items present and accounted for? When 90 percent of items
in the correct place? When 99 percent in-stock? How close is close enough?
is actually a non-trivial matter when seeking a practical solution. Since a
planogram is a complex tool covering many details (items, facings, positioning,
quantities, etc.), determining what data to measure, how often and to what
end(s) requires a thoughtful process.
Evidently, the ways a planogram can go wrong
are numerous but not always numerical. More significantly, they are not easily
recognized by human inspection. That is, compliance issues can be hard to spot
without a scorecard in hand — and even then it takes concentration and focus
What if we could define a short-hand method instead — perhaps three
to six yes/no metrics that could be taken as a proxy for overall compliance?
The late Larry Dorr, most recently of BDS Marketing (and a giant of this area
of business practice), recently described an approach that is worthy of discussion.
proposed measuring the condition of approximately five or six “destination” items
for each category or major subcategory. These are often the highest-velocity
items in their respective sections. “Measure the items adjacent to those
items,” he said. “If those five and their adjacencies are in correct
shape, then the set is probably in good shape overall. If two of the five items
are off, you may assume a compliance problem.”
This approach offers economy,
speed and ease of implementation. A limitation, he concedes, it that this doesn’t
provide a measure of item distribution. While the five-item rule may deliver
a directionally correct conclusion about planogram compliance, it may not help
very much with gauging the performance of non-destination items.
noting is how the criteria for compliance may vary across different product
categories and classes of trade.
So let’s grant that merchandising compliance
is a slippery quantity using presently available methods. That doesn’t absolve
practitioners from the requirement that they track and measure merchandising
performance. In fact, innovation in Shopper Marketing, segmentation and automated
planograms only intensify the need.
Discussion Questions: What criteria define planogram or schematic compliance?
How should they be measured or scored? What are the thresholds?