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V 2.2 2010 In-Store Implementation Network
RETAIL’S SPACE-TIME
CONTINUUMHOW IN-STORE IMPLEMENTATION SOLUTIONS CAN RE-ORDER OUR
UNIVERSE
The ISI Challenge
2In-Store Implementation NetworkFeb. 14, 2010
Intro
• Store-level compliance with merchandising and promotion plans seems to come down to simple physics:
• How much product can be managed, in how much space, taking how much time?
• But the arithmetic for In-Store Implementation effectiveness turns out to be non-trivial.
• Shelf conditions are an informational “black hole” for merchants and marketers
• The measurement and management of compliance is an under-developed art...
Executioner’s Song
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“The most brilliantly designed and
insightful customer offerings
can be rendered impotent
by poor execution.”James Allen, Frederick F. Reichheld, and Barney Hamilton,
"Tuning In to the Voice of Your Customer,"
Harvard Management Update, Vol. 10, No. 10, October 2005
Intro
Accuracy In Question
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?
Feb. 14, 2010 In-Store Implementation Network 4
n=176[ SN, Mar. 20, 2009]
Intro
Lack of Measurement
Other
Do not measure in-store execution
Make assumption that the job got done
Rely on program vendors' "self audits"
Use an independent 3rd party firm
0% 10% 20% 30%
13%
23%
28%
17%
21%
Four of five respondents to last month’s poll said they expect 90-100% execution of their in-store programs.
How do you measure execution in-store?
Feb. 14, 2010 In-Store Implementation Network 5
[ CPGmatters Nov. 17, 2008]
Intro
Industry Demands Improvement
Feb. 14, 2010 In-Store Implementation Network 6
38% Plan-O-Grams
27% Promotions
15% Displays
Which of the following ISI practice areas is of highest importance within your organization today?
Intro
Compliance Gap
7In-Store Implementation NetworkFeb. 14, 2010
Intro
35% indicated no process to track complianceAnother 7% don’t know!
Methods Employed
8In-Store Implementation NetworkFeb. 14, 2010
Intro
Among Those Who Say They
Track Compliance:
Heavy reliance on spot-checks; sign-offs; and self reporting
Promotion BreakdownApproximately 50% of authorized retail promotional displays are not erected or erected late…
This amounts to an estimated $25 billion of ineffective spending annually by CPG manufacturers.
Feb. 14, 2010 In-Store Implementation Network 9
Opportunity
Source: “In-Store Implementation: Current Status and Future Solutions” (2008)
Excess Shelf StocksAn estimated 86% of stock on
hand in food stores reflects quantities in excess of seven days
of supply.
This oversupply accounts for approximately $46 billion in
stagnant capital industry wide.
Actual net cost to the grocery industry may approach $3.3 billion
at a discount rate of 5% per year.Feb. 14, 2010 In-Store Implementation Network 10
Opportunity
Source: “In-Store Implementation: Current Status and Future Solutions” (2008)
Out of StocksShelf-level oversupply coexists with an intractable out-of-stock problem amounting to 8.3% overall, and 16% or higher on the fastest moving items.
70 to 75% of these are a direct result of retail store practices, costing the typical retailer about 4% of net sales.
This works out to a revenue loss or displacement of $20 - 25 billion.
Feb. 14, 2010 In-Store Implementation Network 11
Opportunity
Sources: Gruen, et al and “In-Store Implementation: Current Status and Future
Solutions” (2008)
Bottom LineThe ISI Sharegroup estimated the total cost of sub-optimal merchandising performance is at least 1% of gross product sales, or $10 - $15 billion of the $1.5 trillion total annual sales across the food, drug and mass channels.
Feb. 14, 2010 In-Store Implementation Network 12
Opportunity
Source: “In-Store Implementation: Current Status and Future Solutions” (2008)
Search for Solutions• It’s time for an ISI Industry Initiative• Together we can illuminate the “black hole”• Connect store operations with merchandising• Identify new standards for in-store sensing• Define better performance benchmarks
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Call to Action
The ISI Sharegroup Story
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Formed in 2007 by like-minded visionaries from consumer packaged goods, retail,
technology and consulting firms:
ISI Back Story
The ISI “Working Paper”
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• Published April, 2008• 15,000 words• 1,000+ downloads• P.1 coverage Supermarket
News• Progressive Grocer article• Numerous media pickups• Widely-cited
ISI Back Story
Fast-Forward: The ISI Network
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ISI Back Story
ISI Defined
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Plan Actions• By store/item• What is required• When action is required• Who will take the action
Do The Work• Coordinate the players• Handle exceptions in real time• Includes communications
Measure Outcomes• Verify compliance• Report current store conditions• Ongoing and systematic
Implementation
ISI Solution Criteria1. Players identified, roles assigned, enabled
2. In-store sensing with central monitoring3. Complete visibility with controls
4. Common data with custom dashboards5. Communication channels
6. Systematic, not ad hoc7. Continuous and sustainable by design
Feb. 14, 2010 In-Store Implementation Network 18
Implementation
“Embedded, Continuous, Always On”
ISI “Communities of Interest”
1. Master Store Planning2. Store Capacity-Based Planning3. Planogram Compliance4. Promotion Compliance5. New Product Compliance6. Shopper Media Compliance7. ISI Communications
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ISI Network
Three Primary Initiative Areas: Planning, Compliance, Communications
ISI Planning
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• Master Store Planning: SALA – Space; Assortment; Layout; Adjacency
• Capacity Planning: Balances in-stock vs. assortment vs. labor
• Cluster-level planning with store-level allocation helps limit complexity
• At what point(s) do we take this down to store level?
At Cluster/Store/Category/Item Level:
ISI Network
“Intelligent Loss of Work”
ISI Compliance
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• Apply in-store sensing / measurement processes
• Pay for Performance ideal• Promotes “intelligent loss of
work”• New reality-based performance
standards emerge
Fundamentally An Execution Problem:
ISI Network
The Four Compliances: Planogram, Promotion, New Product, Media
ISI Communications
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• Present methods are largely ad hoc and unstructured, a mix of email, phone, spreadsheets, documents, etc.
• Update to more structured communications, i.e. portals working from common data
• “Many-to-many” solutions required
• Sharing of insights in real time
Inter- / Intra-Organizational:
ISI Network
ISI’s Breakthrough Opportunity
Help Illuminate the “Black Hole”• Industry collaboration is imperative• Room for many under the ISI tent• Big vision – bigger payoff• Cases → Benchmarks → Best Practices• ISI Benchmark Study: Q3 2010
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Conclusion
JOIN US!JAMES TENSER, DIRECTOR
520-797-4314
jtenser@instoreimplementation.com
24In-Store Implementation NetworkFeb. 14, 2010
Conclusion