Through 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 and solution-oriented.
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?
This 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 and time.
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.
He 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.
Also worth 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?