BrainTrust Query: Where are the In-Store Implementation Best Practices?

Discussion
Apr 29, 2008

By James Tenser, Principal, VSN Strategies

The In-Store Implementation Sharegroup has just released its first work product, a working paper, titled In-Store Implementation: Current Status and Future Solutions. It is time for the retail consumer products industry to coalesce around a new set of best practices centered on merchandising.

More than a year in the making, the 15,000-word document argues in favor of a collaborative, industry-wide initiative aimed at closing the implementation gap that today limits effectiveness of merchandising, promotion and category management in the retail consumer product industry.

The ISI Sharegroup was formed in 2007 by like-minded visionaries from consumer packaged goods, retail, merchandising services, technology and consulting firms. Member companies include Anheuser-Busch, Driveline, General Mills, Giant Eagle, Nestle-Purina, PepsiCo, Procter & Gamble, RetailTactics, Schnuck’s, The Partnering Group, and VSN Strategies. [Editor’s Note: James Tenser is the principal author of the ISI report.]

In-store implementation, or ISI, refers to the collective physical and informational actions performed at retail to actualize merchandising, marketing and media plans in the store. ISI encompasses compliance, measurement and communications activities, and is defined by a Plan-Do-Measure process cycle that controls implementation plans and work and communicates implementation signals.

Sharegroup members estimate the available bottom line opportunities from improved implementation approach one percent of gross product sales, or $10 to $15 billion of the $1.5 trillion total U.S. annual volume across the food, drug, and mass channels. Contributing factors include an estimated $46 billion in excess shelf inventory in grocery, costing $3 billion in lost profits; the ever-persistent out-of-stock problem, reported at 8.3 percent of items overall, amounting to tens of billions of dollars in affected sales; and as much as $25 billion in ineffective promotional spending annually by CPG manufacturers.

“Excess inventory and out-of-stocks are results of inadequate shelf management and inability to manage and monitor shelf conditions,” said Dr. Brian Harris, founder and co-chairman of The Partnering Group, who chairs the ISI Sharegroup. “No level of Category Management or supply chain process sophistication can fix these problems in the absence of an improved in-store implementation discipline.”

Sharegroup members are calling for an industry-wide culture of compliance to help resolve systemic merchandising challenges. The working paper proposes a path toward greater cooperation between retailers, manufacturers and third parties that would ultimately enhance the customer experience and industry profitability.

Discussion Questions: Where are the best practices for in-store implementation? What recent successes hold potential to be expanded into new industry standards for managing merchandising at store level?

[Author’s Commentary]
A primary goal of the ISI Sharegroup will be to identify current best practices in in-store implementation and other aspects of store-level compliance. Sharegroup members have agreed to contribute case studies based on their own projects. Other firms and industry groups are invited and encouraged to join the dialog and to write and submit case studies toward the assembly of a library of best practices.

The ISI Sharegroup members recognize that this goal is bigger than any of us. We hope the release of the Working Paper serves as a catalyst for broader industry-based initiative, which leads us to a new set of superior practices for In-Store Implementation. How can your company play a role in establishing the new culture of compliance?

Download the Full ISI Sharegroup Working Paper or the Executive Summary: In-Store Implementation: Current Status and Future Solutions www.instoreimplementation.com [free reg. required].

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14 Comments on "BrainTrust Query: Where are the In-Store Implementation Best Practices?"


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Camille P. Schuster, Ph.D.
Guest
14 years 25 days ago

Certainly the numbers reported here are intriguing. I look forward to reading the report to get more insight into where and how these savings exist. Meantime, this information clearly indicates that the “solution” for effective merchandising has not been identified yet and there is much room for innovation.

Nikki Baird
Guest
Nikki Baird
14 years 25 days ago

Part of the reason why in-store implementation is so challenging is because it is actually very complex. So I’ll only tackle one of the many issues I see getting in the way, and that’s store manager incentives around inventory accuracy.

With a few exceptions, such incentives are pretty much non-existent. But store managers are incented around loss prevention and minimizing inventory write-offs–and without accurate inventory, it’s nearly impossible to maintain a high service level and avoid out of stocks.

While loss prevention is a big concern, I’ve seen many instances where the incentive structure around minimizing shrink flies right in the face of keeping inventory counts accurate and keeping product on the shelf–and ultimately, that’s a much more compelling business case.

Max Goldberg
Guest
14 years 25 days ago

This has been a topic of discussion between brands and retailers for years. The size of the potential savings is significant. In the end, it all comes down to execution.

Too often, the best laid plans of brand manufacturers and retail management are stymied by the inaction or contrary decisions of store personnel.

Real savings will occur when the interests of brands, retail management and store personnel are aligned.

Doron Levy
Guest
Doron Levy
14 years 25 days ago

It’s all about communication. Frontline staff can only implement and execute what they understand. Communications must come weeks in advance so that crews can prepare for the job. Most memos should come down at least 6 weeks before execution date with a 3 and 1 week reminder. Clear and concise direction must be maintained. Equally important is the why. Why are we doing this? Getting associates excited about change requires explanation. If crews are on board with the directive, it will be completed in a more efficient manner.

Daniel Brandon
Guest
Daniel Brandon
14 years 25 days ago

I agree with Nikki that accurate inventory is imperative. I further believe that process to automated replenishment and on-shelf availability provide the greatest benefit to both retailers and consumers. Attempts to correct high out-of-stocks by the manufacturers only impact a portion of the items in the store. Retailers need to take action on making these improvements across the entire range of products in their stores.

Ben Ball
Guest
14 years 25 days ago

As Nikki Baird (and the working group paper) point out, managing in-store execution is actually quite complex. One strategy for managing complexity is to simply reduce it. Of course, that is easier said than done.

Do we truly need 25,000 to 40,000 SKUs in a supermarket when the average consumer buys 200 or so regularly? As one industry observer (and I honestly can’t remember who it was) said recently–“are we running retail stores or warehouses?” The answer is warehouses of course, and finding out why is as simple as a John Grisham novel…follow the money. Manufacturers driven for top line growth pay slotting fees for the 33rd flavor of gelatin and retailers driven by 1% profit margins take them.

The ISI sharegroup has outstanding members and ideas and will no doubt make progress for the industry–but until we collectively bite the assortment bullet, the phrase “creeping incrementalism” comes to mind.

Bill Bittner
Guest
Bill Bittner
14 years 25 days ago
Getting consistent execution at store level will always be a challenge. Each night crew chief and DSD delivery driver brings their own personal bias to the job. When you combine the workers’ biases with their individual supervisor and corporate perspectives, you have the possibility for an infinite number of “right answers.” While the ISI effort seems to be on the right track, the mere fact that we are talking about the same issues twenty years after the Efficient Consumer Response initiative was started speaks to the difficulty with bringing all these various parties together. There is no single answer that fits all circumstances. Maybe the way to get to the heart of this is to merely agree on how to measure it. By establishing a set of standard metrics that can be captured about each process, we can begin to form the database that will enable us to document performance and monitor improvement. Different standards can be established for various categories and different performance goals set as part of contract negotiations. Serialization of containers (RFID)… Read more »
Mike Spindler
Guest
Mike Spindler
14 years 25 days ago
If you remember your tales of Vlad, you may recall that slaying the un-dead requires a stake through the heart, a chance encounter with the light of day or…a silver bullet! I have had the good fortune to spend some recent time with a few pretty sage industry ICONS and an ICON-in-the-making or two. There were enough threads in those conversations to weave a bit of common wisdom. We discussed long standing, unsolved industry ills. These center around the trading partner friction points in the demand chain; implementation miscues and mis-translations, compliance and actionable measurement, mostly in-store. If teased hard enough, that fabric from these icons shows us a couple of truths, some causality, and perhaps a real solution. The Truths: There are no silver bullet solutions to these industry ills. If there were, we would have seen progress in fixing them! And while we have seen billions taken out of supply chain inventories we have seen no real improvements in the in-store implementations that frustrate consumers and waste BILLIONS. The proof of this lies… Read more »
Paul Waldron
Guest
Paul Waldron
14 years 25 days ago
I agree with a lot of Mike’s points. After reading the study summary, I wanted to key on one particular suggestion the share group has for improving implementation in the DO segment…giving the implementation crews the proper tools to implement. Far too often there is too much reliance on planogram outputs or product listings to execute planogram strategies. Set crews “memorize” the planogram quickly and can “set it in their sleep.” An unnerving thought if you ask me. Furthermore, with more and more movement toward store specific planogramming, this “best practice” won’t be possible. The end result can be anywhere from the set person’s own interpretation of what goes where to the desired result of compliance to corporate’s original plan. Tools exist today (like image-based shelf strips and back tags built directly from the planogram) that act as a road map in the crew’s hands helping to steer the set in the intended direction. The permanent version of these tools drives ongoing planogram compliance at the shelf because it’s like having a picture planogram on… Read more »
Mark Lilien
Guest
14 years 25 days ago

Want high performance ISI? You need high performance people. You don’t get high performance people by paying “competitively” (codeword for “as little as possible”). Want to get more productivity for your payroll investment? How about measuring performance objectively and then rewarding it well? Not “competitively.”

Michael Rowland
Guest
Michael Rowland
14 years 24 days ago
I agree with Mark’s points, and I’d like to expand on them with some observations of my own. These issues are nothing new to the world of retail. They’ve been around for a long-long time, and so have I. 1. Skeleton staffing to meet payroll limits won’t get the work done. 2. Overworked staff (or management) don’t care about merchandising. 3. Planograming sometimes doesn’t take into account the clam shells and spiders that are needed for security. 4. Store budgets are sometimes too thin to even illuminate the displays correctly. 5. Poor management and staff are never fired or are fired for the wrong reasons. 6. Retail managers expect little from their staffs. (You get what you expect.) 7. Local management does not communicate effectively with corporate management. 8. Local management does not hold their staff accountable for necessary task execution. 9. Gimmicks to get things right are ridiculed because of the above. 10. Many retail managers are never really trained to MANAGE. 11. Many retail employees have no sense of ownership in the success… Read more »
Warren Dawson
Guest
Warren Dawson
14 years 24 days ago

As a member of the ISI Share Group, I am personally grateful to read the thoughtful comments regarding the release and content of the group’s white paper. Please keep your thoughts coming they are needed and appreciated.

Johan Sauer
Guest
Johan Sauer
14 years 24 days ago
We are encouraged by the dedication and insights of the In-Store Implementation Share Group. For the past two years, we have been advocating ‘Shelf-Centered Collaboration’–addressing demand creation and demand response together with a focus on shelf execution. We’d like to share some “how-to” learning from that work: 1. Get your own house in order. Whether retailer or supplier, it is essential that alignment exist between your internal ‘demand creation’ (merchandising; sales/marketing) and ‘demand response’ (supply and store ops; supply chain) capabilities before engaging in collaboration with your trading partners. If your team is not on the same page, it’s unlikely you’ll get to the same page with trading partners. 2. Create a common language. We agree that common definitions and metrics are ideal. But we suggest that, for the foreseeable future, they will be unique to each trading relationship as partners find the common ground of mutual benefit. A shared scorecard ensures the definitions are measured, discussed and lead to improved performance. We simply cannot wait for ‘the industry’ to set the standard. 3. Simply… Read more »
Robert Emery
Guest
Robert Emery
14 years 18 days ago
Couched in military terms, the ISI Sharegroup study is a brilliant and detailed strategic analysis of the situation with which we are all confronted. The targets have been properly identified and evaluated. The challenges are complicated and diverse. There is no single tactical solution comprehensive enough to have a major impact. What is needed is a strategic plan of vertical envelopment that encompasses multiple tactical solutions executed simultaneously across the broad spectrum of the problem. Vertical envelopment means you attack the targets deep and wide at the same time. You need to attack command, control, supply, logistics, communications, intelligence, and operations as well as isolate and eliminate pockets of resistance wherever they are found. You attack the front line and headquarters simultaneously. The ISI Sharegroup has identified the problem, the solution will be found in multiple venues at different levels and any individual or organization with “skin in the game” can be a part of the fix, and to each according to his gifts. The DSD community presents the best opportunity for immediate improvement because… Read more »
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