The Challenge of Top Down Merchandise Planning
By Bill Bittner, President, BWH Consulting
One of the features of this year’s National Retail Federation (NRF) convention are “working lunches” where groups of retailers sit at various tables dedicated to different subjects that are of common interest.
I sat with a group of retailers and suppliers as they discussed the challenges of merchandise planning in today’s diversified markets.
The fundamental concepts are the same as they have been for years. Stores are assigned to clusters that consist of locations the merchandisers feel should share a common merchandising program.
Stores are first clustered based on store format and volume or size of store. But in an effort to get more precise, retailers are going further and some of their additional attributes get interesting. Many use climate as a factor, distinguishing between locations that experience true winter seasons and those that have never seen snow.
Another interesting attribute was activities. A sports retailer includes what types of leisure past times the local area supports. Fashion retailers were pretty free with their shelf allocations, while grocers supported very specific planograms for the shelves.
Some retailers are using frequent shopper data to help in their merchandising decisions. Demographic data is also used in some planning. One retailer is setting up clusters by category that creates a custom store merchandising program based on a combination of category layouts particular to that location.
Despite all the effort to be more scientific about it, all the retailers expressed concern about their ability to really meet their individual store’s needs using the top down
approach. Some have hired market specialists whose job it is to understand the peculiar circumstances faced by a specific store. The specialist tweaks the generic merchandise
plan to meet their requirements. All of them conceded that some stores don’t fit their clusters and have unique merchandise requirements that are not met by the cluster approach.
Moderator’s Comment: What do you see as the biggest challenges relative to store merchandising today? What do you see as Best Practices to make sure
stores are merchandised to meet the needs of local shoppers? Is there a retailer you can identify that does the best job of merchandising on a store by store basis?
I enjoyed this lunch. I found it a nice opportunity to hear a variety of approaches. Were some people more talkative than others? By all means, but I think
everyone learned something. People who were listening certainly learned a lot, but the ones who were talking got reassurance that they were ahead of the curve as others expressed
their desire to get to the point they were. And for the record, no one discussed prices or ways to constrain trade. –
Bill Bittner – Moderator