Getting a planogram right is easier said than done, especially when it comes to planograms for Direct Store Delivered (DSD) goods. Most retailers find DSD planogram performance evaluation maddeningly difficult, and many find that they lack the right toolset to get their ‘DSD planogram insights’ right.
The single most critical factor to optimizing your DSD planograms is that you have a historical performance database. This data should have your historical planograms going back at least two years and reside in a data warehouse. It will store for each planogram when it went live, when it ended and which stores were assigned to it. For each item in the planogram it will capture important attributes like the shelf space in linear space, cubed space, and number of facings.
Connecting sales data to your planogram will require that you have a common product identifier that connects items in your sales data to items in your planogram data. DSD Planogram solutions like Harmony by iControl offer data storage with common product identifiers as a core capability. With a common identifier, you can build a data model that connects sales data to your planograms based on the dates each planogram was live in each store. This will be the foundation to analyze how well you are allocating your limited shelf space.
With all the data you need from a data warehouse, it is time to focus on the analytics you will need to quickly answer key space related business questions:
Key to optimizing you shelf space is to understand sales velocity in relation to shelf space. It is very insightful to visualize this relationship with shelf space on the X Axis and sales metrics on the Y axis, such as in this proprietary report offered by iControl:
The upper left quadrant will identify items that need more space and lower right quadrant will identify items that need less space.
Being able to quickly generate a visual space optimization analysis at different levels in product hierarchy is incredibly valuable.
For example, in the above visualizations from Harmony by iControl’s DSD planogram solution, you can see that while space is fairly well allocated by brand, for those same products in the same stores that doesn’t hold true at segment level and also identifies opportunities at the item level. This ability to analyze optimization across many levels of product hierarchy ensure you allocate your limited space correctly.
With this data at your fingertips it is easy to identify opportunities to better align your shelf space to product sales making your operations more efficient, reduce out stocks (by having correct stock on shelf), and make it easier to slot new items without impacting sales.
Once those critical foundations are in place it is important to have automated alerts that notify you when an unauthorized product is delivered to your store. This inventory will either waste away in your backroom or even worse take up valuable shelf space stolen from products that are supposed to be on the shelf. In addition, you will want to be alerted if any of your authorized products are out of stock at any of your stores.
The best planogram in the world can’t sell product if it isn’t on your shelf!