In-Store Implementation

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

Feb. 14, 2010 In-Store Implementation Network 3

“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?


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?


[ CPGmatters Nov. 17, 2008]

Intro

Industry Demands Improvement


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


Intro

35% indicated no process to track complianceAnother 7% don’t know!

Methods Employed


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.


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


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.


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.


Opportunity


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


Call to Action

The ISI Sharegroup Story


Formed in 2007 by like-minded visionaries from consumer packaged goods, retail,

technology and consulting firms:

ISI Back Story

The ISI “Working Paper”


• 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


ISI Back Story

ISI Defined


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


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


ISI Network

Three Primary Initiative Areas: Planning, Compliance, Communications

ISI Planning


• 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


• 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


• 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


Conclusion

JOIN US!JAMES TENSER, DIRECTOR

520-797-4314

[email protected]


Conclusion

In-Store Implementation

Business

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