In Auto Kelly Planograms Were Amended by Day-to-Day Category Management
The Auto Kelly presentation covering the method concerning their Category Management implementation belonged to the best items on the agenda of this year’s Quant Workshop. We are very happy that we can share the most interesting ideas with you.
Previously, the tools for the preparation of planograms and web interface were used as a communication channel allowing connection with individual stores. Updates of product planograms took into account also preliminary results of analyses.
Considering the fact that until then there was no specialist for Category Management, creating the CatMan platform, used for cooperation between the Product Management Team and Merchandisers and also for defining a new role of the Category & Merchandising Manager, was a crucial step.This position is part of the organizational structure of the B2C Team who has defined 4 key objectives of Category Management:
1.Effective management of changes in assortment
2.Space corresponds to sales
3.Effective merchandising on the selling area
4.Putting Category Management into practice
1) Effective management of changes in assortment
Auto Kelly had no processes for assortment modification set and therefore, it was necessary to implement regular changes of the goods on display on planograms. Category Management set basic modifications of assortment occurring in Auto Kelly and based on them, 4 basic changes in assortment were set:
- an MOL modification (once per month) – modification of items according a new leaflet
- a required modification (once every 6 weeks) – modification of items on a one-for-one basis (a novelty replacing a discarded item)
- a great modification (once every 3 months) – more extensive modification of assortment (such as inclusion of a new brand…)
- a strategic change (once every 6 months) – modification of the entire group of assortment (seasonal), change of space, change of the type of equipment…
An important tool for the coordination of the processes is a shared Modification Calendar where deadlines for individual steps of the process and also the shared files where the modifications are systematically entered, are indicated.
- (PM) PRODUCT MANAGEMENT ENTERS ALL CHANGES IN PLANOGRAMS IN SHARED TABLES + ENSURES SAMPLES OF GOODS
- (F/M) MERCHANDISING DEPARTMENT ENSURES TAKING PHOTOS AND PERFORMING THE MEASUREMENTS OF PRODUCTS
- (POG) MERCHANDISING DEPARTMENT INCORPORATES REQUIRED MODIFICATIONS AND DRAWS PLANOGRAMS
- (PUB) PERFORMS THE PUBLICATION OF PLANOGRAMS (USUALLY UP TO THE PHASE OF THE “PREPARED PLANOGRAM”) AND DISTRIBUTES GOODS FROM THE CENTRAL WAREHOUSE TO INDIVIDUAL STORES
- (IMPL) IMPLEMENTATION OF THE MODIFIED PLANOGRAMS AT INDIVIDUAL STORES (I.E. PHYSICAL CHANGE OF DISPLAY)
2)Space corresponds to sales
In this phase, the company wanted to verify whether the previous intuitive arrangement of categories corresponds to revenues from the sale of goods and whether the goods on display are the goods with the highest sales potential. The company wanted to test the aforementioned hypotheses using the space analysis and assortment analysis.
Before the analyses were commenced it was necessary to correctly classify products into individual groups of assortment. Correct defining of categories is a strategic prerequisite for Category Management. In Auto Kelly, this process was demanding due to an extreme quantity of items. A total of 12 main categories (including sub-categories) were created based on a presentation on the selling area, where approximately 600,000 items had to be arranged.
The preparation of the original floorplans was based on the actual state of the arrangement of categories at the store. Using the space analysis over the floorplans of the stores it was tested whether the space corresponds to sales and whether individual stores differ by local specifics concerning the sale of the assortment. The conclusion was basically positive and the company does not have to radically change the arrangement of categories on the selling areas.
In addition, the so-called ABC analyses of sales, the purpose of which was to verify the productivity of individual articles within the framework of planograms, were performed. Both wholesale and retail data was used for the analyses.
The analyses should provide answers to the following questions:
- How many planograms include correctly selected products on display?
- How many planograms need their selection of products to be optimized and whether they are available in the company's portfolio?
- How many planograms need to be rearranged radically, or where applicable how many of them need to be reconsidered as far as their further presence on the selling area is concerned?
3) Effective merchandising on the selling area
The results of the analysis have shown that it is necessary to focus on 2 groups of planograms with incorrectly placed products. The one group has not a sufficient number products placed in the planogram but they can be replaced by other products available in the company's portfolio.
The planograms of the other group also lack correct products, but in this case the company has no replacement for them. Based on the aforementioned results, the company concluded that it is necessary to set a new process of “a great change” within the framework of which the following will need to be introduced:
- A new schedule for the updates of categories
- A critical path for each category will need to be set
- Regular annual meeting with the Product Manager
4) Putting Category Management into practice
The implementation of Category Management is quite a demanding process but the company has already checked that it could be able to succeed. The first success was the update of the air fresheners category. Based on the product analysis the products presented on the counter display have been replaced and rearranged. One month after the planogram update, the turnover in the space concerned increased by 12 %.