No Two Plans Alike

The one-size-fits-all method with regard to planograms is no longer the case in today’s beverage marketplace. At one point in time a cookie-cutter approach to designing store shelves might have worked, but the marketplace has changed significantly over the past decade with factors including SKU proliferation, category saturation, just-in-time delivery, increased consumer knowledge and changing shopping patterns all impacting the way beverage marketers, distributors and retailers conduct their business.

“The big difference is in the past, planograms were developed more at the macro level,” explains JDA Software’s vice president of industry strategy Danny Halim. JDA is one of the largest suppliers for supply chain management software globally and has worked with large retailers including Lowe’s and beverage companies including Dr Pepper Snapple Group (DPS), Anheuser-Busch and Coca-Cola Enterprises.For instance if you look at a particular zip code, the consumers buying within this zip code might have, on average, similar behavior and therefore one planogram would be sufficient and could be applied to a group of similar stores.”

However, today that method doesn’t hold true. Halim goes on to say that consumers shop at different stores looking for different products and different package sizes, for example, even if the stores are located within the same geography.

Creating store-specific planograms, especially on a large scales for thousands of stores in a particular chain, for example, can be time consuming and costly. This was exactly the issue DPS faced as it looked to improve category management efficiency and productivity. JDA’s Planogram Generator using Intactix Knowledge Base and Space Planning applications helped the company automatically generate planograms based on user-defined information saving time and manpower: the task which previously required a team of 10 people and 600 hours was reduced to just two people and 40 hours to complete the same number of planograms, according to the company. DPS also achieved other benefits with the new space management approach such as a 99 percent accuracy rate, increased inventory turns on an item-by-item basis, a reduction in extra inventory (which translates to increased sales for the retailer) and the ability to change retailers’ planograms twice a year or more.

“Retailing is getting more demanding these days,” notes Dennis Osrow, president of Shelf Logic, a global planogram software company based in Rock Hill, N.Y. “The store owners are no longer people who have been there for 30 years and have all the ancient wisdom—what goes where and what sells better. And as the margins become slimmer, they just have to be more aware of the information available and not just go on a gut feeling sort-of-speak.”

Shelf Logic offers a handful of solutions, among them its flagship product, the Enterprise Edition. Compatible with JDA Prospace and AC Nielsen Spaceman software, Enterprise Edition highlights include tools that allow for after market analysis using actual sales figures, a category management feature to visualize and report across categories, subcategories and brands, and a presentation manager feature to combine plan printouts and reports for a cross section look at performance.

Osrow notes that planograms also are being used as ways to keep inventory. “Carrying inventory these days is a huge expense,” he says. “If you have inventory in the back, not only do you have money just sitting there, but you have to count the inventory and that’s a laborious job and it’s often inaccurate,” he says.

With developments like just-in-time delivery retailers carry less product “in the back” and rely on accurate indicators of product demand.

That type of information is readily available today. Jason Derienzo, executive vice president of sales and marketing for ezPOG says, “Technology has come along where you can automate assortment recommendations. There is much more data readily available. If you go back 10 years there wasn’t a lot of information to make those recommendations.”

With companies like Nielsen, IRI and NPD, information from SKU performance to demographics of a particular area are available and that can be input in the software to make recommendations for product placement on the shelf, quantity, size, flavors, etc.

Headquartered in Farmingdale, N.Y., ezPOG is a web-based planogram software solution allowing for customers to access their planogram information from virtually anywhere, by a number of sales team members across the country, as it offers affordability and an easy to use platform, says Derienzo.

“In the beverage world you have a lot of these mom-and-pop stores where distributors want a planogram—they can actually use a tablet right in front of them and drag and drop product,” he says.

Big Geyser Inc., one of New York’s largest non-alcohol distributors, has been using ezPOG for the past nine months. In that time, says Lou Fabiano, director of retail chains, the distributor has added more than 1,500 shelves by using ezPOG as a value added tool when working with retailers using it with sales data and consumption trends for a specific account. “Ezpog, with the data, helps us tell a story in pictures that says you need to expand your presence on your organic tea and your coconut water category and these functional ingredients beverages need more space,” explains Fabiano.

Having worked with some of the largest beverage companies including Pernod Ricard, planograms can help gain shelf space for existing products or create shelf space for new products, which is particularly important with beverage alcohol. Think vodka. “It’s being able to convey the assortment vs. duplication story,” he says. “You want variety, but you don’t want duplication and that’s really a simple way to put it with planogram tools.”

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