Case Study: Tesco Automated Store Specific Planograms - Tesco leads the industry with galleria's automated store-specific planograms
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Case Study: Tesco Automated Store Specific Planograms Tesco leads the industry with galleria’s automated store-specific planograms
Client Case Study
Tesco
The Need
Tesco decided in the late 1990s that they wanted to raise the stakes in the quality of their
space optimization. They realzed that conventional approaches to planogram production
would not be able to deliver the results they now sought. They identified a number of
problems that are common to generic or mix-and match planograms:
° Low levels of store compliance.
° Wide variations of interpretation and execution.
° Poor product availability.
° Difficulty of reacting to rapid, unforeseen
product changes.
These problems are inherent with the manual production of generic planograms, and could
not be solved by, say, staff training. Each store has unique physical characteristics and fixture
layouts, so a standard plan can never match reality. This forces judgement calls to be made
at the front line every day. At best, such decisions are sub-optimal, but in reality many of the
plans were not even used. So, no matter how much effort went into producing planograms for
generic store types, compliance rates were very low and unacceptable – never greater than
Key Challenges
Customer dissatisfaction with poor product availability
Unique store fixture configurations
Potentially unique store assortments
Need to implement central merchandising strategy
Limited resources – a merchandising team of 16
Galleria Retail Technology Solutions Ltd. 2
UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.com
Client Case Study
Tesco
Varying Assortments
Store individuality is not limited to physical characteristics, however. Even identically-sized stores in similar areas
have different customer profiles, based on local house prices, regional cultural and ethnic variations, and so
on. Each store can therefore have its own unique product range. For optimization purposes, calculating space
allocations precisely is a huge task, which cannot feasibly be done manually.
No-one tries harder
Tesco famously coined the phrase ‘No-one tries harder
for customers,’ and their spectacular success over the last
few years bears witness to the fact that this is no mere
platitude.
The scale of the problem
Dealing with change on the magnitude of Tesco is a
challenge in a class of its own. Tesco calculated that
storespecific planograms would ideally need to be created
Additional Challenges at the rate of 25,000 in a day. It amounted to one every
four seconds, a specification of unprecedented degree.
Need to be right first time every time – no
Tesco calculated that to produce a single store-specific
manual intervention
planogram would require over 10,000 calculations. But
it also transpired that a solution would need to take into
Need to deal with ‘sticky’ products – those
account shelving that can be removed or added in order
that logically pair with others so that if one
to occasionally accommodate oversized products. These
moves the other does too
would require even more calculations.
Need for merchandising rules such as
blocking to be consistent
Need for shelves to be added or removed
to accommodate large or unique products
Galleria Retail Technology Solutions Ltd. 3
UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.com
Client Case Study
Tesco
The Solution
The groundbreaking solution that Galleria delivered was as a result of the ambitious vision and dogged
determination of both Galleria and Tesco to define and develop a system embracing the following needs:
Each store’s unique fixture configurations and space allocation.
Each store’s unique product assortments, which reflect their current local
customer preferences plus market data.
Tesco’s current central merchandising strategy and priorities, including
product promotions.
Product adjacencies that influence associated purchases.
Downstream feed to replenishment systems.
The ability to cascade from a template even when shelves have been added or removed.
Space-specific calculations to account for visual display rules such as consumer decision tree logic.
In addition, the system uses a patented process to balance
the three antagonistic drivers that are notoriously difficult
to reconcile, but without which true optimization cannot be
There is no doubt that realised:
our sales increase is due
Assortment – the range of products that should be
in part to the installation
incorporated across each category segment.
of this system. The Inventory – the number of each product to be stocked.
implementation of Aesthetics – the visual merchandising of the fixture.
– all optimized by a solution that reads the template space
the software has gone planogram and applies the category management rules
smoothly and our strong without the need for any manual intervention.
financial results are no
coincidence.
IT Strategy Director
Tesco
Galleria Retail Technology Solutions Ltd. 4
UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.com
Client Case Study
Tesco
The Results
Successful implementation
The solution is currently rolled out across almost the entire Tesco FMCG
spectrum, categorized into approximately 150 merchandising groups from Adult
Soft Drinks and Bacon to Vitamins, Yoghurts and Yorkshire Puddings, with any
one merchandising group represented across up to 700 stores.
Speed
In live tests a figure of 4 seconds per store-specific planogram is achieved or
exceeded.
Compliance
An immediate and substantial win for Tesco has been in-store compliance to
planograms. This increased from approximately 30% to over 90% as a direct result
of the Galleria solution.
Sales increase
The introduction of Galleria’s planning solution at Tesco has coincided with
outstanding sales results at the group. From Tesco’s 2004 Annual Review
are taken these extracts:
Galleria Retail Technology Solutions Ltd. 5
UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.comClient Case Study
Tesco
The way forward
There was once a time when retailers and product suppliers largely
controlled the retail model and could predict, with some certainty,
what customers would buy. But today it is the customer who is in
the driver’s seat, and thus the challenge for retailers is how to adapt
to this new model. The retail winners and losers make headlines in
the mainstream media every day, and the message is clear: Retail
is a brutally competitive industry, and customer demands are both
relentless and increasingly sophisticated.
It therefore speaks volumes that Tesco have become today’s
pre-eminent retail success story, achieved through 100%
customer focus and by not taking customer loyalty for granted.
Part of this new thinking is the new need to combine the best strategic thinking with the most locally-sourced
intelligence possible. Today, it is important for retailers to move beyond ‘mere’ customer satisfaction towards
customer anticipation. Demand planning, based on local intelligence, is seen as the way forward.
Galleria focuses on creating the most advanced demand intelligence in the industry, assimilating diverse sets of
data into one coherent platform of information that not only feeds its renowned cluster, assortment and space
management systems but also integrates with other retail execution systems such as replenishment, pricing
and promotion.
The result is increased retailer sales and profits –
Galleria’s primary goal. For stores to grow they need
Our core purpose is ‘to
to make every retail inch perform at maximum, every create value for customers
day – no matter what that store’s particular size, to earn their lifetime loyalty’.
region or customer demographics are.Beyond mere
We deliver this through our
efficiency, optimization is a process that takes real
live customers into account – their preferences, how
values - ‘no-one tries harder
they view a store fixture, how products relate to other for customers’ and ‘treat
products, and so on. It’s a huge amount to consider, people how we like to be
but it has a crucial role to play in a retail world that
treated’.
becomes tougher and more competitive every day.
Tesco public statement
Galleria Retail Technology Solutions Ltd. 6
UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.comClient Case Study
Tesco
Galleria is the leading provider of retailer and supplier category planning,
automation, optimization solutions and consulting services. With its
comprehensive product suite, Galleria provides customer-focused solutions
for data warehousing, management and insight, workflow management,
clustering and the automation and optimization of assortment and space
planning, all of which are supported by detailed analytics and reporting
solutions, designed to meet the needs of retailers and manufacturers. The
net result is that users realize significant benefits including: increased sales,
enhanced margins, reduced waste/mark-down and accelerated inventory
turns.
Galleria’s flexible solutions can be hosted by Galleria and/or operated as
both desktop and integrated solutions as well as being provided as pure
consultancy services. Galleria currently works with many of the world’s
leading retailers and manufacturers including A&P, Coop Denmark, East
of England Coop, Giant Eagle, Maxima, M.Video, Morrisons, One Stop,
PARKnSHOP, Safeway, Tesco, Unilever and Woolworths.
For more information about Galleria, visit www.galleria-rts.com
Tesco is one of the world’s leading multi-channel retailers with operations
in 13 countries. Our half a million colleagues work to earn the lifetime
loyalty of customers and put the responsibilities to communities at the
heart of what we do. We’re the largest retailer in the UK, and our domestic
market accounts for around one-third of our selling space and two-thirds
of total sales. We have a multi-format approach, operating hypermarkets,
superstores and convenience stores
Galleria Retail Technology Solutions Ltd. 7
UK phone: +44 (0)800 121 4492 | US phone: +1 (866) 397 0546 | info@galleria-rts.com | www.galleria-rts.comYou can also read
