HOUSTON -- Merchandising service operators can implement planogram changes and cut in new products faster on the shelves of mass market stores than traditional methods of getting the work done, according to a new study.
The research results documenting the value of these services were released by the National Association for Retail Merchandising Services at its annual spring conference and exhibition here.
The key findings show that merchandising services organizations can do the following:
Implement planograms five times faster than traditional retail methods;
Cut in new items three times faster, creating a 45% increase in sales;
Post a higher level of initial planogram compliance, compared to traditional retail methods;
Achieve 50% greater depth of distribution with new items than retailers using "business as usual practices" in the same amount of time;
Provide planogramming implementation and maintenance services that result in category sales increases of about 8%.
Executive director Gary Ebben said NARMS fielded the study to provide a clear, accurate view of what benefits professional merchandising services companies can offer brand marketers and retailers.
"Planogram compliance, along with quick 'speed to shelf' for new items is a marketing strategy whose time has come," he said.
"There is a lot of money being left on the table as a result of incomplete retail implementation," said Bill Bishop, whose firm, Willard Bishop Consulting, Ltd., conducted the study for NARMS.
"To my knowledge, this is the first study to document the value of timely retail implementation and shelf maintenance," he said. "While all of us know that what matters 'happens at the shelf,' there is just not enough focus on timely retail execution."
NARMS and WBC conducted the field work in two corporately controlled chain environments with diverse formats in 17 categories, and validated the results across multiple channels.
Jim Hall, chairman of NARMS and president of Advanced Retail Merchandising, said, "Because of tools like activity-based costing, the industry today has a much better understanding of how to evaluate the value and cost of services between trading partners. In an effort to be as efficient as possible, brand marketers are developing 'cost-to-serve' models. These menu-service programs are designed to separate the cost of product from the cost of other services provided."
The study largely covered two areas: planogram implementation and new product cut-ins. For the former, the study showed that merchandising companies eliminate the retailer's current dilemma of struggling to find the time and resources needed to do category resets. The study urged brand marketers and retailers to focus more management attention on the process of effective retail implementation. The three key steps recommended were:
1. Evaluate current planogram implementation processes and identify opportunities for improvement. Is implementation complete and timely? Does the process make efficient use of resources?
2. Prior to scheduling a reset, make sure planogram is expected to produce a significant sales increase, and covers most or all of the actual store conditions.
3. For each reset, provide the implementation team with the tools necessary to get the job done. These include detailed planogram (color preferred) and supporting documentation, new product and discontinued product lists, shelf tags, and equipment and supplies.
To help ensure fast, accurate new product speed-to-shelf by professional companies, the study recommended that brand marketers make sure that each store has:
