With all the hype about Efficient Consumer Response, it is easy to focus on the wrong issues. Issues that most of us can't do anything about are being hurled at us from podiums everywhere: conventions, workshops, seminars, plus more articles than you can read. Consultants are coming out of the woodwork.
Getting overwhelmed by ECR is an understatement, understanding ECR would be a life's work, working toward ECR should be manageable. It's like the elephant: eat it one bite at a time.
The trick for most of us is to focus on the areas where we can make a difference. ECR is really about the movement of product from inception to consumer purchase, but the real power lies in the sale. However, the sale really depends on the mix, price and arrangement of the category.
The category's success is dependent on category size, location, adjacencies and -- for a large part -- on effective planograms. To put the whole thing in perspective, ECR is like the Pentagon, category management is one hallway and planogramming is just one room. But how important are hallway and room to ECR? I believe if we are to convince retailers of ECR's value, we need to focus more on the category and planogram levels where there is more retailer value for their ECR time and money investment. OK, so what can we do? Well, we can start by understanding where we are and where category management is going.
Right now the majority of category information and time is focused on corporate planograms with variations for size. The next category management objective will be cluster-specific planograms that are demographically driven with variations. This next step is significant because for the first time we are looking at grouping stores by natural product appeal. In other words, not just stocking a brand in every store that buys the line, but stocking it only at stores where there is a likely demand for the product. This is so important for retailers and vendors alike. The return-on-inventory investment improves, out-of-stocks and overstocks are reduced and, best of all, the consumer is exposed to a planogram that has "shopability." It is a merchandising display that turns a consumer's thoughts into a purchase.
As good as cluster planogramming will be in the near future, the next step, "store-specific planogramming," will be even better. Store-specific planogramming will bring everything into play: store-specific point-of-sale data, store manager input, demographically created planograms customized to the categories' physical needs, corporate merchandising philosophies, product and category natural appeal.
Store-specific planograms will be orchestrated by super systems, capable of blending all input on a daily basis. Store-specific planograms are probably five to 10 years away, depending on the chain, but rest assured, they are coming to retailers near you.
As a retailer, you need to develop a plan and timetable to get to these next levels as soon as budget, manpower and ability will allow. It's a competitive advantage to be early. It will be a disaster to be late. While you are on your way to store-specific planogramming think about developing "signature merchandising" unique to your chain and identifiable by your customers.
As a vendor, your future planogramming presentations need to be developed with clustering a store-specific planogram in mind. Retailers want to partner with forward-thinking companies.
Finally, my advice to vendors is that if the data dictates it, be prepared to lose a stockkeeping unit to win a retailer.