SEATTLE -- Associated Grocers here has boosted the productivity of its planogramming staff by more than 300% by shifting to a template-based space-management system, said Stuart Cohn, manager in the space-management schematic department.
Additionally, planogram implementation has been greatly accelerated using a Web site to distribute electronic PDF files that can be printed out by the company's far-flung retailer customers using the readily available Adobe Acrobat Reader software, he said.
"We have taken exactly the step we need to move forward with our space- and category-management initiatives for this new data-driven era," Cohn said. Last year, AG started using several space-management programs from Intactix International, Irving, Texas, including planogramming and analysis software, a file-conversion application, an image storage/display application and an automation tool.
"Today there are over 17,000 new items introduced to an average American grocery retailer, excluding many pack changes. On top of that, an average store stocks in excess of 30,000 SKUs. That's why we need to be as efficient with our processes as possible. We needed to move from managing SKUs to managing categories and eventually to managing entire commodities," he said.
Associated Grocers now has about 400 planograms posted on its intranet/Internet sites. "The average number we have updated and maintained each month over the last six months is 170. With our previous software, we averaged about 35 planograms per month, spent a great deal of time and expense printing them, sorting them and mailing them via our truck mail. You can do the math -- 300% is a conservative estimate," he said.
The productivity improvements were made possible by the automated capabilities of the new system, he said. Because it is designed around templates, "it is a bit more complex, but after you structure your information and design your templates you can automate just about anything that you routinely do," Cohn said.
For example, external databases are structured according to Associated Grocers' Product Order Guide, which is understood by the retailers and vendors. "Now, instead of checking items SKU by SKU, we refresh our information from a filtered relational database and update entire categories of schematics. Something that would have taken us many hours now takes us seconds. When we refine our data further we will be able to automate this to a greater extent and be able to update our schematics with an almost push-button approach. This will allow us to better focus on analysis and SKU rationalization. The end result is speeding new viable items to shelf and discontinuing poorly performing items," Cohn said.
"It's another time saver. It all goes back to having good sets of databases, and good sets of information, then having templates built, and having standards defined around what your retail objectives are," he said.
Working with Deni Johnson, another manager in the department, and Greg Lee, merchandising services manager, Cohn has been focusing on grocery and frozens planograms, and secondarily on maintaining the health and beauty care and general-merchandise categories.
Cohn has set a goal to someday be able to get new items on store shelves in less than two weeks. "I may get laughed at for this, but I think we can do it. It is all tied to efficient communications," he said.
Part of this speed is obtained by using the Web page and smaller files, especially important because AG has retailer customers as far away as Guam. "The Web is the most practical way to efficiently and economically communicate with our retail and category partners," Cohn said.
These electronic files can take from 10 seconds to 10 minutes to download, depending on the connection. "As we move forward and upgrade our Adobe software, we will be able to decrease our file size by as much as 90% by incorporating a new optimizer. AG conducted two studies of the new system last year and found that, after a category reset, gross sales for that category went up 2%. "As we have made our planograms more available, the implementation has gotten better, and more retailers want to line their ads up with our information in our planograms, and speed up the new item process to shelf," Cohn said.
This kind of efficiency is critical to the survival of independent supermarkets, he said, citing the results of the recent Retail Coverage/In-store Implementation Study. For example, the study showed that independents could increase unit sales by 21% by solving shelf-set problems and could increase top-line revenue per store by no less than $115,000 by speeding the rate that new items get to shelves. Additionally, there is a 21% difference in performance between stores that maintain shelves with a high degree of integrity and those that don't, a 12% difference in dollar volume with pricing and promotion factored in, and a 7% increase in gross profits.
"With the right programs set in place and unifying our independent retail partners, I believe we could achieve the same statistics that the chains are doing, and still offer them the competitive advantage of being demographically focused on their 20% niche business, which is one of their greatest strengths," Cohn said.