PITTSBURGH — This month, Giant Eagle here completed the rollout of a store-specific endcap optimization system to all of the 54 independent supermarkets that carry its banner. The chain had finished implementing the system at its 168 corporate stores last winter, completing a process that began in the fall of 2008.
So far the system has brought a series of benefits, including sales gains and lower inventory and labor costs.
The system, from Galleria Retail Technology Solutions, Chicago, is one of the first to take a common store task — building endcap displays — and make it a much more precise exercise based on consumer demand factors peculiar to each store across the regional chain. Giant Eagle applies the tool, which generates store-specific planograms for creating the displays, to all edible and non-edible grocery categories, and occasionally to general merchandise and health, beauty and wellness categories, said Stephanie White, Giant Eagle's vice president of sales systems and operations.
“While we realize that we are not utilizing the tool to its fullest capacity, in a given week we create up to 3,500 store-specific endcap planograms,” she said. Three full-time employees are responsible for creating the planograms. She declined to state the cost of the system.
To produce the planograms, the Galleria system leverages information — including store-specific demand forecasts for individual items, POS data, pack-outs of cases, endcap dimensions and other data streams — provided by a separate system developed by Giant Eagle.
White confirmed business impacts of the optimization system reported in a Galleria case study. On average, she said, the system has increased sales up to 18%, margins up to 5% and product availability up to 8%; it reduced post-promotion inventory by up to 15%, inefficient inventory 5% to 10% and labor/replenishment costs up to 10%. “We have worked closely with Galleria to create a tool that meets our specific needs, and thus far have been extremely pleased with the results,” she said.
The system has also increased promotion compliance by more than 95%. White attributed this to two factors: the use of demand-based store specific planograms, and “a better defined process via our weekly store communications and internally driven prioritized display planner.”
In a research paper, Kevin Sterneckert, an analyst for Gartner, Stamford, Conn., wrote that Giant Eagle has demonstrated “the value of promotion display optimization.”