To ensure that critical in-store merchandising tasks are completed as specified by corporate
A study published by AMR Research in late 2007 quantified what most chain retailers have long recognized, to their great chagrin: namely, the frequent inability of stores to carry out plans developed at headquarters consistently and uniformly across a chain.
This could apply to practically any plan hatched by headquarters, but most often it impacts the merchandising arena. For example, one of AMR's findings noted that only 37% of head-office merchandisers are completely confident in the ability of store operations to execute merchandising and promotional strategies; another found that only 59% of merchandisers feel that merchandising and promotional instructions and initiatives are executed by store operations in the intended fashion.
Last year, a group of retailers, CPG manufacturers and others, now known as the In-Store Implementation (ISI) Network, published a white paper that identified about 1% of annual gross product sales — or an estimated $10 billion to $15 billion — that were lost to food, drug and mass channels as a result of inadequate implementation of merchandising plans and promotions at the store level. The ISI Network is now focused on promoting awareness of best practices for implementing in-store tasks.
What is causing this disconnect between the carefully wrought plans at headquarters and their implementation at stores? It may have been best expressed by Paul Newman's Luke character in the 1967 film “Cool Hand Luke”: “What we have here is a failure to communicate.”
The failure is not from lack of trying. Headquarters bombards stores with phone calls, faxes, spreadsheets and emails directing them to, say, implement a particular endcap by a particular time. But stores are finding themselves unable to consistently convert these messages into the desired results.
While poor in-store compliance is harmful at any time, in the current economic downturn it can be especially detrimental, said Prashanth Palakurthi, chief executive officer at software provider Reflexis, Dedham, Mass. “In this economy, your margin of error is almost zero.”
Reflexis is one of the more well-known vendors that have emerged in recent years to market a type of software, generally known as task management, that attempts to improve the in-store implementation of tasks assigned by headquarters. Reflexis' task management system has been implemented in the U.S. by Hannaford Bros. and Food Lion, two divisions of Delhaize USA, and is in the process of being adopted by Supervalu and H.E. Butt Grocery Co., according to Reflexis.
Palakurthi stressed that the tasks in task management should always be tied to specific business benefits. “We changed [the software] from being just a checklist of tasks to managing tasks that drive business change,” he said. The software, which can communicate to devices as small as a Blackberry, has expanded to include activities at the corporate level, in the field for district managers, and at vendors.
At stores, the software can incorporate store walks and track the store's compliance with key performance indicators. To document that tasks have been completed, employees can simply report back via the system, scan targeted products or send back visual confirmation.
Scarborough, Maine-based Hannaford, which began to deploy the Reflexis task management system in 2006 at its 165 stores, has applied it to ensuring the proper in-store execution of promotions, new product introductions, merchandising messages to fresh departments, shrink management, store manager walks with employees, and product recalls, Kevin Carleton, director of retail automation for Hannaford, reported last year at the Food Marketing Institute's Supply Chain Conference.
Carleton said the system improved the execution rate of store tasks to an average of 95% from 65%. The system, he added, offered a rapid return on investment, based in part on a three-hour-per-week reduction in training time at each store, as well as a four-hour-per-week reduction in time spent reading email per store.
Last year, Hannaford began using task management at a distribution center in South Portland, Maine, for new product introductions, visibility into store delivery status, safety compliance levels, quality control, Sarbanes-Oxley compliance and new employee orientation procedures, Carleton said in a case study posted by Reflexis on its website. He was not available to comment for this article.
Food Lion, Salisbury, N.C., deployed Reflexis' task management system chainwide in 17 weeks during the fall of 2006 to ensure store compliance for promotions and new product introductions. According to a case study on Food Lion posted on the Reflexis website, the system has enabled the chain to “minimize the volume of inefficient email employees must process,” optimize workloads so that employees are not “overloaded or underutilized,” and focus attention on problem stores.
As a result, employees are able to “spend more time with customers and provide better service,” Greg Finchum, director of retail productivity and standards, Food Lion, said in the case study. Food Lion declined to comment further for this article.
Giant Eagle, Pittsburgh, which is part of the ISI Network, is working on ways to improve the performance of Center Store employees “by predetermining the tasks that need to be accomplished, who is going to perform the tasks and how much time should be devoted to each task from start to finish,” said Brian Ferrier, director of retail business systems, Giant Eagle. With this attention to detail, Ferrier said, “we have better equipped our team members to perform their duties, increasing overall execution.”
Labor scheduling is also part of the task management process at Giant Eagle, along with an effort to enhance “many of the activities we had previously accepted as ‘the way we work,’” said Ferrier. “The end result is a more productive and stable working environment, leading to an improved customer shopping experience and stronger store sales.”
Supervalu, Minneapolis, is taking another approach to the management of shelf resets, which are handled not only by its own employees but by CPG manufacturers and third-party merchandising firms as well. To oversee these various parties and ensure that resets are completed correctly, Supervalu is running a Web portal called the Online Reporting System (OLRS), which it inherited with its acquisition of Albertsons.
Hosted by Retail Tactics, Acworth, Ga., under its Right Action platform, OLRS serves as a clearinghouse and central repository of all reset activity, and a source of “real-time feedback on progress” from the various reset workers, said Scot Henderson, vice president of sales for Retail Tactics, which is part of the ISI Network.
As a single-format communication vehicle, the system allows Supervalu to simplify and harmonize the transmission of information to individuals working on resets as well as the receipt of information back from them, noted Joe Nassour, CEO of Retail Tactics. Supervalu declined to comment on the system.
In its three years of use at Albertsons/Supervalu, OLRS has tracked 38,000 planograms, 894,000 store visits and 5 million store labor-hours, said Henderson. Currently 48 reset providers are overseen by the system.
The system has also identified about 200,000 “issues” relating to reset compliance, such as a display that hasn't arrived or a store that doesn't carry a particular section, noted Nassour. “The important thing is to identify the issue and resolve it soon.” OLRS also enables Supervalu to compare the performances of different reset providers, replacing those that don't pass muster.
OLRS is priced per store per month of usage, said Nassour. The return on investment comes from several sources, including a drop in the number of people at headquarters needed to track the resets and a reduction in the cost of reporting, as well as the value of identifying issues and resolving them quickly, he added.
Direct-store-delivery manufacturers are also trying to improve their in-store activities. For example, Anheuser-Busch, St. Louis, has developed an in-store selling program called Mobility that has been used at more than 400,000 retail accounts representing about 80% of its retail business.
The Mobility program equips A-B wholesalers with handheld devices for their store sales reps loaded with retail-specific sales objectives and promotional collateral such as schematics, display and merchandising instructions, and pictures. “They have everything needed to effectively implement the program,” said Joe Pandolfo, vice president, retail channel marketing, for A-B.
The system automatically tracks store activity based on the sales rep's interaction with the handheld device. It also “requires a sales rep to manually indicate they performed certain tasks by checking a box or inputting data,” said Pandolfo.
Despite the economic downturn — or perhaps because of it — more suppliers of task management applications are emerging. For example, RedPrairie, Milwaukee, which markets labor scheduling software, among other applications, has begun marketing a task management system it inherited with its acquisition of StorePerform two years ago and has since enhanced.
Convenience store operator Sheetz, Altoona, Pa., is rolling out the RedPrairie task management system to execute new product releases, promotions and other programs. In January, Loblaw, Toronto, announced that it had purchased RedPrairie's entire workforce management application, including task management.
RedPrairie's task management system ties into its other labor applications, said Noel Goggin, vice president of execution management at RedPrairie. Tasks can be delivered directly to employees through the time-and-attendance application, for example. Another application can leverage labor standards to calculate the specific cost of tasks.
Red Prairie's task management system also has the ability to compare pictures taken of an endcap or shelf to their planograms to determine how accurately the planograms were followed, said Goggin.
Another new player on the scene is Opterus, Toronto, which introduced its Store Ops-Center, a Web-based task management portal for retailers, last fall. Like Retail Tactics, Opterus operates on a software-as-a-service basis, charging a monthly per-store fee for the application, which requires only Internet access.
“We see this as a content delivery tool for the operations side,” said Janet Hawkins, president and co-founder of Opterus. “It encompasses buyers, HR, anybody at headquarters who wants to communicate tasks to stores in a consistent way.” A 50-store food retailer is evaluating the Store Ops-Center in a lab environment, said Ron Blackwelder, vice president of sales and marketing for Opterus.
Task management software is also being imported from abroad. In January, WorkPlace Systems, a U.K-based software provider with a U.S.-based subsidiary, Labor Solutions International, St. Louis, announced its new task management application at the National Retail Federation show in New York. The system is being piloted by Metro Group in Germany.
Like RedPrairie, WorkPlace integrates its task management system with its other labor applications, or with those of other vendors. For example, it can ensure that a task is scheduled in such a way that it won't incur overtime hours or violate labor laws pertaining to minors, said Gordon Gilkison, director of retail products for WorkPlace Systems.