Merchandising SUCCESS - Independent Convenience News

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i ndependent convenience newsFEBRUARY 2011
www.conveniencecentral.ca
Merchandising
SUCCESS
BY JEREMY DICKSON
Building sales with core
category planograms
It’s said that a picture is worth a thousand
words. In the convenience industry, if that
picture happens to be a planogram, its worth
is greater than words – it’s money in the
bank. A planogram is a pictorial representation of a marketing plan for every branded
SKU in a retailer’s store. To maximize sales,
superior space management is crucial.
In convenience, the average consumers
browsing for a chocolate bar or a beverage
might not realize it, but every c-store product they encounter is strategically placed to
bring optimum sales. If retailers aren’t using
or receiving planograms created by suppliers
and chains, they should be.
In today’s competitive and evolving cchannel, where stores come in all shapes and
sizes and new SKUs can be hot today and
yesterday’s news tomorrow, the planogram
has become one of the most important merchandising tools for chain and independent
retailers to leverage. Retailers who don’t use
their space management skills and resources
to capacity are more likely to lose sales and
see their shelves collect dust.
ferent customer needs across regions, most
planograms incorporate a certain amount of
flex space to accommodate innovation or certain products outside of the core SKUs. These
are usually found in secondary displays.
All of the biggest and most successful retail
chains are leveraging planograms today, and for
those that have to manage a variety of diverse
stores, planograms become key to their success.
Nicholby’s is a 30-year-old retail chain with
30 locations in southern Ontario. Its formula
for success is based on uniformity and compliance, and the chain continues to open stores in
bustling office buildings, hospitals, along busy
highways and near tourist attractions.
“Planograms are important because you
need to make sure you don’t waste space by
having duplication. It’s like putting together
Lego, all the particular pieces have to make
sense,” says Wendy Kadlovski, director of operations for Nicholby’s Convenience Stores.
“You need to plan the work and work
the plan if you’re going to have any kind of
consistency. The planogram is a blueprint for
what the store should look like every day.”
“PLANOGRAMS ARE IMPORTANT BECAUSE YOU NEED
TO MAKE SURE YOU DON’T WASTE SPACE BY HAVING
DUPLICATION. IT’S LIKE PUTTING TOGETHER LEGO,
ALL THE PARTICULAR PIECES HAVE TO MAKE SENSE.”
PLANOGRAMS 101
There are many different types of planograms.
Some may feature numerous flavours of one
brand merchandised together, while others
may feature the offerings of one manufacturer
blocked together. Depending on current trends
or the long-term strength of top sellers, some
SKUs may be more prominently placed on
a rack, display case or in a cooler for optimal
visibility and ease of access. To allow for dif-
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Buyers from Nicholby’s work with manufacturers to tailor planograms to customers’
needs in particular venues based on what
they know about the customers.
“When our buyers look at products, they
look at particular modules. For example,
you wouldn’t put a health and beauty item
in the middle of a confectionery display.
They have to look at the available space and
determine what products would work best
in that space,” she adds.
For example, most Nicholby’s locations
have a chocolate bar display at the front
counter that’s six, eight, or 10 feet long because it’s a standard with proven results.
Nicholby’s planograms are typically developed in the fall for the upcoming year. They
are launched in January, reviewed mid-year, and
come in hard copies and downloadable versions.
“We try not to adjust them very often because too many changes could confuse retailers.
Obviously certain items can get discontinued,
but the execution of our planogram system has
proven to be efficient,” explains Kadlovski.
Making sure all of the categories get the
right representation and facings is challenging
given the high number of SKUs available to fill
a retailer’s inventory. According to the 2010
ICN Profiles: Independent Retailer Report, confectionery is a top five category with significant
sales levels, but inventories are high, resulting
in lower gross margin return on investment.
“Retailers who don’t have an idea of the
top sellers in confectionery tend to order
what they perceive to be good sellers, but
they need to look at the top 10 or 25 SKUs
that will give them the biggest bang for their
buck,” says Kadlovski.
VENDOR KNOWLEDGE
Research from manufacturers is crucial in
the development of planograms. For example, Cadbury Canada educates its customers on confectionery trends, product placement, merchandising, and speed to market
through its field sales team and with the help
of full-service distributors.
“Regardless of store size, product assortment is critical to maximizing sales,” says
Jodi Gardner, category development manager
for Cadbury Canada.
“Visibility is also extremely important.
If shoppers can see the category, they are
more inclined to look for their brands and
make a purchase.”
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The innovative beverage category, which, according to ICN Profiles, is a growing top five core
category, also needs to be managed properly.
“To ensure the same level of quality and
consistency across the marketplace, we have
a standard planogram design,” says Cam Erwin, convenience retail director of sales for
Coca-Cola Refreshments.
“Our goal is to ensure that we allocate
appropriate shelf space to minimize out of
stocks, take consumer demand into account
and facilitate expansion for innovation and
growth categories.”
No matter the category, the goals of planograms are similar, but success lies in execution and compliance.
“We have a category management/planogram team that reviews movement trends in
c-gas bi-annually,” explains Mike Guindon of
Frito Lay Canada.
“They are able to provide our frontline sales
reps with the most up-to-date planograms, reflecting the latest sales trends. We’ve found
that the top 10 SKUs rarely, if ever, change. The
most popular brands have a loyal following and
have been the anchor of our planograms for
several years.”
For a seasonal category like ice cream,
the same basic rules apply, but there are
some differences.
i ndependent convenience news
“Since the most volume happens between
April and September, we contact stores before the season to remind retailers of the importance of having new products and a full
cabinet,” says Jean-Albert Tuteleers, Nestlé’s
category sales development champion for the
convenience channel.
“On the first warm day of spring, a retailer
could sell all of their ice cream SKUs if it’s
beautiful outside, so they’ll need to prepare for
the season and stock up to take advantage of
early seasonal sales.”
While planograms help make planning
easier, retailers need to remember that planograms are only one piece of the merchandising puzzle. Retailers might have all of their
SKUs in the predetermined places with accompanying signage and promotional material, but if the store is dirty, if customer service
is not up to par, and if scanning is not being
used to its full potential, these shortcomings
might result in fewer repeat customers and
decreased sales.
The following pages of this report highlight additional tips and insights on planograms to help
retailers maximize sales in their confectionery,
beverage, snacks, and ice cream categories.
Optimum Chocolate Planogram
(Under the counter)
8 ft. 4 shelf
Category
% Linear
SKUS #
% Facings Market Shr
SINGLES
68.7%
35
67.3%
61
KING SIZE
30.1%
15
28.9%
30.5
BARS (FAMILY)
1.3%
2
3.9%
8.5
13
Big is better: King size
chocolate bars drive growth
in immediate consumption
chocolate. Merchandise king
and family bars on the top
shelf to promote trade-up
from singles.
Maintain brand blocking:
Brand block vertically and
then horizontally, but ensure
top sellers are merchandised
higher up on the rack. The
prime location is the centre of
the rack or closest to the cash.
Incorporate innovation:
Fourteen percent of chocolate sales were driven by
innovation last year, primarily
in king and pieces formats.*
Retailers should stock innovation on the main display
if they can accommodate a
larger assortment of immediate consumption chocolate.
Keep brands together: If
singles, king and a brand extension are within the same
brand, align on the shelf as
space permits.
Source: Cadbury Canada
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**Source: Nielsen MarketTrack, National convenience and gas, Latest 52 weeks, Period ending July 31, 2010.
* Source: Nielsen, National convenience and gas, Year to date, Period ending June 5, 2010.
% Linear = linear space allocated on shelf expressed in percentage
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14
i ndependent convenience newsFEBRUARY 2011
www.conveniencecentral.ca
Optimum Gum/Cough/Mint/
Chocolate/Candy Planogram
4 ft. 13 shelf
Focus on assortment:
Allocate a greater share of
space to chocolate singles to
provide consumers with a wide
assortment.
Source: Cadbury Canada
THIS SHELF FORMAT
IS IDEAL FOR SMALLER
STORES THAT CAN’T
ACCOMMODATE AN
8 FT. RACK OR
MULTIPLE RACKS.
Category
% Linear
SKUS #
Facings # Market Shr
GUM
76.2%
72
73
76.1
COUGH
15.3%
14
14
14.6
MINTS
8.5%
8
10
9.4
Category
% Linear
SKUS #
Market Shr
SINGLES
83.5%
23
66.6
KING SIZE
16.5%
6
33.4
**Source: Nielsen MarketTrack, National convenience and gas,
Latest 52 weeks, Period ending July 31, 2010.
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