Archive for May, 2010

Welcome to The Profit Lab

by Greg Wilson • May 29th, 2010 • Write a comment »

THE PROFIT LAB // Top 10 Ways to Pull Profit from Allocation

Introduction

Thank you for your interest in this series. Allocation is one of the most often overlooked areas to optimize retail and gain profit margin. I will be taking you through some successful strategies that will help you find the dollars, understand your customers and achieve efficient and strategic allocation execution.

- Greg Wilson
Director of US Field Strategy, Quantum Retail

Allocation – Your Best Opportunity to Improve Revenue and Profit

With the economy changing the way consumers are behaving and the pace of change accelerating all the time, it’s become much more challenging to get the products our customers are looking for into the right locations. What can retailers do to improve our ability to meet the expectations of our customers better in such a dynamic environment?

Large retail merchants go through a series of product activities in the process of fulfilling their customers’ expectations.

These include:

1. Selecting

2. Ordering

3. Allocating

Which of these three processes can be improved most?

Incorrect assumptions

Selecting product is often the first area retailers assume we should work on. This is usually due to the fact that it’s generally the starting point of in the retail lifecycle and selecting good products is a key factor in success. Ordering the right quantity typically follows when using this time-line based logic. Unfortunately, the allocation of product to stores is often relegated to being the last area given attention. However, this critical component of success is imperative and when it is overlooked, retailers risk failing even when everything else is right.

A significant impact on store and product performance

Allocating product is our last chance to impact what our customer has to choose from. When we’re making allocation decisions we’re making as many decisions as we have stores, for every receipt of every SKU that’s carried. That means hundreds, or thousands of decisions per product, each of which can have a significant impact on how well products and stores perform.

Get these decisions right and you can maximize returns for good products and reduce the pain of the inevitable poor products. Get them wrong and you can stifle the potential of good products and turn poor products into devastating losses.

Get the most out of your merchandise

Unlike the heavily artistic side of product selection, allocation decisions are one of the best points to leverage data and apply analysis to getting the most out of your merchandise and stores. Better understanding of product, location and ultimately customer behavior is an invaluable foundation to support improvements not only in allocation, but also in ordering and assortment decisions as well.

There are multiple process steps and related decision points that can be improved upon in allocation:

Traditional allocation systems allow you to select a base of historical data to use as either a foundation of allocating, or to create a plan to allocate into. Allocators select the products, locations and times to consider. They also choose calculations to apply and constraints to impose. They then review system-generated results and make changes. Each of these process steps and related decision points can be improved upon in any environment.

Over the next 10 weeks, we will be deconstructing the allocation process and exploring opportunities to improve within your current allocation processes and technology limitations. We will also review key areas to think about if you are considering investing in improved allocation capabilities.

Next post in series >>

Download this blog as a PDF»

Subscribe to receive weekly updates of this series HERE»

For resources on allocation, visit: http://quantumretail.com/solutions/allocation-replenishment/resources


Get back in the game //

Are you ready to know exactly what your customers are asking for at every location and to have the ability to react as their wants change? If you are looking for a solution that can drive momentum for your business this year, check out the solutions offered by Quantum Retail.

Our customers see valuable results in 8 to 12 weeks and our implementation approach gives your team access to the system from early on, so you can manage changes to your processes with ease. Quantum Retail continues to help all of its clients drive positive business value more rapidly than anything seen in retail.

Get resources on how to adapt to today’s retail market HERE»

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Grocery Innovation Series: How to target products based on consumer buying behavior

by Vicki Raport • May 27th, 2010 • 1 Comment »

GROCERY INNOVATION // week 4

Precision assortment equals more profit

This series will be published Thursday’s and will review trends, tips and technology to optimize grocery planning. To sign up for series updates – CLICK HERE»

If you precisely target the amount of choices you offer per product, reduce overstocks and markdowns, and ensure that your assortment meets and does not exceed the needs of each of your stores, you will ultimately reduce wastage and increase sales.

“Retailers find they sell a lot more of nearly everything by reducing the number of brands on offer; but figuring out what should stay and what should go can be a tricky business.”

In an intriguing study on the impact of reducing product choices, Wal-Mart found that in many cases less is more. Marina Strauss, Retailing Reporter for The Globe and Mail tells the story of one such product Wal-Mart targeted:

Several months ago Wal-Mart Canada Corp. decided to overhaul one of the staples of its grocery business – the peanut butter aisle.

It dropped two of its five lines of peanut butter to free up scarce shelf space for cinnamon spreads. But the decision didn’t cost the retailer a single jar in sales. With fewer selections to browse, customers wound up purchasing more than before.

“Folks can get overwhelmed with too much variety,” said Duncan Mac Naughton, chief merchandising officer at Wal-Mart in Mississauga. “With too many choices, they actually don’t buy.”

Many retailers are now reducing the amount of choice on their shelves in order to simplify their offerings. The recession has changed consumer behaviors and encouraged retailers to focus on top sellers and private labels.

Strauss reports that by focusing product lines, retailers can trim costs, reduce consumer confusion, and ultimately boost sales. Reducing the number of products can help companies increase sales by as much as 40% while cutting costs by between 10 and 35%, according to a 2007 study by consultant Bain & Co.

Rationalizing an assortment is difficult. Retailers need to have a keen sense of product performance in order to pick the right products. According to this Globe and Mail report, “Evidence suggests that reducing the number of products on the shelf can improve the overall shopping experience. The average shopper takes just 2.5 seconds looking for an item and notices only half the products on a shelf,” according to research by Procter & Gamble Co., the consumer products giant.

Optimizing sizes and rationalizing products:

In order for retailers to target the right range of products on their shelf, they need an acute awareness of product behavior. There are dozens of product behaviors unique to every store. As well, product behaviors can be unique to customer segments. In order to analyze these behaviors, retailers should look at the performance of package size, brand, value, locality, and flavor as well as things like price points, life cycle, overstocks, under-stocks, amount of markdown, etc. What do these metrics tell you about your assortment of products? How do those metrics change across your stores? How do these products support your customer segmentation and brand strategies? Which stores have similar product behavior? What attributes do those products have in common? How often are you discounting those products?

One of the best ways to analyze these behaviors is to look at the profitability of each product at every location. Do not cut your assortment across your chain, but look at the unique selling patterns at each store to determine what products will sell to their unique customer base. This is a complex exercise, but one that needs to be done on a continuous basis. Your customer’s buying patterns will change – and it is necessary to acknowledge they have already drastically changed.

Consumers Adopting New Behavior to Save on Food

So what are the consumer behaviors that are affecting your sales? The Food Marketing Institute reported the following changes in grocery shopping trends:

Shoppers are economizing when it comes to food purchases. There are three stages of consumer behavior that have changed:

  1. Stage One: Shoppers save money on eating out by switching from fine dining to fast food. They also seek supermarket meal solutions and prepared foods in place of restaurant fare.
  2. Stage Two: Consumers change their saving measures in the store by buying more private brands, using coupons, buying basic ingredients, focusing on full meal deals, and shopping with a plan.
  3. Stage Three: Shoppers switch store formats and choose venues with focused or limited assortments, including superstores, warehouse clubs, and private label food services.

A majority of consumers (69%) surveyed in the study say they are eating out less. An additional 50% said they are eating out at less expensive places. All point to a significant shift in the expectations that consumers have for service and assortment from their food and grocery retailers.

The survey also showed that when deciding how to save money on their grocery bill, consumers are making plans before heading to the supermarket resulting in fewer impulse purchases. In fact, 53% say they make a shopping list, 40% search newspaper or advertising inserts, and 35% responded that they look for coupons in the mail, newspapers, and magazines.

Private Label Brands Should Become a Priority in Product Assortment Targeting Efforts

The FMI found that the effort to save money continues once shoppers are in the store. The report stated that the popularity of private brands has significantly grown, with 97% of shoppers saying they plan to purchase the same amount of private brands or more over the next year.

The following chart from the FMI report, shows consumer responses on private labels:

The shift of focus to private label brands is a logical choice for retailers. The following diagram from the FMI shows how consumers rank their product choices. Today, price is the most important factor in their buying decision followed by quality. When private labels succeed, it shows that customers are more interested in the product than the brand itself. This has caused retailers to stretch the reach of their private label brands, leveraging the appearance and placement of store-brand products.

FMI reports that some retailers are conducting in-store comparison tests to measure shoppers’ preference for store brands versus national brand alternatives. Words associated with private products in the minds of consumers include “quality,” “value,” “cheaper,” and “inexpensive.”

“Shoppers view private brands as a value-added offering in tough economic times.” - FMI

Technology to assist in product rationalization and give insight into product performance

In the complex task of SKU rationalization, planners and buyers need the assistance of smart technology that can give visibility to the performance of every product at every store. This kind of technology can quickly pay for itself as it optimizes your offering, reduces inventory, and increases sales.

What to look for in assortment planning and SKU rationalization technology:

  1. A system that continuously monitors business strategies, customer strategies, profitability, service levels, and stock levels
  2. Technology that utilizes the data it takes in to recommend the most profitable assortment for each store, across time
  3. The ability to optimize SKU rationalization by recommending like-product attributes for new products
  4. The ability to take in real-time data and automatically recommend inventory need based on local consumer behavior and store performance

When retailers optimize their product range based on local store demand, stock outs, and customer behavior, they will quickly become more profitable and able to compete in today’s retail market.

Get back in the game

Are you ready to know exactly what your customers are asking for at every location and to have the ability to react as their wants change? If you are looking for a solution that can drive momentum for your business this year, check out the solutions offered by Quantum Retail.

Our customers see valuable results in 8 to 12 weeks and our customer engagement approach gives your team access to the solution from early on, so you can manage changes to your processes with ease. Quantum Retail continues to help all of its clients rapidly drive measurable and significant business value through our proven merchandising optimization solutions.

Get resources on how to adapt to today’s retail market HERE»

Learn more

Follow this series to learn more innovative practices for grocery.

To download as PDF CLICK HERE»

To sign up CLICK HERE»

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Grocery Innovation Series: Creating a Localized Supply Chain

by Blake Weihrauch • May 23rd, 2010 • Write a comment »

GROCERY INNOVATION // week 3

This series will be published Thursday’s and will review trends, tips and technology to optimize grocery planning. To sign up for series updates - CLICK HERE»

Customer Awareness

The movement towards customer awareness is a growing trend in today’s retail market. As grocers seek new business tactics, they will find that one of the most profitable strategies is creating a customer-driven supply chain. For grocery chains, the secret to success lies in the drive towards localized inventory.

Local demand signals

There are a variety of demand signals that need to be monitored on a local level, these signals include: the time of day activity occurs, local events, sports schedules, weather, seasonality, social trends and local buying habits. To add to this already complex problem, this must be done at a SKU/store level, in real-time to optimize profit from perishables. Grocers are one of the only retailers who have a legitimate need to plan inventory by the hour in order to avoid situations of ‘scarcity and abundance’.

Departments like dairy, meat, produce, sea food, bakery, deli, etc. sometimes have a lifecycle that is measured in days (or even hours). The key to optimizing profit with this merchandise is timing. Integrating time-phased planning for fresh products requires a strategy and an execution that aligns store-specific assortments with localized signals of demand. In order for stores to execute on their strategy, they must have the ability to plan in advance for known demand signals, and to execute quickly for signals that change on a day-to-day basis.

Local Suppliers

Utilizing local suppliers in your chain will also help you appease your customer’s needs. According to a report from the Food Marketing Institute on grocery shopper trends, consumers continue to show strong support for locally grown products.

Nearly three-quarters (72 percent) of shoppers say they purchase locally grown products on a regular basis.

Some of the reasons they like to buy local:

  • Freshness (82 percent).
  • Support the local economy (75 percent).
  • Taste (58 percent).
  • Environmental impact of transporting foods across great distances (35 percent).

Local demand insight for perishables

When grocers have local demand insight, they can optimize their recipes and manage their yield in order to align their fresh produce to that localized need. They can manage orders based on transit costs and locality of suppliers, as well as understand local factors that drive the demand of specific product types. Grocers will notice immediate increases in margin with their fresh and perishable goods, because they will be minimizing waste while achieving their availability goals.

Local demand insight for non-perishables

Because the majority of non-perishables are shelf stable with long code dates, the time-phased element to the demand, delivery, and sale is related to carrying cost, customer service levels and the cost of money invested. The majority of allocation/distribution projects tend to focus on determining how much inventory to push to a given store. Theoretically these items can remain in the store until someone buys them or until they are marked down as part of a clearance initiative.

Non-perishables are typically divided into two groups, fast moving consumer goods (FMCG) and slow moving consumer goods (SMCG). FMCG are typically intended to be completely consumed by the customer (like paper towels, charcoal, pet food, etc.). SMCG are intended to be replaced someday but on a far less predictable buying curve (like flatware, dishes, light bulbs, decorations, home décor items, etc.).

What is most important for FMCG is the replenishment strategy. FMCG are typically replenished based upon a combination of assortment, demand and time. Having local demand insight on how to most efficiently pack and move those goods during the replenishment cycle will help grocers reduce costs. Grocers usually do not mind carrying some additional inventory for FMCG because demand is usually high and sell through is complete soon after delivery.

Since slow moving goods typically remain in the store for a long period of time, demand is less important. However, these goods can cost a tremendous amount of money in inventory carrying costs and typically end up eroding the overall margins of the store through markdowns and inventory reduction initiatives. The strategy for SMCG relies on having an efficient initial allocation that takes into consideration local transit vs. national transit as well as size and pack optimization.

Assortment and SKU rationalization

Assortment and SKU rationalization ensures that every product serves a purpose at each store. Grocery chains need to align their inventory with regional and cultural product preferences. Grocers will find that in some stores – natural products sell more rapidly, in others – cultural products perform best, while in some – discount items move quickest. To understand this level of SKU/store analysis in real-time with 46,000+ SKUs and over 500 stores would be impossible with spreadsheets. Grocers need the right technology to ensure they are able to get their order right.

Sustainable Practices

The FMI reports, that despite the volatile economy, consumers are still concerned with sustainable practices. More than half (59 percent) of shoppers say retailers’ efforts in the areas of recycling and sustainability are important. The vast majority of retailers (94 percent) sell reusable shopping bags and more consumers (40 percent) are bringing their own bags when they shop for groceries. There is growing evidence that sustainability can make sound business sense, reducing costs and increasing consumer loyalty.

Metrics to drive inventory

In order to adapt to those differing habits, grocers need to have the ability to turn transaction data into an action plan for the store and customer. Grocers must first consider what detail of transaction data is necessary and then compare the factors of demand to the conditions of the transaction.

In an industry where one mistake can wipe out hundreds of good decisions, shopper behavior and local buying habits are the most important metrics for grocers to utilize in their inventory decisions. The quicker a grocer can understand and react to this information, the quicker they will increase sales and service levels while reducing inventory waste.

Learn more

Follow this series to learn more innovative practices for grocery.

To sign up - CLICK HERE»

Download this blog as a PDF»

For resources on allocation, visit: http://quantumretail.com/solutions/allocation-replenishment/resources

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Grocery Innovation Series: Integrating perishable & non-perishable supply chain systems

by Debby Heid • May 19th, 2010 • Write a comment »

GROCERY INNOVATION // week 2

Reviewing trends, tips and technology to optimize planning. This series is for retailers who desire to align their inventory, reduce waste and gain consumer insight, applying new strategies and technology is the answer. Merchants who can fulfill customer needs at a local and personal level will quickly become profitable and gain a competitive advantage.

This series will be published Thursday’s and will review trends, tips and technology to optimize grocery planning. To sign up for series updates CLICK HERE»

Grocery Innovation 2: Integrating perishable and non-perishable supply chain systems

Historically, perishable and non-perishable categories have used two disparate systems with supply chain reporting, management and execution solutions governed by completely different business rules and calculations. This disparity causes hours upon hours of manual intervention to create integrated strategic reporting – and in most cases does not compare KPIs like to like.

These systems cause questions to arise in planning and management. Which category comes first? What doesn’t fit? What is handled separately? All are questions that grocery I.T managers ask across the globe on a daily basis.

5 reasons/benefits to combine Perishable and Non-perishable supply chain systems:

  1. One replenishment engine for ALL departments will:
    • Reduce redundant hardware, software and system support
    • Simultaneously apply software upgrades across the enterprise
  2. Consistent replenishment reporting across ALL departments (Grocery, Meat, Produce, Bakery, Deli, GM, HBC, etc) allows for:
    • Systematically created consolidation reports
    • Data aggregation flexibility across organization hierarchy
  3. Consolidated IT development and support teams can create:
    • Consistent solution development across the organization
    • A unified technology platform for enterprise supply chains
  4. Cross departmental resource sharing (buyers, merchandisers, analysts, etc) allows for:
    • Departmental sharing of resources
    • Expanded career opportunities for key personnel
  5. Consolidated education platforms will:
    • Reduce custom education across departments
    • Have common terminology within education materials
    • Reduce ramp up for new personnel

Retail I.T. budgets are shrinking, forcing grocers to find a way to stretch their dollars even further than before. Consolidated systems will optimize their dollars while providing the best solutions for their user communities.

Learn more

Follow this series to learn more innovative practices for grocery.

To download as PDF CLICK HERE»

To sign up CLICK HERE»

Get back in the game

Are you ready to know exactly what your customers are asking for at every location and to have the ability to react as their wants change? If you are looking for a solution that can drive momentum for your business this year, check out the solutions offered by Quantum Retail.

Our customers see valuable results in 8 to 12 weeks and our implementation approach gives your team access to the system from early on, so you can manage changes to your processes with ease. Quantum Retail continues to help all of its clients drive positive business value more rapidly than anything seen in retail.

Get resources on how to adapt to today’s retail market HERE»

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Grocery Innovation Series: Trends, tips and technology to optimize planning

by Chris Allan • May 15th, 2010 • Write a comment »

GROCERY INNOVATION // week 1

Reviewing trends, tips and technology to optimize planning. This series is for retailers who desire to align their inventory, reduce waste and gain consumer insight, applying new strategies and technology is the answer. Merchants who can fulfill customer needs at a local and personal level will quickly become profitable and gain a competitive advantage.

This series will be published Thursday’s and will review trends, tips and technology to optimize grocery planning. To sign up for series updates CLICK HERE»

2010 Grocery Outlook

Shopping trends in 2009 caused retailers to re-evaluate the way they sort, price, promote and mark down their products. Shoppers have become more cautious, not only with the price of products they choose, but also of the quality, sustainability and health value of those products.

Fluctuating patterns have dramatically shifted store demand and thrown off retail forecasts, increasing sales of necessity items, produce, bulk, frozen and ready-made meals. Restaurant dining has decreased—increasing the frequency of home-cooked meals.

Retailers are struggling to adapt their inventory assortments and allocation processes to the new shopper patterns of the recession. As retailers try new ways of positioning products and revamping their assortments for today’s conservative customers, they must also face the uncertainty of the marketplace.

This leaves retailers with many lingering questions:

  • Have shoppers changed their buying habits forever?
  • Will shoppers remain frugal?
  • Will the demand for local products continue to shift distribution patterns?
  • How will consumers balance the sometimes competing pressures of price, quality, sustainability and healthier food options?

These concerns continue to plague grocery store planners, buyers and category managers alike, leaving them with a chronic issue:

How can they keep up with this new ever-changing customer and how do stores plan and execute for the unknown?

The answer?

Stores must create a new approach to planning and executing, and invest in new strategies and technology for capturing and acting on this consistently changing shopper behavior.

Reacting to Local Shopper Behavior

Grocers and food retailers now need a new approach to forecasting, SKU rationalization, assortment planning and order planning. Retailers who can meet the specific needs of their customers at a local level will become much more successful.

Meeting those needs comes down to stocking the right mix of products and brands, and stocking those products appropriately. Some retailers have met the challenge of providing lower-priced products by creating quality store brands comparable to the popular brand-name versions. Take Target for example; Target has created a low-cost brand, “Up and Up,” to appeal to its bargain shoppers, but also offers “Archer Farms” as an upscale, but cost-effective, choice. Being able to offer a variety of price points and utilizing a high-quality in-house brand allows the retailer to increase margins, and compete with vendor sales. It also lets the consumer decide what is the best value to them.

Once retailers have created competitive strategies for products, they must begin tracking sales and inventory data that will measure the difference in sales and demand at each location. The traditional cookie-cutter approach to store stock levels cannot work in today’s fluid, competitive environment. Each store has unique demands that are continuing to change and will respond differently to the assortment of products. When retailers look at customer trends, they can begin to understand how much of each product to stock at each location, allowing them to tune their store offering, based on local demand and profitability.

Localization works on two levels. First, retailers can look at the unique behaviors of each store to determine each store’s selling patterns by day and to monitor trends for size, brand, quality, quantity, locality, season, etc. With this understanding, a retailer can plan to deliver the right amount of the products customers are buying at each location, allowing the retailer to achieve the highest turn rates and rationalize SKUs to reduce inventory to the appropriate levels, increasing availability, reducing over-stocks and stock-outs and ultimately increasing margin.

The second concept of localization comes from localizing distribution and utilizing vendors that produce products in a close vicinity of each store. This type of localization is most easily applied to fresh foods, as well as organic and natural products where customers prefer to support local farmers and local brands. This type of shopper is increasingly socially aware, and the demand for these products has made them become more affordable.

Strategic Moves

To place inventory in the most efficient and profitable way, merchants can define product objectives, like minimum credible display and service levels, which should be used to decide each inventory placement decision. This enables retailers to make sure every product is in their assortment for a reason.

Though fast-moving products create the most revenue, even slow-moving products need to have a strategy. It’s not just about ensuring availability; it’s also about choosing the right mix of products and ordering the right amount for each location. It is even more critical in grocery, as perishable products create wastage and erode profit, especially in a retail sector with already slim margins. In the past, retailers have not been able to drill down into individual item behavior on a store-by-store basis because of the complexity and time involved, but modern technologies are changing that.

Retailers who understand the needs of the market at a lower level of granularity and can react to current buying trends will be much more successful. As channels grow and become more complex, planners and strategists require technology with the ability and intelligence to turn real-time data into actionable knowledge.

Creating Customer Loyalty

The following article was posted in Retail Merchandiser Daily Dose. Mobile technology is bringing about a new wave of customer loyalty programs. With mobile and e-coupons – customers have visibility to your value instantly:

  • Customers can easily learn of yours promotions
  • Save discounts to their customer loyalty card
  • Receive text messages about ongoing promotions
  • And most importantly – engage with you

Plus – mobile and e-coupons reduce the cost of print and mailings – a majority of which get thrown away and overlooked. This new avenue is definitely worth exploring and will likely prove to be profitable for your business.

The New Face of Grocery Coupons

The days of paper coupons may be even shorter than we thought if supermarket chain A&P’s mobile phone text-coupon program is any indication of a new trend to save shoppers money.

Starting in March, the New Jersey-based company gave shoppers a new way to reap the benefits of having a loyalty Club Card by offering a coupon alert option that is sent directly to their cell phones. This mobile coupon benefit is the result of a partnership developed between A&P and Zavers, a mobile technology provider, last year.

The two began working together to build and implement a digital promotions platform for A&P, enabling the chain to offer mobile coupons. The texting option is just one component of that partnership.

A&P’s coupon texting option first requires consumers to visit its website and create an account, building even more Web traffic. Once a consumer has a Club Card account number, they can view coupons online, choose which ones they want to use, and save their options online. They then take their Club Card with them to an A&P location and save money by scanning their card when they checkout.

For the texting portion of the plan, when a new coupon is available, a text is sent to participating shoppers describing the coupon and providing a code for shoppers to respond to if they want the coupon added to their account. To redeem the coupon, again, shoppers only need to swipe their Club Card at the register.

“This program is an important addition to our loyalty club card programs, and provides our customers with another reason to shop at A&P,” said Lauren LaBruno, A&P’s senior director of public relations, community affairs and customer care. “From a marketing perspective, there is a generation of consumers that is increasingly turning to the Internet and to their mobile phones for product information and savings opportunities, and this program allows us to reach them the way they want to be reached.”

She continued to say that since launching mobile coupons in August 2009, A&P’s coupon redemption rates have gone as high as 45% and average double-digit percentage rates compared to 1% for paper coupons. “Consumers tell us how easy it is to sign up and get started on the program, they tell us they love the amount and breadth of coupons available, and that this program allows them to take advantage of manufacturer and private label savings without the hassle of paper coupons,” she added.

Smart Technology

Customer loyalty programs and localization practices take time and manpower in order to manage store need and customer behavior at such a granular level. But there is smart technology available to retailers who want the best insight into consumer behavior that can enable them to scale. These technologies can tell the retailer what the demand is at every level of their chain, and can automate order planning by learning and recommending execution of the right products at each store. This type of technology makes allocation and replenishment a simple task and proves a very profitable decision for progressive markets.

With smart inventory management tools, retailers can track real-time sales and demand data to learn from the behaviors of customers and create a more accurate forecast that can help them understand the changing patterns of shoppers.

For retailers who desire to align their inventory, reduce waste and gain consumer insight, applying new strategies and technology is the answer. Merchants who can fulfill customer needs at a local and personal level will quickly become profitable and gain a competitive advantage.

Learn more

Follow this series to learn more innovative practices for grocery. To sign up CLICK HERE»

Check out this article by Chris Allan in Natural Products Marketplace. To view CLICK HERE»

For resources on allocation, visit: http://quantumretail.com/solutions/allocation-replenishment/resources

Get back in the game

Are you ready to know exactly what your customers are asking for at every location and to have the ability to react as their wants change? If you are looking for a solution that can drive momentum for your business this year, check out the solutions offered by Quantum Retail.

Our customers see valuable results in 8 to 12 weeks and our implementation approach gives your team access to the system from early on, so you can manage changes to your processes with ease. Quantum Retail continues to help all of its clients drive positive business value more rapidly than anything seen in retail.

Get resources on how to adapt to today’s retail market HERE»

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Guitar Center Selects Quantum Retail’s ‘Q Assortment and Range Planning’ Software

by Quantum Retail • May 10th, 2010 • 1 Comment »

The new Q module has already demonstrated increased sales and margins for Guitar Center.

MINNEAPOLIS–(BUSINESS WIRE)–Quantum Retail is pleased to announce that Guitar Center, the world’s largest music retailer, has successfully implemented Quantum’s new Q module for Assortment and Range Planning to manage its assortment planning and range optimization activities.

“The system’s localized assortment planning capabilities will help us to understand how to measurably increase sales and margin on product lines that are currently live on the software.”

Q: Assortment and Range Planning constantly updates data on product and customer behavior, which it then uses to automate the way retailers manage and assort their stores at the local level. This enables retailers to easily determine what products should go into which locations and when, ultimately maximizing merchandise objectives like profitability, sales and service levels.

Guitar Center initially implemented a pilot of the software in May 2009 on four product levels: classical, acoustic, acoustic/electric, and miscellaneous guitars. Following the successful pilot, full implementation of Q: Assortment and Range began in July, and was completed December 15th, allowing Guitar Center to manage the assortment of every individual product in every store by the new system.

“We had a successful implementation of Q: Assortment and Range Planning,” stated John Bagan, Guitar Center’s chief merchant. “The system’s localized assortment planning capabilities will help us to understand how to measurably increase sales and margin on product lines that are currently live on the software.”

Guitar Center has been using Quantum’s Q modules for inventory allocation, replenishment, forecasting and order planning activities since 2005.

READ MORE» Q: Assortment & Range Planning solution

About Quantum Retail Technology, Inc.

The market is asking new questions. You need new answers. Q answers the new questions facing retailers today with solutions that enable them to profitably buy, move, and sell merchandise, solving the most complex and costly problems they face - quickly and permanently.

Q is the answer for: Assortment and Range Planning – Forecasting and Order Planning – Replenishment and Allocation.

Every Quantum Retail customer has achieved 100% return on investment in less than 6 months. For more information visit http://www.quantumretail.com. Follow Quantum Retail on Twitter at http://twitter.com/quantumretail.

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Quantum Retail Ranks 9 in the Top 50 Women-Led Companies in the Nation

by Miami Herald - Wall Street Journal • May 4th, 2010 • Write a comment »

“It is refreshing to see so many companies with women leaders doing so well in this economy,” commented Quantum Retail CEO Vicki Raport. “The whole team at Quantum is proud of the hard work we have put in to be able to be recognized amongst such a fantastic and deserving group.”

American Express OPEN and the Women Presidents’ Organization Name Top 50 Fastest-Growing Women-Owned/Led Companies

See Quantum Retail in the Top 10 Women-Led Companies in the Wall Street Journal

FORT LAUDERDALE, Fla. — American Express OPEN, the small business division of American Express, in partnership with Women Presidents’ Organization (WPO), today released the third ranking of the 50 fastest growing women-led companies in North America. The Top 50 generated a combined $2.3 billion in gross revenues (2009) and averaged 128 employees (2009).

“The Top 50 list exemplifies the vital role women business owners have on boosting the economy and enhancing job growth overall,” says Marsha Firestone, Ph. D., president and founder of the WPO. “We are pleased to partner with American Express OPEN to honor these powerful women and recognize their triumphs.”

“There are 10 million women-owned businesses in the US that employee over 13 million people and generate nearly $2 trillion in annual sales,” says Nancy Hood, Vice President at American Express OPEN. “We at OPEN are honored to support this group of women business leaders that thrived in a challenging economic climate.”

All eligible companies were ranked according to a sales growth formula that combines percentage and absolute growth. From this list, the 50 Fastest are selected. To be qualified for the ranking, businesses are required to be privately held, woman-owned/led companies in the U.S. or Canada and have reached revenue of at least $500,000 by the first week of 2005 and $2 million in 2009.

In order to help the Top 50 continue to seize even more business opportunities, each of the honored business owners will be offered a Business Platinum Card1 from American Express OPEN. The card will include 100,000 Membership Rewards® points, which may be used on capital investments including: the funding of employee recognition programs, business travel or the purchase of office equipment and supplies.

46 of the Top 50 women were polled to examine what makes them tick and uncover how they were able to grow their businesses at breakneck speed and in such a difficult economic environment. The survey touched on key themes including: overcoming business growth challenges, reexamining business strategies despite the current economic condition and prioritizing the important characteristics for being a successful woman leader.

The key findings include:

Reasons for success

  • A commitment to high growth – 71% agreed or strongly agreed that their goal from the very beginning of their leadership of the company was to build a large company
  • Inspiring leaders – 64% believe their “ability to motivate employees” is the most important characteristic for being a successful woman entrepreneur
  • Surrounding yourself with a skilled team – 78% say “Hiring the right people” was the most important action that contributed to their company’s growth
  • Adapting to a changing environment – The strategy most frequently chosen (64%) to meet the challenge of the current economy is to “enter new markets”. Sixty-one percent admitted current economic conditions caused them to change their business strategies
  • Lower sales – 56% say their biggest challenge in our current economy is “existing customers reducing purchases.”

Positive Outlook

  • Doubling their workforce – Nearly all (96%) plan on adding employees this year.
  • Boosting the economy and their communities – Their ability to create much needed jobs is the greatest benefit of being a successful woman entrepreneur

All 50 companies were honored at a special event hosted by American Express OPEN at the WPO annual conference in Ft. Lauderdale on April 23, 2010.

Read at Miami Herald: http://www.miamiherald.com/2010/04/23/1594485_p3/trailblazing-women-business-owners.html#ixzz0lxQdwFf2


About the Women Presidents’ Organization and American Express OPEN

The Women Presidents’ Organization (WPO) is the premier peer advisory organization which internationally connects top women entrepreneurs at the multimillion-dollar level ($2 million in gross annual sales or $1 million for service-based business) for greater professional success. In monthly meetings across four continents, chapters composed of 20 accomplished women presidents from diverse industries and backgrounds invest time and energy in themselves and their businesses to drive their corporations to the next level. For more information, call 212-688-4114 or visit http://www.womenpresidentsorg.com. For more information on American Express OPEN, visit www.OPEN.com.

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Allocation Localization: A guide to creating a profitable allocation strategy

by Matt Garvis • May 1st, 2010 • Write a comment »

This is the part 4 of a 4 part series on Fashion Innovation and Optimization. To read parts 1-3 CLICK HERE. Look out for the full report on Fashion Innovation and Optimization next week.

KEY TOPICS IN THIS SERIES:

  1. Size & Pack Optimization
  2. Assortment & Range Planning
  3. In-season Replenishment
  4. Allocation Optimization

Localization

The term localization is arguably the hottest word in retail merchandising today. Getting the products to the store that the local market wants, in the right quantity, in the right color, in the right size and priced to sell it at the highest possible margin is the Holy Grail of any retailer merchandiser. Adding constraints such as price elasticity, markdowns, supply chain, knowledgeable customers is one thing but when a merchant is constrained by her own internal systems; that’s another problem entirely.

In many cases current enterprise systems and business processes are what constrain retailers from taking advantage of business opportunities. Allocation is an under-appreciated aspect of most fashion businesses today and as such, it’s constraining the work that’s being done getting an assortment localized and priced to perfection. It’s a little bit like pushing a golf ball through a garden hose. There is no such thing as a perfect plan or a perfect forecast and the closer the time-frame to an actual launch of a season of merchandise, the more accurate that plan and/or forecast is going to be. So, why is allocation the merchant’s step-child?

Today, every initiative has to show rapid, significant return on investment. If the current operating model is too restrictive the cost can outweigh the short term benefits and fail to deliver that return on investment. Allocation improvements have the potential to quickly add to the bottom line of any retailer but especially those seeking better performance by localizing assortments.

Creating an allocation strategy

Retail is complex and it gets more complex every day. A changing economic environment, a better educated consumer, global expansion and, as mentioned, localization challenges are at the heart of this complexity. We can’t eliminate these challenges, but we can embrace them and simplify the processes and the way solutions are delivered.

Allocation decisions are the last chance to get breadth and depth of the assortment right. The risks are obvious, too much inventory hurts your margins and too little hurts sales. How can we improve on the process to minimize the risk.

5 tips to creating an allocation strategy

1.    Don’t cluster your stores

This one has perplexed me for years. All this talk of localization assumes that stores need to be managed individually. It’s common for two stores to be of similar size, volume, and be only a mile or two apart and yet have drastically different customers shopping them which changes their size ratios, color ratios, and basic performance on thousands of items. So, why would anyone still cluster stores together, even at a class or department level? Instinctively, you know that clustering and localization are mutually exclusive.

2.    Don’t forget to hold back

Not every decision can be made on profitability alone. Sometimes, your store has to look great first. It’s why the presentation quantity is so often the leading driver in an initial allocation decision.  But, above having a nice presentation or complete offering of size, why allocate significantly above that?  It’s important to cover the expected sales initially but anything above the store’s demand until it can be replenished could be better served somewhere else.

The knowledge of even a day’s or a weekend’s performance by SKU should be enough to re-evaluate the expected demand of an item. Use it! If a store’s lead time is less than a week including the allocation process, why allocate it multiple weeks’ supply?

3.  Don’t allocate too far in advance

Tied closely with the recommendation above, there’s no reason to pre-allocate merchandise and stick to it. Often in order to properly order to expected demand by size, a pre-allocation is a good idea when preparing a production run or order, but once that happens there is no need to stick to it. Stores change constantly so let them and allocate just before the product goes out.

4.    Use more than just history

Most allocation systems only have one tool to perform future sales expectations, past sales. Don’t be constrained by this methodology. There is a lot more to it than just how a past item sold.  When it sold, how much of it was pre-markdown, how did stock-outs affect the would-be performance of an item. Was it different by store or are you looking only at aggregated sales? Knowing what sales “would have likely been” at a store/SKU/day level can critically empower future allocation decisions.

5.    Is there really such a thing as a like item?

Nobody seems to argue that the consumer is constantly changing. Fickle customers tastes change from season to season and often times even more often than that. So, why do we seem to all perform the same function when allocating, that of finding an item in the past that most describes the item I have now? Using attributes, detailed store performance, price sensitivity, store attributes, and demand is much more likely to generate a more accurate outcome than copying last year’s performance. Wash, rinse, repeat? I don’t think so.

Don’t overlook allocation

As an industry we have all embraced the idea that localization, in general, will generate positive results. The obvious place to generate localized offerings is in assortment planning and knowledgeable buying but don’t forget about allocation. The benefits there can be just as large, and more than likely more quickly achieved than any other merchandising process.

Learn how to improve allocation further:

We will be starting a 15-week series on improving allocation. To receive email updates as the series comes out SIGN UP HERE.


Get back in the game

Are you ready to know exactly what your customers are asking for at every location and to have the ability to react as their wants change? If you are looking for a solution that can drive momentum for your business this year, check out the solutions offered by Quantum Retail. Our customers see valuable results in 8 to 12 weeks and our implementation approach gives your team access to the system from early on, so you can manage changes to your processes with ease. Quantum Retail continues to help all of its clients drive positive business value more rapidly than anything seen in retail.

For more information on Quantum Retail’s allocation solutions, visit:

http://quantumretail.com/solutions/allocation-replenishment/introduction/

Download this blog as a PDF

You can also follow our 4-part 2010 Retail Outlook series here.

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