Planning Ahead

Many shoppers love to meander through bookstores, seeking out the physically relaxing and mentally stimulating atmosphere found browsing shelves of the latest hardcover titles, paperback bargains, DVDs and CDs. It’s no wonder many bookstores now double as reading lounges and cafes.

But behind the peaceful and engaging presentations of thoughts on paper and sounds on discs lies a mad scramble to update these offerings weekly or even more frequently. “Best-sellers change every week,” says Michael Steele, director of store operations at Borders Group Inc., which operates more than 1,100 stores worldwide.

That means thousands of changes to store content on a nearly constant basis. Merchandise buyers and category managers at headquarters dive into market trends and new product data and, with input from suppliers, combine it with expected regional and local demand at groups of stores and individual locations. They take all that information and plan product assortments and ways to promote them across the Borders chain.

Depending on what’s hot or at least expected to be hot—a Grammy-winning CD or the latest Stephen King novel, for example—merchandise managers at Borders will distribute plans for promoting and displaying products in each store.

But things don’t always go as planned. All chain retailers face what can be endless hurdles to store operating plans. Store employees get incorrect or insufficient information, promotional materials don’t arrive on time, prices are marked incorrectly, or a store’s product display areas aren’t spacious enough to hold planned promotions.

Executing planograms

To address these challenges, Borders and other retailers are deploying web-enabled execution management systems for distributing and managing planograms—graphical layouts of store selling space that show exactly how products are to be displayed on shelves—along with other store operations plans and policies.

And thanks to web technology, planograms have become universally accessible and more user-friendly, with graphical user interfaces that let merchandise managers at suppliers and retailers drag and drop product images into shelf outlines to illustrate how products should appear in stores. Borders and other retailers distribute planograms to stores as part of online execution management systems designed to ensure that store employees execute planograms as well as other store operating procedures as planned by headquarters.

The store-planning technology market consists of web-enabled execution management systems from companies like RedPrairie Corp. and Reflexis Inc., which typically run within suites of workforce management applications that include recruiting, labor scheduling and time-and-attendance recordkeeping. There also are companies specializing in store planograms, including Shelf Logic Software Products and Galleria Retail Technology Solutions Ltd. And there are companies offering planogram applications as part of broader enterprise suites, including the Marketmax division of SAS Institute Inc., DemandTec Inc. and JDA Software Group Inc.

These systems are designed to help retailers avoid failure to carry out corporate merchandising and promotional plans, failure that can result in lost sales and extra operating costs as well as damage to a retailer’s brand, experts say.

“If you don’t have accurate, clear plans distributed to stores you waste human resources and adversely impact the customer,” says Paula Rosenblum, managing director at RSR Research LLC and a former retail executive. “You really want to know if people responsible for store tasks are executing them the way management wants them done.”

Many retail chains, however, lack a single, effective method for getting headquarters’ instructions to stores and confirming compliance. When an August-September 2007 survey by RSR Research asked 160 retailers to name the three top barriers to improving task management, the most frequently mentioned problem, cited by 55% of respondents, blamed multiple directives to stores coming from “too many people using too many methods.”

Managing tasks

An increasing number of retailers are addressing this problem with web-enabled execution management systems, RSR says. 38% of retailers in the 2007 survey said they used execution management systems, up from 31.6% in 2006.

The planning process starts with store planograms—the blueprints for how to arrange products and promotions that are issued by suppliers, tweaked by retail managers and implemented by store personnel. Headquarters has traditionally distributed planograms on paper or computer discs, which could get misplaced. Worse yet, multiple versions of these planograms could leave employees with outdated or inaccurate copies. Moreover, planograms often don’t account for the actual merchandising display space, labor availability or customer demand unique to each store.

Although many chains try to build nearly identical store layouts, there often are local discrepancies that go unnoticed by corporate merchandise planners. “A store might have a building support column taking up shelf space, making it impossible to display products the way headquarters wants,” says Mark Shapiro, CEO of Gladson Interactive, a company that manages product data and imaging for store planograms on behalf of retailers and manufacturers.

Borders, for example, may have some stores with larger cafes, forcing a rearrangement of product display areas. And many stores and groups of stores cater to different consumer groups, calling for particular assortments of book genres and titles that may not be reflected in initial planograms.

Web-fortified planograms

Now, however, store planograms are becoming more effective as part of broader store execution management systems. These systems incorporate web and other technologies that allocate shelf or floor space for each product and connect with applications that assign tasks to store employees related to displaying products. In addition, integrating these systems with labor management and inventory management applications enables retailers to ensure product display needs are supported by available staff and inventory. Distribution in a web-enabled, integrated environment makes planograms more effective, experts say.

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The combined technology creates planograms that determine product depth and location by store based on available shelf space along with objectives such as expected profit margins and inventory turns of each product, with the fastest-moving, highest margin products usually getting the most space. But the ability of local store managers to inject their knowledge of local market demand and current store layouts also is crucial. Universal web access to planograms enables chains to easily include and leverage local management expertise, experts say. “Local retailers can take a planogram and make it right for their stores,” says Paul Waldron, Gladson’s executive vice president.

The graphical, drag-and-drop interface of planograms makes them relatively easy to use by store managers and corporate merchandise managers, who typically attend corporate demonstrations on how to check inventory and planned sales data to configure a picture of how products will appear on store shelves, Waldron says. These demonstrations help store managers learn, for example, how to alter planograms initially designed by suppliers. Once planograms are completed, designated store personnel can view them online or print them out as easy-to-follow guides for displaying products, Waldron adds.

Learning the drill

Store managers and employees also must learn how to use planograms as part of execution management systems. Headquarters staff, via demonstrations to managers, and managers, via demonstrations to staff, show how to have employees, for example, check boxes online to indicate products have been displayed in the correct location and on schedule, and managers check online to confirm assigned tasks were completed as planned.

Borders has implemented a web-based execution management system from RedPrairie that controls the distribution of merchandising and operating plans across the chain. Rather than relying on a patchwork of phone calls, faxes, e-mails and meetings, a process that could result in missed or delayed instructions as well as difficulty in confirming compliance at stores, Borders now uses the RedPrairie execution management system to distribute a single version of merchandising and operating policies across its chain.

By having store employees check off completed tasks in the online task management system, corporate managers can confirm over the web store compliance with plans and get a chainwide view of how well all stores are meeting schedules. They can view, for example, if certain stores missed product launch deadlines because display fixtures didn’t arrive or because of insufficient staffing, and determine which stores may be ready for additional product launches and promotions.

Efficient use of store personnel is key, experts say. “The whole philosophy is to give 10% of labor costs and time back to the retailer by making store personnel more effective,” says Neil Goggin, vice president of execution management solutions at Red Prairie. In most cases, he adds, retailers will re-invest such savings into improved customer service. Borders says increased productivity from its execution management system has boosted sales, primarily from customers given extra service.

Multiple steps

Matching planograms and other directives from headquarters with an individual store’s particular merchandising needs, however, can require multiple steps to arrange for the right mix of products and promotions. Having a web-enabled management communications tool accessible to all participants through web browsers on desktop computers and handhelds makes this a more efficient process, experts say.

The RedPrairie execution management system deployed by Borders, for example, is designed to organize store tasks into several steps and provide ongoing communications within a single portal between store and headquarters personnel. Formerly known as StorePerform, which RedPrairie acquired in early 2007, the execution management system is designed to make the distribution of planograms and other store operations information more effective in a task management environment that facilitates the assignment of that information to store personnel according to schedules that support planned promotions and product launches.

“We break down every step that needs to be done ahead of the scheduled date for a product to go on sale, ensuring stores have all the necessary products, signs, lights, labor and training,” Goggin says.

Execution management systems can be effective in all kinds of store categories. Food Lion, a chain of grocery stores throughout the eastern U.S., uses the web-enabled RetailAction execution management system from Reflexis along with a planogram application from Galleria Retail Technology Solutions to get corporate merchandising policies carried out across 1,200 stores.

The Reflexis system enables Food Lion executives to optimize workloads in stores, monitor store-level compliance with assigned tasks and provide store employees tools to increase efficiency in store operations, says Greg Finchum, director of retail productivity and standards at Food Lion. “It enables Food Lion to ensure the consistent execution of promotions and new product introductions,” he says.

Getting personal

Technology alone, of course, isn’t enough, says Steele of Borders.

One of the ongoing challenges for retailers deploying execution management systems is applying them to the most differentiated product groups within stores, he says. At Borders, most stores share about 80% of products, but the other 20% is usually geared to the local interests of each store’s customer base. And figuring how to best serve that 20% involves a long learning curve, he adds.

“We’ll upgrade the system to make it more personalized, accounting for each store’s customer demographics reflected in the space we give to product displays,” Steele says. “We’re still learning how to use the system better.”

paul@verticalwebmedia.com