Supply chain collaboration is certainly an end goal, but why should I look at sharing data right now?
The Supply Chain is evolving to now include what is the most important link of all: The customer. Retailers and manufacturers must work together to fully understand customers’ motivations at the shelf. Individually, retailers and manufacturers certainly have ‘views’ of what customers may be trending toward, but the whole picture is lacking. For example, POS data alone can give overall trend analysis, but cannot reveal more detailed information about why products were selected and what was purchased in the same basket. A complete picture is not only made possible by working together but is demanded in today’s business world. Are you in the loop?
Retailers and manufacturers stand to reap major benefits by understanding the specific products that are most frequently purchased on various trip types and featuring these products in trip–targeted advertising and promotions.
For instance:
Drug Retailers and internal analgesic manufacturers have a major opportunity to collaborate in building marketing and merchandising plans that attract high–value trips, grow baskets and increase brand and category sales.¹
I want to be in the loop but where do I begin?
Whether you are a manufacturer, retailer or a retail marketing services company that represents the former, it is critical to build a comprehensive strategy to understand as many promising and impactful customer trip types as possible. You want customers to be motivated, happy, fulfilled and advocating your products. To do that you must collaborate with your partners to:
- Develop appropriately designed stores, aisles, promotions and experiences to fulfill customer’s needs (“Dinner Tonight” aisle, etc…).
- Joint/Cross promote and advertise high trip purchase products with complementary products in a logical way.
- Base your assortment on purchase patterns for individual locations, not regions and customer needs, not what you think they need.
- Use customer trip type preferences to help price products.
“Build collaborative marketing and merchandising plans with key partners.”¹
What information do I need to collect to share? What data should I expect in return from my partners?
Depending on whether you are a manufacturer, retailer or 3rd party — and/or the way you collect data — the nature of the information you need to collect differs. In the end the customer must be understood. So if tangible, on the floor customer interactions are required to attain the last mile of information then it must be facilitated by someone (To customer: What would you have bought if it were available before you left the store; Why did you choose product A over product B, etc…). Collaboration means deciding on what needs to be collected and then making sure it gets done and presented properly to the partners. Manufacturers may have field reps merchandising and fielding questions from store patrons — or perhaps it is the retailer who by its nature is required to have plenty of staff engaged with buyers (e.g. electronics). There is much more than POS data that must be captured and shared!
Data sharing is certainly on the rise, with Wal–Mart leading the way by providing tools and data on Retail Link which is available in 15 minute increments. Other retailers are following suit by providing point of sale (POS) data to their larger suppliers. However the challenge on the supplier side is gathering, cleansing and normalizing the huge volume of POS data and then turning that data into insights which can be acted upon.²
If every retailer provides data, but in a proprietary technology or format, it becomes very difficult to manage the data and almost impossible to get any cross–retailer insights.²
What are some of the common challenges that we will encounter?
Retail execution is a common bellwether for how well you and your partners are collaborating. What are your penetration numbers like? Are OOS’s under control? How are promos affecting sales lift? Be proactive with your partners: Look for ways to augment each other’s activities and improve upon any weaknesses.
The biggest challenge by far is effective retail execution, cited by 53 percent of our respondents. This is the one area that will require true collaboration between retail and supplier trading partners, particularly to avoid the finger–pointing that often occurs when something goes wrong. Trading partners must work together to attain their common goal: Having the product that the consumer wants on the shelf when the consumer wants it in order to increase sales.²
Seek out and participate in retail partners’ targeted merchandising initiatives against specific high–potential consumer segments (e.g. based on loyalty, shopping trip types, lifestyle etc…) …By tracking and benchmarking store–level merchandising performance among leading retail partners — address underperforming stores or eliminate them from merchandising events …and work with retail partners to replicate in other stores.³
What other benefits can I expect from Supply Chain Collaboration?
Future benefits of supply chain collaboration should not stop with simply improving sales. Customer insights are a key conduit for product line expansion and improvement too. As technology seemingly improves every day, collaboration becomes that much more attainable and important for survival (as your competition is likely engaged). Further, as you learn more about the customers you serve, you can approach more and more supply chain partners with valuable data to bring them aboard as well. Make sure that your solutions provider has the vision to make it happen for you and your partners.
Closely monitor retail execution with your MSO partner — Consider incentives for superior store performance. Also identify execution best practices and replicate in other stores.³
Traditional Data Management has decisions based on data that is old, batched, removed and inaccurate. Future Information Management has information in real time, with accuracy, and granularity — shared with trading partners.4
Customer insights are shared and leveraged with vendors and partners for new product development.4
Best Practices…
“Manufacturers
- Understand the trip mix for your categories and brands and alignment with key retailer partner trip strategies; analyze across international markets as differences are likely.
- Build collaborative marketing and merchandising plans with key retail partners.
- Pricing strategies should take into account the extent to which purchases are made by end–users vs. for others, which impacts price sensitivity.
- Products with a high purchase incidence on targeted trip types or that are complimentary to those products should be placed together on shelves and bundled in promotions and displays to drive traffic and basket size.
- Assortment should reflect dominant purchase patterns (e.g. Broad assortment for categories with multi–unit purchases on pantry stocking trips).
- Location within the store should reflect dominant trip types, as well as targeted trip types, where relevant (e.g. Front–of–store displays for quick trip items).
- In–store marketing plans should be built around the level of brand predetermination (e.g. focus on increasing purchase quantity where predetermination is high vs. influencing brand choice where it is low.
- Measure and monitor plan success.
- Track share across stores implementing initiatives above vs. those without.
- Monitor brand contribution in retailer partner’s achievement of plan goals including trip mix and basket growth, as well as category and brand share.
Retailers
- Identify new growth opportunities through shopper insight analysis.
- Work with leading manufacturers to assess end–user vs. purchaser dynamics for top categories and brands and resulting pricing, promotion and premium product implications.
- Identify the current and desired trip mix for your stores, leveraging industry benchmarks to assess opportunity; explore the potential of specializing in specific trip types.
- Work with leading manufacturers to determine trip mix for top categories and brands and brands and alignment with your trip strategies.
- Identify the level of brand predetermination across leading categories of brands and resulting in-store marketing implications.”¹
Some interesting market stats and facts…
What data do you leverage for inputs to the new product development process? (Manufacturers)
79% — Basic Research
76% — Competition Monitoring
68% — Consumer Focus Groups and Surveys
61% — Collaboration with Retailers
55% — Customer Complaints
50% — Ideas Sought from Employees
32% — Ideas sought from website
16% — Monitoring Patents
3% — Analysis of Blogs ²
What do you think will be the most important aspects to focus on to help you work better with your retail partners? (Manufacturers)
36% — Collaboration Business Planning
22% — Open Sharing Of Data
22% — Category Insights Focused On The Customer’s Context
11% — Improved Supply Chain Execution
6% — More Regular Interaction
3% — Data Cleanup ²
An information gap exists today between product arrival at the store and the point of sale. Mantis from Metaworks is focused on retail execution and helps bridge the gap of missing information that is so needed right now.
Call for further information:
Jim Dorey
Manager, Product Marketing
877–265–0075 x25
1 Marketing to the Multi–tasking Consumer — IRI Study, June 2007
2 Customer–Centric Merchandising — Consumer Goods Technology, November 2006
3 NARMS 2007 Return On Investment Study
4 Merchandising Best Practices — Consumer Goods Technology Webinar, May 2007
