Data Foundation and Category Management
Background
A major home video distribution company sought Systech’s assistance to bolster their category leadership for the DVD category in the retail scenario. They required retailer specific solutions and comparable insights across many retailers and markets.
Objective
The objective of the Category Management project is to provide the data foundation, both strategically and technically, for the overall Category Management Application and subsequent releases, the better forecasting and allocation of new releases, and fixture level assortment planning and merchandising. The approach targeted the most influential variables within a category manager’s span of control: Adjacencies, Aisle Flow, Planogram Configuration, and SKU Assortment in an effort to simplify the consumer shopping experience.
Challenges
Data
- Highly disparate sources of data made it difficult to get a holistic view
- Lack of visibility into financial performance, channel sales and inventory across 13 territories outside US
Incentives
- Category management functions between the retailer and the distributor across the globe was not aligned
- Different promotions and plannogramming at various retailers across different locations made it difficult to perform an efficient analysis
Process
- Standardization of master/reference data across multiple categories
- Required definition of goals, metrics and incentives
Technology
- Required timelines and quality of analysis on large volumes of granular data
- Needed access into significant number of resources to crunch data, gather insights and make it actionable
Solution
Systech worked with the client to develop Enterprise Data Architecture to Integrate Data and applications residing in 13 different sources across many countries. Informatica was configured for the ETL process to extract data from source & populate the data mart. Systech’s seamless data exchange through automation, resulted in minimal manual intervention. Conversions and interfaces were also built from existing and legacy systems to a flexible platform, and migration was managed without any disruptions to the users. To make the deployment efficient, Systech adopted a Phased Approach (by territory)
Systech also designed, developed & implemented the data warehouse, the reporting & Dashboard applications to provide information on Sales, inventory, promotion, assortment planning, merchandizing, market share by retailer, by SKU, by time, by region using MicroStrategy. Defining key business drivers and KPIs to achieve deeper insights into the product was also facilitated.
Product-specific configuration principles were developed to be implemented when new DVDs were introduced into the strategic assortment structure. In addition, Systech developed a fully automated assortment tool that integrated configuration principles with market forecasting to optimize space allocation on an account level.
The category management application was developed in an onsite – offshore model.
The underpinning category strategy set by Systech was to increase footfall into the category, by improving relevance, as well as to simplify the customer shopping experience, through improved layouts, product range segmentation and product presentation.
Results & Benefits
Assortment Planning and Merchandising
- Assisted in determining which products should be in distribution at specific stores during specific time frames
- Assisted in determining which, and when, to discontinue an item
- Helped the buyer determine which assortment of products will best maximize and capitalize on seasonal changes and events like holidays.
- Matched consumer demographic and psycho-graphic traits to store level assortment
- Determined incremental gain obtained thrrough cross selling synergy, or diminished sales resulting from cannibalization
- Helped understand correlations between qualitative activities, such as fixtures and displays, and quantitative results such as sales dollars and unit sales
- Helped understand cross-merchandising patterns and opportunities, such as selling DVD’s near DVD players
- Assessed planogram performance in maximizing store sales and/or category profits
Market Share Analysis
- Assisted in determining the performance of retailers and products across different geographic areas such as the West coast, Midwest, Los Angeles, etc.
- Evaluated the performance of retailers and products across different channels such as grocery, mass merchant, specialty
- Assisted in ranking and assessing the performance of vendor sales for specific products across retailers
- Helped compare the retailer’s sales performance against another part of the market, or across the market as a whole.
- Assessed the opportunities of expanding the retailers’ footprint into new markets, categories, or channels.
- Evaluated Market Share across studio, brand, genre, format, top selling DVD
Sales and Inventory Analysis
- Assisted in analyzing POS sales performance based on product, vendor, store, division, or time frame
- Evaluated sales, profit, and distribution share across the retailer categories
- Assisteded in ranking, contrasting, and evaluating the sales, profits, and related performance of specific products across brands or franchises
- Helped understand how to maximize sales performance based on the physical store layout and store type
- Assisted the retailer in managing out-of-stocks, as well as assessing opportunity cost
- Helped the retailer manage inventory capacities at both the warehouse and store level
- Assisted in planning initial forecasts, as well as replenishments order requirements
- Evaluated the impact on category profits by analyzing shrink and loss prevention
- Helped better manage the inventory process by monitoring the product movement
Promotion and Event Analysis
- Assisted in determining increases or decreases in sales resulting from promoting two or more items together
- Evaluated the sales, profit, or distribution or a new item launch or re-priced item
- Determined the impact to product and category performance in conjunction with the price elasticity
- Assisted in assessing the performance of specific retail promotional tactics and combination of Ad Price, Display, Price Points, etc.
- Assessed the performance of special events such as a sporting event tie-in, celebrity store signing, etc.
- Determined the performance of special pack configurations, such as dual packs, premium packs, special editions, limited editions, etc.
- Understood the impact and value add of promotional themes and circular themes
- Assessed the impact of product placement in an advertisement or Sunday circular
- Compared and analysed retailer promotional price point against competitor promotional price points
The majority of concepts developed through this project have been implemented by retailers, leading in all cases to double digit improvement in performance for both the DVD category as a whole, and the whole DVD distribution enterprise.
