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Shelf smarts

Shelf smarts. Leveraging assortment, price and promotion to drive category performance. Retail sales trends in US. are flat. #Consumer360. Driving efficiency is critical to success . Sales programs (shelf placement, feature, display and pricing tactics) are the second biggest spend .

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Shelf smarts

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  1. Shelf smarts Leveraging assortment, price and promotion to drive category performance

  2. Retail sales trends in US. are flat #Consumer360

  3. Driving efficiency is critical to success Sales programs (shelf placement, feature, display and pricing tactics) are the second biggest spend COGS44.1 Sales Programs 19.0 Dist 7.6 Adv 7.5 R&D1.4 #Consumer360

  4. WE’RE NOT MANAGING ASSORTMENT WELL Declining velocities against SKU proliferation Scantrack: xAOC 2013 vs. 2010

  5. Applied analytics drive ASSORTMENT performance #Consumer360

  6. MATCH PRICE TO MARKET CONDITIONS EXPECTATION REALITY 6

  7. Promoting more but getting less Promotion Frequency and Trade ROI Trend – 2012-2013 Trade ROI Promotion Frequency #Consumer360 7

  8. Only 10% of promotions are profitable Products ranked by Trade ROI(One Category – in Grocery) $1 is Breakeven $2 Breakeven $1 $0 -$1

  9. Some Manufacturers outperform peers Trade ROI by ManufacturerSales per Dollar Invested - $1 is Breakeven $1 Trade ROI $0 Negative ROI (<$0) Margin return on trade ($0 < ROI <$1) Positive return on trade (>$1 ROI) Best in Class (top 5% trade ROI)

  10. categories perform differENTly by segment Trade ROI by SegmentSales per Dollar Invested - $1 is Breakeven $1 Trade ROI $0 Negative ROI (<$0) Margin return on trade ($0 < ROI <$1) Positive return on trade (>$1 ROI) Best in Class (top 5% trade ROI)

  11. Get your balance sheet in order Product Assortment Pricing Promotion Management To enable winning promotions Get the right products on the shelf… At the right price… #Consumer360

  12. Case study: integrating assortment, pricE and promotion #Consumer360

  13. Let’s look at it in action Classic hi-lo retailer Only a few major brands $150 million category, flat sales for a couple years Over 400 UPCs 2 brands = 32% of Sales #Consumer360 Each brand has multiple sub-brands

  14. Retailer Region 10 Rationalize Develop Rationalize Develop 16 sub-brands 1 - 7 Rationalize Develop -2 4 BREAKDOWN 10 Sales Rate ($/store/week) New Sub-brand -10 15 0 10 Sub-cat 3 0 0 Squeeze Nurture Nurture Squeeze Squeeze Nurture 0 Incremental Value ($/Store/Week) #Consumer360

  15. Fixing assortment DRIVES topline growth Changes ( Abs. $MM)

  16. thresholds put significant volume at risk Sales Rate Index by Regular Price Point

  17. Current hi-low strategy with holiday focus Key holiday windows $3.85 Regular Price Heavy focus on Holiday Discounts Holiday timing Feature TPR EDLP spend Base #Consumer360

  18. Optimized “hybrid” strategy uses EDLP + Events Key holiday windows Use EDLP spend to bring regular price to $3.49 (below Threshold) Focus TPR & Feature below $3.00 (on & off Holiday) Use EDLP spend to bring Regular price to $3.49 (below threshold). Focus TPR & Feature below $3.00 (on & off Holiday). Holiday timing Feature TPR EDLP spend Base #Consumer360

  19. Hybrid trade strategy drives win-win Changes ( Abs. $MM)

  20. Let’s think about this as a system Product Assortment Pricing Promotion Management To enable winning promotions Get the right products on the shelf… At the right price… #Consumer360

  21. Fixing the baseline supercharges promotions Display provides 200% lift. Same Display effectiveness drives 100 more incremental units due to increase in baseline Total 450 Incremental 300 Cannibalization -30 +100 Total 300 Incremental 200 Cannibalization -40 +50 #Consumer360

  22. Win on all metrics: 1 + 1 > 2 +9.4% +6.7% +28.2% +3.9 +1.0 Manufacturer Profit Manufacturer Gross Revenue Trade Spend Retailer Profit Retailer $ Sales

  23. Integrated planning uses insights to drive demand #Consumer360

  24. You need to know where you stand High incrementality would lead to different actions than low DEVELOP Key category driver Increase items • RATIONALIZE • Saturated; restricting category growth • Make sure you have the best items in distribution fast Distribution (# Items) Avg Sales Rate Helps maximize category sales Review slow mover for de-listment NURTURE • Detrimental to category performance • De-list worst performers • SQUEEZE slow negative positive Consumer Response to Assortment (Incrementality)

  25. Successful trade strategies by category Best in Class (top 5% trade ROI) Remaining category #Consumer360

  26. Get your balance sheet in order + = Product Assortment Pricing Promotion Management To enable winning promotions Get the right products on the shelf… At the right price… #Consumer360

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