Assortment Management for Retail "Flying underwear"


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Assortment Management in Retail:
 can the manufacturers policy be harmful to the company itself?

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Assortment Management for Retail "Flying underwear"

  1. 1. AssortmentManagement inRetail:can the manufacturerspolicy be harmful tothe company itself?The business model is based on the Ukrainian market in thelargest producers of FMCG sector analysis1
  2. 2. Since in Ukraine all theinformation about the goods isconfidential, the only productwhich is openly displayed isunderwear.72
  3. 3. 73
  4. 4. What are the usual discussionshappening these days, specially ina big company like“Flying Panties”?4
  5. 5. Our characters …MarketingdirectorCEO5
  6. 6. Our company does notfulfil the sales plan!Soon we will run withoutpanties, because theonly remaining thing leftis rubber!6
  7. 7. The company isdistracted by storm,sales are falling: foreveryone came testingtime – survive or beeliminated!Do you still haveplace, marketingdirector!?7
  8. 8. Unambiguously,because Im supercool!8
  9. 9. Previously we sold pantiesthrough advertisement but now thebudget is cut, and you need to findother sales opportunities forimprovement!Do you have any ideas?9
  10. 10. Without thebudget !? Thereare some ideas …10
  11. 11. First, I will wake up“sleeping” clients – Also Iwill increase sales toclients, who bought little!11
  12. 12. Why they willbuy more?12
  13. 13. I mastered discount art!Either it will workor . . .One out of two!13
  14. 14. First standard advice – we will wake up“sleeping” clients or we will sell themmore, who bought little!14
  15. 15. In other words …Value more important than price, we will sell to her cleanpanties!15
  16. 16. Second idea – we willknock and for us the doorwill open. We will look fornew segments andmarkets. MarketingClassic! We will “Collect”new clients!16
  17. 17. Will they give you?17
  18. 18. For me? Yes.IF we will have moresellers! Either it will workor… One out of two!18
  19. 19. Second standard advice– seek new clients.“Blue Ocean” Strategy – lets go there, were are nocompetitors. Seeking niche.19
  20. 20. “Blue Ocean” Strategy – lets go there, were are nocompetitors. Seeking niche.20
  21. 21. Third idea – tobe Creative!21
  22. 22. How so?22
  23. 23. Boss, behold, here are for you 2 outof 60 free or nearly free trade pushtechniques: here is the new way tosell old products!23
  24. 24. Third standard advice - to find newcreative ideas. For example: Life isgoing on, but panties sings!24
  25. 25. 25
  26. 26. Or crazy PR event“Fishnet underwear”26
  27. 27. 27
  28. 28. What happens, if companies listensthose advices?5 suicide ways for marketing director:1. The first advice destroys profitability, because whendiscount is given to some companies then later all otherwill start to require it to;2. Second advice increases cost, because it requiresthe recruitment of additional sales agents and all so“to arm them”;3. The third advice is proposing new ideas, whichrequire investment and ROI from them are in the fog.Do you need to continue with the advice if thecore problem will stay the same?28
  29. 29. Sales continue to fall...Wait until autumn, or willyou give the results hereand now?!29
  30. 30. . . .and some underwearwe have for half ayear. . . How to reach thesky, and make theclouds rain in money?30
  31. 31. Пробовали акции,давали хорошуюскидку…Не помогло!Yo, I know!Shelves Optimisation!Cheap analogues!We will give the plan,we will change salesteam and we will ropethem with real salesresults!!!31
  32. 32. But boss, we havealready changed 3teams in 3 regions,but sales fell evenmore…32
  33. 33. And so sellersbonuses are tied upto the panties andshelves... I have noclue what to do andto whom to tie!33
  34. 34. Ana-logically!34
  35. 35. Work with HR. Undressing thesellers, ukrainians are worldchampions.No fixed payment at all!Ukrainians versus World: 4:2.35
  36. 36. Работа с персоналом. В раздевании украинцылучше всех!Ukrainians versus World: 4:2.36
  37. 37. Boss, I have an idea!We will go to the storeand we will show howto fight with them!37
  38. 38. How?38
  39. 39. If we are going to go, we will have toget bigger negotiating muscle! This isa technological approach! It is socalled harsh negotiation phenomena!We will use the opponents scriptbreaking tactics!39
  40. 40. MAXIMA40
  41. 41. What isgranted?41
  42. 42. Your shelf is kind empty!You don’t have veryimportant assortment!Eithersomethinghappens,or...One out of two!42
  43. 43. So you are saying, that I canget panties that I don’t have?43
  44. 44. Underwears that are gone:Top Moversguarantee 80% of sales, they are needed to everyone:DealersDeputysElectriciansSoldiers44
  45. 45. That’s how looks clients who aremissing. . .45
  46. 46. You can get it. But it isnecessary to optimize theassortment, You need toorder the priority panties!46
  47. 47. Priority products, up to marketing - they willguarantee the future!!!!!!47
  48. 48. My whole family already have this priorityproduct! Even I wear 2 underwears at thesame time! I worked hard to clean themfrom the shelf!48
  49. 49. This is my lovely daughters photo!49
  50. 50. Crisis is outside, we stillneed to make sales!50
  51. 51. I wont sell any newstuff until I will sell theold products that youobtrude!51
  52. 52. Here are they: Slow MoversSlowly sold products52
  53. 53. Here are they: Out MoversProducts which nicely reflects thetrading history and no one buys themanymore. . .53
  54. 54. The fact is we didn’t foist, butyour “Masha” (shop manager)ordered!54
  55. 55. This is a headache.Perhaps the salesagent gave bonuses inpanties to the Masha,so she ordered more. .Agent done his job,Masha got her“bonus”, and whatshould I do?Buyers stopped goingto the shop,underwears theyneed I don’t have!Either they don’t likethe color or the coloris bad.55
  56. 56. So say to them – buy what is here. . . tellthem they can’t see underwears underthe cloths, whats the difference whatcolor they are? Panties, is a product thatcan be substituted. . . Or one out of two!56
  57. 57. Men product substituted forwomen57
  58. 58. 58
  59. 59. Women product substituted formen59
  60. 60. 60
  61. 61. We will assign toyou the bestmerchandisers,which will be ableto explain topeople.61
  62. 62. 54We will give you newstuff too – cheapcrisis panties!For real it’s a good stuff, justtake as much as you can! Notless then EURO pallet! I giveyou my word. Or. . . one out oftwo!62
  63. 63. New MoversGoods, that are introduced in to assortments63
  64. 64. 64
  65. 65. New Movers for mensGoods, that are introduced in to assortments65
  66. 66. Yeah, you know, wewould like to bring toyou and top movers…but, you know, howour logistic andproduction works .When I will get it inmy warehouse I willbring you first!66
  67. 67. When you will solve your damnproblems come back. Tomorrow“Carlsperg’s” panties will arrive,may be they have what I need?!67
  68. 68. I don’t get it... For some crazy reasonassortment and shelf optimizations forall Ukraine and for this shop doesn’twork?68
  69. 69. Now I will show where are we looking• First we are analyzing main businessprocess, we check how well the TOPclients are served with TOP assortment69
  70. 70. What do you need for that?1.To identify TOP clients by sales2.To identify which products are in TOPassortment by regional sales3.To know analysis methods that allows youto calculate lost sales4. And of-course not to forget your head athome!70
  71. 71. We check if all top moversare in top shops. . .. . . and this is what we found:71
  72. 72. Data analysis and during shelfobservation time we found:• Regional TOP assortment in TOP shops wasdisplayed between 36% and 60%. That whypotential to increase sales was from 40% to 56%.• However, at the same time there also was lostsales, which fluctuated between 16%-25% and thusin certain circumstances, when producer had hisfocus team for work with assortment and wholebunch of merchandisers!!!• And at the same time from 12% till 36% wasoverstock, though they havent been delivered thewhole month, but usage was daily!72
  73. 73. Current  MarksTOP ProductsMarked in Black arenot listed in theshops assortment atall.TOP Products markedin red are inassortment, but atanalysis time theywerent on the shelf -OutOfStockTOP Products markedin blue which werentdelivered during themonth but they arestill in the shop.(OverStock)73
  74. 74. Assortment surplus, shortage andpotentialShop AddressAssortment74
  75. 75. How is it possible that the most wantedproducts are not in assortment at bestshops?Life without panties?75
  76. 76. Rules, which affect shortage of neededproducts:1.Planogram creation policy (one planogram for 1region or maybe for the whole Ukraine for one year);2. Priority products policy (in the best shelf places putproducts you want to get rid of, not what the consumerwants to buy);3. High margin products get priority, even so the finalbenefit might be little;4. Business way: employees works to fulfill sales planbut not for clients (shelfs) service.76
  77. 77. And other rules, aggravatingsales:1. Retailers belief that product substitution fullyreplace products that are short (shop dont needto order sold products till they have substitution).2. To put products which are sold-badly, whichfront look is damaged or the valid time is over inthe best place.3. Belief, that does not need to order soldproducts until stock of product (or group!)decrease till minimum (most of the time it is 0)4.- etc.77
  78. 78. 78I see we have a veryinteresting situation!Apparently we aremaking oneplanogram for thewhole Ukraine. Butusage in regions andeven in separateshops is quit different!78
  79. 79. 79yeah, and during the year everything ischanging, during the winter we need warmpanties and during the summer light. . .79
  80. 80. 80What if competitorscreates newproduct...80
  81. 81. So boss. . . You think we aredealing wrongly of what andhow much of it should be in theshelfs?81
  82. 82. You know colleague. . . if only wecould review the planogram in everyshop, and knowing what and howmuch of it are exactly are sold. . .82
  83. 83. 83If your are interested in how to improve your sales,how to find the solution to control your shelfspaces, how in three months to get real ROI fromyour investment in to changes, you need to contactus.We can reach fast results, we have real KnowHow, real supply chain management experience(for Production, Distribution and Retail) andknowing how to be mediators between productionand retail.83
  84. 84. Author of “God, Quantum physics,Organizational structure andManagement style” can order a book,workshop, or lecture, orjust a dream Darius  Radkevičius  84
  85. 85. www.god-­‐physics-­‐management.com4485