Planograms: Planning and implementation

Planograms aim to optimise article availability and thus specifically stimulate sales. The term planogram refers to two aspects: on one hand the actual merchandising, i.e. which articles are presented on the sales floor and how, and on the other hand, the detailed quantities for individual colors and sizes in order to meet customers’ demands in the best possible way.

Ideally, merchandising and planogram go hand in hand: customers are inspired by the form of presentation and then, their desired product is available in the matching size.  The reality, however, most often paints a different picture.

Planogram – Merchandising

Planogram – Quantities and Priorities

Visually appealing and available in relevant sizes

Breaking this down, there are two questions that retailers face: 1. How to define a planogram for my stores with a suitable size distribution? and 2. How can we implement an efficient refill process such that the plan is properly executed?

With AI (Artificial Intelligence) and RFID-based processes, Detego InStore helps to answer both questions. Since the manual maintenance of the planogram per store can be enormously time-consuming, we rely on machine learning procedures to define a precisely optimised size distribution for all articles across the store. Not only does this save an enormous amount of planning time, but also addresses the ongoing dynamics in individual stores. The self-learning system adapts to possibly changing conditions and continuously optimises the plan.

During the operational process in the store, Detego InStore also supports the store personnel at several occasions: The software offers two parameters that provide information about article availability at any time and therefore represent important KPIs:

  1. On-floor availability: The percentage of all available articles that are currently displayed on the sales floor
  2. Planogram compliance: Provides information on how well the planogram with its individual size distribution is implemented on the sales floor

If one of the two parameters fall below certain threshold values, store staff needs to action: In addition to classic ERP systems, Detego InStore offers a finer level of granularity in the stores, by telling store staff that certain articles are available in the backroom but not on the salesfloor and therefore need to be refilled to comply with the predefined planogram. Retailers benefit from a complete process for the planning and implementation. Another advantage: Refill advices in the app are sorted such that the search in the back room is made as efficient as possible by minimising walking routes.

Shelf space is used for top sellers and is not wasted on sizes that are rarely or never bought. With its self-learning components, Detego InStore makes a suitable proposal for all sizes and facilitates implementation in daily processes – including relevant KPIs for measuring performance. And if a certain size is not available in one store, Detego InStore offers an exact inventory view of surrounding stores – ready for click & collect.

Benefits for retailers:

  • Individually optimised planogram per store
  • Efficient use of shelf space according to bestsellers per store
  • Guided processes: from planning to refilling
  • KPIs to provide insights on operational excellence per store – in real-time

Benefits for consumers:

  • High on-floor availability for the locally popular sizes
  • Positive customer journey
  • Overall increased article availability through exact inventory data on the entire store network – including reservation options

“By optimising the sizing profile of individual items for each store and greatly simplifying the in-store refilling process, we provide retailers with tools that make it easier for them to plan and implement optimum product presentation and thereby help them to boost their sales.”

Dr. Michael Goller – CTO Detego

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The hype about cloud-based systems continues: There is hardly a software system that has not stepped into the cloud. Many applications, especially in the business environment, rely on an “infrastructure-as-a-service” or “platform-as-a-service” model, where existing solutions are simply hosted and operated by a large cloud provider.

In addition, there are true “software-as-a-service” solutions that are available for a monthly fee with  guaranteed performance.

Regardless of the actual model chosen, the cloud offers enormous advantages for retail companies, especially with respect to RFID-based inventory management.

Advantages of inventory analysis in the cloud

  • IT infrastructure does not have to be operated and maintained by the retailer: Focus on core business
  • Lower costs: in comparison to individual operations
  • Flexibility: For store openings and closings, and even for the operation of pop-up stores
  • Easier integration with existing systems: standardised, open APIs

Smart processing of data at scale

Compared to traditional inventory management, an RFID-based approach brings one thing in particular from a system perspective: More data. Frequent, even permanent and real-time stock takes and tracking of each individual article movement generates more data than before. More data is not necessarily an advantage, and must be processed and stored somewhere. In addition to the – almost unlimited – storage space that cloud-based systems offer, here is another decisive advantage: On one hand, sufficient computing capacity is available for complex and -intensive processing steps, which can be activated simply and automatically “when needed” (“scaling up” and “scaling out”). On the other hand, in cloud-based systems, the application of modern algorithms such as machine learning methods are significantly simplified in order to actually benefit from operational data.

What does data reveal?

This gives retailers access to a broad portfolio of analytic tools, algorithms and necessary infrastructure, without having to become a specialist in the implementation and operation of complex systems and tools for large-scale data analysis. Sounds abstract? The following examples show concrete use cases:

Analysis of the performance of individual articles:

While classical analysis is mostly limited to sales data, new technologies allow far deeper insight into what is happening in the store. With RFID-based inventory management, in addition to sales data, other parameters can be precisely measured and correlated. Derived from this, influencing factors are used to determine in which store the sales probability for certain articles is actually the highest. What is the result of the analysis? Easy to follow recommendations for the sales personnel in the store in order to make the most of the potential of the sales area. Sales personnel receives notifications directly on the smartphone which is processed as soon as possible.

Raw data from the store network – Derive meaningful KPIs – Processing and feedback to the store

Evaluation of periodic inventory data:

The classical stocktake: Not very popular, cumbersome and lengthy – still needs to be done 1-2 times per year for audit purposes. However, an RFID-based system makes it very easy. Reason enough to increase the frequency for better data accuracy. This quickly results in several thousand data records per year. Nevertheless, these datasets contain far more information than just the ordinary inventorydifferences that need to be accounted for in the ERP system: A targeted analysis quickly identifies trends about problematic items, allowing timely countermeasures. As far as the operational process is concerned, smart algorithms can raise additional potential: The classic approach of “one RFID-based stocktake per week” is not necessarily optimal or necessary in every store. Detego InReports suggests the ideal time for a stocktake and can even predict how many people will be needed to complete the process in the desired time. It provides support where it makes sense.

 

These scenarios show how current methods and algorithms from the world of data analysis, when cleverly applied to inventory data, can show operational benefits.

 

While this might sound simple, practical implementation is far from easy due to the amount of data that needs to be processed and complexity of procedures used.

 

Specialized systems that leverage benefits of the cloud can help address this and gain data driven insights rather than pure intuition.  This is accessible in a scalable infrastructure that comes with predictable cost within a simple SaaS model.

What needs to be taken into consideration by retailers

Aside from all the advantages, there are also aspects in the use of cloud-based systems, which requires rethinking and possibly even making changes to the existing infrastructure.

 

Infrastructure

Make sure your infrastructural equipment is bandwidth-rich to enable you to run store applications in the cloud with satisfactory performance and to adequately size Internet uplinks for today’s and tomorrow’s applications.

 

Data collection in the store

Make sure to install optimal WIFI in your stores. That is what customers expect nowadays. Not only do customers interact with their smartphone while shopping, persons accompanying them do so too. That is an aspect which should not be underestimated in order to keep customers in the store and offer new services.

 

„Shared“ versus „Dedicated“-Cloud-environments

Many software packages allow operation either in a so-called “shared environment” where resources are shared with other companies, or in a “dedicated environment” which is operated exclusively for a particular customer. Both variants have their advantages and disadvantages. While “shared environments” are generally cheaper to operate, there are some dependencies, e.g. in terms of performance. “Dedicated environments” usually offer more flexibility but also entail higher costs.

 

Lock-In to a Cloud-Provider

Cloud software packages that can be transferred at any time from one cloud to another if necessary are advantageous. This bypasses a long-term dependency on one of the classic cloud providers, e.g. Amazon, Google, Microsoft and Co. It is recommended to make sure that the software you use is not dependent on a particular provider, but can also be operated flexibly with another provider.

Conclusion

Your inventory data contains information going far beyond the typical inventory differences or what ordinary sales data can tell you.  Smart analytics and state-of-the-art processing helps you to unlock this potential – a new way where cloud-based systems flex their muscles.

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Nowadays, fashion retail is not restricted to one single sales channel only. Fashion retailers rather provide their customers with a whole variety of different channels. Hereby, the customers’ expectations are clear:  they demand a smooth shopping experience across all channels. Reliable stock information builds the basis for any satisfied omni-channel customer. A successful “one-face-to-the-customer” strategy can only be achieved with a real-time view on the overall stock; regardless of whether it is being checked in the store, in the franchise store, at the wholesaler or in the online shop. The resulting 100% article availability across all channels guarantees a satisfied customer who may buy again.

Which solution fits everyone?

The one-fits-all approach represents a scalable sizing concept within the fashion industry. Transferred to the IT landscape, the challenge is to integrate all channels in a way that the customer perceives them as one single entity.

Integrated system landscape: Real-time stock view for retailers as well as customers.

Why integrate all channels?

  • Brand stores
  • Stores of franchise partners
  • Concession stores
  • Online shop

Customers do not distinguish where and from whom they buy: in the brand store or its online shop, in the department store or in a franchise store. Customers are looking for a specific article and expect a certain price and quick delivery.

System landscape requirements:

  • Real-time view on item-level
  • Constant updating of involved systems with regards to stock movements
  • Central stock view (for stores, franchise partners, wholesalers) on item-level (real-time) as a single-point-of-truth
  • Access to stock information for all sales partners in real-time
  • Real-time information on item-level also for customers
  • Real-time analysis of article movements, aging structure, replenishment performance to optimise article availability

Analysis for everyone

Of course, an evaluation of individual sales channels can be useful to determine its success. However, only an analysis of all the channels, taking into account the entire branch network and all sales partners and online sales, is decisive for the assessment of the collection-, product range- and, above all, the omni-channel success.

Detego InReports

Consumer Engagement for everyone

Successful labels roll out their new collections in a multi-channel strategy across all sales outlets.  In addition, social media as well as viral campaigns inter-relate with one another. The aim is to offer various touchpoints for customers to interact with brand and articles. A stronger relationship with the brand and more time spent – in the store and in the online shop – lead to more sales.

Detego offers fashion retailers a reliable platform for inventory management, analytics and customer engagement across all channels.

Platform advantages:

  • Scalable: Just as your business requires. Start small. The platform expands itself.
  • Modular:  In-store management, analytics & reports, consumer engagement – choose what is necessary.
  • Flexible: SaaS for switching on and off specific services as needed.
  • Manageable: All services on one single platform. Accessible for everyone.
  • Economical: Investment protection for the seamless integration of existing systems.

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