The journey of SKUs from storeroom to shelf - a true tale of adventure
#planogram #facing #trade-promotion #OSA #on-shelf availability #Shelfreplenishment #brandvisibility #trademarketing #salesmetric #FMCG #brandactivation#generaltrade #moderntrade #mindshare
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Pardon the long headline, I felt like a Bollywood writer today. Believe me, the story of Shelf replenishment is as thrilling as some Bollywood movie. it’s filled with battles between brands, merchandisers, negotiation, manipulations.
What goes behind the scene? Let’s see.
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WHAT IS REPLENISHMENT
Replenishment is the process of re-ordering stocks. So let’s say you have 10 bottles of shampoo at shelf, and you sold 7 and now when you are left with 3 bottles, you re-order 18 bottles to meet the demand for the next week/month. You are replenishing your stock. (10, 3,18 - these no. would be based on your calculation of lead time, demand, order point etc. / Inventory planning).
You have placed an order of 18 bottles and they have arrived at your warehouse. Now the process of restocking the shelf is shelf replenishment.
PLANOGRAM AND MERCHANDISING LAYOUT
The no. of SKU on the shelf would depend upon the space you have. Planogram is a tool that lets you visualize what goes where, and in how much quantity is in your store. It helps you to plan the placement of SKUs in isles, shelf placement, % of sales vis-a-via space allocation of SKUs, brands etc. It helps you to strategically allocate space to different SKUs.
SHARE OF SHELF
WHY SOS is important?
“Jo dikhta hai wo bikta hai” Loosely translated - what visible is gets sold. While shopping in a physical store, the probability that you will pick up product front-facing is higher. That’s why brand battles between each other to have a higher share of shelf. Right place, right shelf position.
FACING
I remember asking my boss about the meaning of facing when I heard this term first time. Facing is the no. of identical SKU facing front on a shelf - facing out towards the customer.
So facing for Brand 1 is 3. and the Share of Shelf for brand 1 is 60%. It doesn’t matter how many SKUs of brand 1 are on the shelf, only front-facing SKUs matter while calculating the share of shelf.
As a brand manager, trade marketing manager, you have to negotiate with your retailers for higher SOS because that will improve the high-off take. Retailers assign the higher no. of facing to brands / products which are high in sales or profit margin.
Share this post with someone interested in trade marketing or offline marketing.
HOW DO YOU ENSURE PLANOGRAM COMPLIANCE OR SHELF ALLOCATION AS AGREED?
In the previous article, we have talked about Beat planning and route planning. Field executive visit retail stores and check if their products are visible in the stores. Self-reporting by retailers or field executives is unreliable. Also, it’s a time taking process.
But thank god, There are tools available in the market in the image recognition space. Field execute takes pictures, Through machine learning, accurate % of SOS can be calculated.
This will help you to identify any planogram execution gap and help you to achieve hot zone placement, on-shelf availability (OSA), and purity.
Today’s world is moving towards everything digital. Tomorrow it might be all online or a hybrid model of Offline-online. In virtual, you have unlimited shelf space. I equate Buy Box in Amazon as Shelf allocation. The items which are behind in the shelf are similar to the products that are on 2nd page, or the 3rd page of marketplace search result. (It’s like 1st first search result = virtual facing). So it is important to monitor your digital shelf as well. In future articles, I will touch upon the digital shelf and digital shelf metrics as well.
Additional points:
1. A large share of the shelf doesn't mean high take-off. If sales are not going up despite high SOS, that means you need to check other sales drivers - consumer preference, product quality, pricing, customer feedback etc.
2. Category managers within the company have to negotiate amongst themselves for shelf allocation. And that could be tricky.
Before I end this post, I have a request for my readers, do share this newsletter with your friends. Will help me to keep motivated and stay on track.
So that’s all for today. Goes without saying,
mindshare of consumers >> share of the shelf in the store
Have a great weekend :)