About the client
IDS is a leading national producer and expert in the quality of natural mineral waters, presented by Borjomi, Morshynska brands, and others.
The company has chosen the LEAFIO Shelf Efficiency solution to conduct a pilot project in merchandising for the Borjomi and Morshinska brands.
The LEAFIO Shelf Efficiency system uses advanced algorithms to place goods on shelves automatically, considering the parameters required by the client. By tracking data on sales, balances and other parameters with LEAFIO Shelf Efficiency, it is possible to regulate the place of goods and optimize the use of space on the shelves. This ensures that customers can always find the product they want and reduces the time and effort required by store staff to manage the shelves manually.
Challenges faced by the company
The manufacturer is interested in bringing sales by making its products stand out among its competitors. With the unification of planograms and their analysis, the company aimed to:
- increase profit by 1% in test stores compared to reference stores
- increase by 5% in unit sales
- increase in the share of category sales in pilot stores
- reduce the amount of time for the development of planograms.
Our team started the project with these goals in mind.
IDS worked closely with the LEAFIO Shelf Efficiency team so that the system brought tangible results quickly.
The project was implemented in 3 stages:
- Solution integration:
The solution was integrated with the client’s accounting system. Also, the data on the goods’ dimensions, sales and stores were uploaded.
- Work with planograms:
Since the manufacturer did not create planograms for each separate store but for a particular cluster, we suggested switching to format management of planograms.
A format planogram is a single planogram arranged for a group of stores united by similar parameters. When something is changed in the planogram, the changes are immediately reflected in stores to which it is “attached.”
Reference and test planograms in the pilot stores were selected so that the results could be visible at the end of the project. The test planograms were modified based on their analysis in LEAFIO Shelf Efficiency and sent for implementation at retail outlets.
- Analysis of the work done:
Comparison of the efficiency of reference and test planograms. We took data before and after introducing changes to the planograms.
The solution proposed by the team:
LEAFIO Shelf Efficiency’s customer support team already has extensive experience with various company requests. Therefore, after analyzing the goals of IDS Ukraine, we suggested they use the tools of a comprehensive layout analysis.
The following tools were used for this:
- ABC analysis of selected brands.
The correspondence of facings according to ABC analysis and the average stock in days were compared.
- Calculation of the rate of return.
We drew our attention to the maximum inconsistencies.
- Study of sales data per meter.
We focused on the maximum deviations from the group average.
After a thorough analysis and identification of improvement points, the following changes occurred in the shelf display:
- Moving displays of Borjomi 0.33l
- Application of vertical display for small-volume bottles (Morshinska 0.5l was dropped down the rack)
- Increase in facings of Borjomi 0.75l
- Extended the block Morshinska 1.5l. on the lower shelf and reduced the placement of large bottles
What are the benefits of such an approach to changes in the layout?
- Making decisions about changes based on analytics rather than relying on intuition or favoring one brand or another
- 85% reduction in time for creating one planogram. The process now takes 5-10 minutes
- Optimizing the use of purchased shelf space: reducing the number of passive SKUs
- Improving brand awareness and customer experience: a popular product appears more accessible to the buyer
Economic results of the pilot
- 3.7% increase in the share of IDS in the sales category compared to the dynamics of reference stores
- 3% increase in sales at test stores by sales volume (in bottles) compared to reference stores
- An increase in the share of small volume and main SKUs of Borjomi compared to reference stores with other retail outlets
Implementing the merchandising solution helped IDS create a more profitable display and improve assortment management, namely active and passive SKUs. As a result, the company achieved better customer engagement and made decision-making based on data.
Using the algorithmic technologies of LEAFIO Shelf Efficiency, IDS will be able to improve the position of bottled water brands steadily and remain a competitive company in the market.