Grocery

Basket

How can retail chains improve the merchandising process without losing resources when scaling? Basket chain case

Basket

A local retail chain with modern and stylish stores. The company operates according to cycle stock procedure

Locations:

12

Trading floor:

250 sq. m up to 500 sq. m

Assortment:

5,000 SKUs

The Basket chain consists of 12 convenience stores with a trading floor of 250 sq. m up to 500 sq. m. The range is about 5,000 items. The company operates according to cycle stock procedure. This means that there is no or not much stock in stores. The stock on the shelf and the supplier product delivery leg are calculated so that there are enough goods on the shelf until the next delivery. This is especially true for goods that are shipped from your own distribution warehouse. 

Challenge: how to solve the resource problem when scaling

When scaling the chain, the main challenges are human resources, knowledge, and time. The main thing is not only to collect a technical staff but also to set up the correct interaction process. Basket Company tried different systems, even their own best practice in the field of merchandising. But over time, the management decided that they needed a separate system, which would solve not only the mechanical planogram drawing issue but also the automation issue. When scaling, a business has two options:

  • To increase human resources to close the issues;
  • To automate the processes associated with merchandising.

To solve current problems, the company has chosen the path of automation. They made an essential software solutions market snapshot. It was important for the price and value to converge. The software was to prompt how to arrange the goods and to help build a decision tree. It was necessary to see not only the work of the headquarters but also the bottom side, that is, the operating stores involved in the process. The Leafio Planogram Optimization system became the solution.

Process: how to properly organize a merchandising management system

An external expert was involved in this project since it is a matter of time and money. The company was not ready to invest an incredible amount of internal resources to build and run the system. Management considered that dynamics is much more important. Cut and error is not the path that Basket chose. 

“I think it’s better to lay the proper foundation right away and build everything else on it. So, honestly, I would advise starting building any architecture with an expert opinion,” Max Holovakhin, Retail Operations Director of the Basket chain, said.

Result: how to work with the new system and use its potential

The company notes that with the introduction of the Leafio system, all processes related to merchandising, assortment, and communication between the office and stores have changed a lot. We even managed to touch upon the renewal of the product range: work with orders, planograms, and approval of goods. The operating staff, working in the stores, began to receive more feedback from the central office and began to be involved in the merchandising process. Now the management can hear the right opinions formed at the local level. After all, the staff usually knows better how to make a display.

“No matter how good your planogram is built in the office, there are always some subtle aspects on the ground. Due to the Leafio system, we have clear feedback. We can quickly respond and change something. All our communication has changed a lot,” Max Holovakhin, Retail Operations Director of the Basket chain said.

Any system is just a tool, not a “magic bullet”

Basket initially built work with the system in such a way that the emphasis was not only on the work performed. It was important to monitor quantitative indicators in the chain. Together with the developers of Leafio, we made another improvement for uploading data from the system. Now the headquarters can see any information at any second: 

  • what amount of this or that product is presented; 
  • what shelf is the product on; 
  • in which store. 

This fundamentally changes the interaction with suppliers - during any negotiations, you can immediately turn your cards over and show the product participation interest in any context.

When it comes to the effectiveness of planograms at Basket Company, a lot depends on customer behavior. The products sold from the shelf - this is what make for a qualitative assessment of the chain. Of course, the aesthetic component is also involved in this, on which the chain is also working via the Leafio system. The Basket employees make sure that the shelves look beautiful, and the products are displayed on them according to the defined rules.

How are planograms monitored?

During the week, the merchandiser accumulates changes and uploads them to the store once a week. The store, in turn, has an obligation to set changes according to the planogram within a certain period. And then the central office can control this process. The chain has external auditors who go shopping and check the online planogram with its actual implementation. Evaluating the results of the work performed, you can clearly determine how well the store has fulfilled its merchandising duties.

Planograms created at the headquarters are always available in the system and mobile application. You can track the process, get feedback and make some improvements any time you like. This facilitates the whole process of updating and proper display.

“You can only manage what you can count. Thanks to Leafio, we can precisely calculate the assortment that has not yet hit the shelves and determine which dairy products space ratio is occupied and which is not yet. And these quantitative indicators were transferred to KPI,” said Max Holovakhin.

Now the Basket retail chain is at work on increasing brand awareness. It is going to enter new markets, attract new audiences and update the range.

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