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

Basket

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

Locations:

15

Assortment:

5,000 SKUs

Years on the market:

11

The Basket chain consists of 12 convenience stores with a sales 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 their distribution warehouse. 

Challenge: how to solve the resource problem when scaling

When scaling a chain, the main challenges are human resources, knowledge, and time. The main thing is not only to establish a technical staff but also to set up the correct interaction process. The 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:

  • Increase human resources to resolve the issues;
  • Automate the processes associated with merchandising.

The company has chosen automation to solve their current problems. They made an essential software solutions market snapshot. It was important to balance price and value. The software was to help design the arrangement of goods and to help build a decision tree. It was necessary to see not only the work of the headquarters but also that of the operating stores involved in the process. The LEAFIO Planogram Optimization system provided the solution.

Process: how to properly organize a merchandising management system

An external expert was involved in this project since it was a matter of time and money. The company was not ready to invest a significant amount of internal resources to build and run the system. Management considered that dynamics is much more important. Basket was not willing to risk a trial and error approach with the project. 

“I think it’s better to lay the proper foundation right away and build everything else on it. So, honestly, I would advise getting an expert opinion before you start to build any architecture.” – Maksym Holovakhin, Retail Operations Director of the Basket chain

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 coming directly from the stores. After all, the on-site staff usually knows better how to make a display in reality.

“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.” – Maksym Holovakhin, Retail Operations Director of the Basket chain

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 also important to monitor quantitative indicators in the chain. Together with the developers of LEAFIO, Basket made another improvement for uploading data from the system. Now the headquarters can see any information at any time: 

  • what amount of a particular product is presented; 
  • what shelf the product is 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 the Basket Company, a lot depends on customer behavior. Products sold from the shelf is what makes for a qualitative assessment of the chain. Of course, the aesthetic component is also involved in this, and the chain is also working with the LEAFIO system on this. 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?

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 Maksym Holovakhin.

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

When choosing a system, it was important that the vendor's team supported, developed, educated, prompted, and provided access to the software. That's what I found with Leafio. The system is flexible and highly configurable. This means that every business process can be customized based on the analysis of current data – designed, implemented, analyzed, a continuous cycle of improvements. With Leafio, we now have just one person ordering in every product category.

Basket
Basket , Commercial Director

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