October 3, 2007

BrainTrust Query: Why does customer-centric planning fail to reach store level?

By Shaun Bossons, Executive Vice President, US, Galleria Retail Technology Solutions

Retailers
say they are implementing customer-centric strategies, but how can they achieve
the customer focus they’re looking for when they fail to follow through with
execution at store level?

Today, retailers are investing millions of dollars
in optimization solutions for price, promotion, mark-down and computer assisted
ordering. These solutions allow the retailer to plan at a far more granular
level than ever before, even down to store-specific levels.

However, the majority of retailers still issue a generic merchandizing strategy to their stores – the planogram. Leading retail analysts suggest that compliance at store level is below 40 percent; this suggests the possibility that 60 percent of strategic decisions made at head office are being ignored at the shelf.

Example: If a computer assisted ordering solution recommends 16 units of
stock for a product, but the store receives a generic planogram, showing 12
units, then four units will be left in the back storeroom. This generally leads
to shrink as products are lost, or replaced with the more recently delivered
products. In addition, the lack of space/units being allocated on the shelf
results in availability issues and lost sales.

Discussion Questions: Where do you see the barriers in getting head office
optimization plans to be actualized on the shelf? How much potential ROI
in these automated systems is lost when the store fails to execute accurately
on the head office strategy?

Discussion Questions

Poll

18 Comments
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Peter Fader
Peter Fader

Besides all these supply-side concerns–which seem quite legitimate–there are also major problems with “customer-centric” thinking on the demand side. Retailers tend to focus on the “average” customer or, at best, they think about maybe 3-4 different prototypical customer types. In reality, there is such massive heterogeneity across customers’ habits and tastes, that any attempt to be “customer centric” will badly miss the mark for the vast majority of customers. So these elaborate optimization plans are optimizing for a mythical customer that doesn’t exist.

Retailers are better off getting a deep understanding of actual, heterogeneous customer behavior, then gradually tweaking their offerings accordingly. This is far better than over-engineering an elaborate “solution” to an oversimplified view of who the customer is and how he really behaves.

Mary Baum
Mary Baum

What I see here is almost unanimous agreement that the data is largely going only one way–from corporate to the store level–and that customer-centric is essentially a name slapped on merchandising decisions that are about supplier relationships and distribution efficiencies.

Which makes our topic question ludicrous on its face.

If I’m reading this discussion right, the real customer-centric planning is failing to reach headquarters. What’s really happening instead is that store managers are doing it on their own, to serve their own customers, in their own markets, to build their own stores’ numbers. One comment here suggested tying compensation more closely to compliance with the corporate planograms that the consensus here seems to indicate get developed in a near-perfect state of innocence of the facts on the ground in the field.

Now, I’ve spent parts of the last decade hawking mystery shopping programs, preferably integrated into ongoing, comprehensive performance improvement processes that would get the field and headquarters on the same page on this and a host of other issues. And I have a dim awareness that some retailers have gone as far as to implement rather sophisticated versions of these processes.

(I just noticed Lisa Bradner’s comment–we’re on the same page here…)

Mark Hunter pointed out that companies who actually do what we’re talking about, like Hy-Vee, can even beat Wal-Mart.

So we clearly know why things aren’t working and how to fix them. I guess the question I would ask is–what would it take to motivate more of the right people to take a strong enough interest in fixing the problems such that it would actually happen?

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.

There are several reasons for the disconnect–any or all of which may be relevant.

1. Training of store level employees to understand and/or take responsibility for consumer-centric planning may be lacking.

2. Scanner data at the store level may not be analyzed.

3. Scanner data at the store level may not be matched with consumer data–especially with data for the store’s most valuable consumers.

4. Decisions for store planograms may not be made at the store level or store managers may not have the opportunity to modify planograms.

5. The efficiency of preparing similar deliveries for similar stores outweighs the “apparent” inefficiency of delivering what will actually sell at a store level.

6. Basing future orders only on historical data from a traditional supply chain perspective.

While all the problems listed in 2 – 6 can certainly be relevant, if they are all eliminated but #1 isn’t addressed the change still won’t happen.

Ed Dennis
Ed Dennis

It absolutely amazes me that an independent operator can execute a customer-centric plan with little effort but a corporation has a huge problems doing the same. Why is this? I believe it has to do with the motivation of management. The independent operator is motivated to build his business. The corporate executive is motivated to do what? There is you answer! Customer-centric plans aren’t successful because the motivation isn’t there. It isn’t a quick fix, it won’t effect the bottom line by the end of the quarter, you can’t get it done sitting on your butt. Only in a corporation are the people farthest from the customer in charge of the business decisions. They have the least direct exposure to the germs but feel they can contract the disease quicker than anyone else.

It doesn’t work quick, demands a commitment and those who do it well aren’t the ones initiating programs today. They enacted programs 20 years ago and now they eat their competition alive.

Herb Sorensen, Ph.D.
Herb Sorensen, Ph.D.

The discussion here is focused on getting the right merchandise into the store, and displaying there according to a planogram. Although these two factors may be related in some way to customer centricity, it doesn’t seem very connected to any customers in reality, but a perception of customers by someone at headquarters, looking at economic inputs and outputs to the store. However, the shopper is less interested in those economic inputs and outputs and more interested in their experience in the store.

The management of the store (operations) has to stuff 40,000 items into the store so that the shopper can by one of the 300 they typically buy in a year. There is no way there is anything customer centric about this process. This is a headquarters and brand centric process, since the retailers #1 source of profits is squeezing the brand. This is not a shopper centric process, and pays no attention to the shopper in the store, except as an agent to cart the stuff out the door. Why would the people doing the planning at headquarters know anything about this?

Ron Margulis

I agree with Professor Fader. There are several disconnects between HQ and the store, not the least of which are in the areas demand forecasting and item level planning. We do, however, need to give credit to retailers that are at least trying to get closer to some of their customers even if they’re not always successful. The worst thing a retailer can do in this day and age is to sit back, buy on the deal and expect the stores to sell everything.

Lisa Bradner
Lisa Bradner

Peter has eloquently hit both key issues on the head; from a supply chain perspective everything on the retailer and manufacturer side is set up to optimize shipping large quantities of goods on identical pallets through huge DCs based on regional needs. For manufacturers to start producing mixed pallets or cases or for retailers to break cases and build pallets someone would have to be willing to bear a lot more cost than the margin structure for either player currently allows–and nothing says customers are going to pay more for a planogram that’s tailored to them.

Heterogeneity is absolutely the other issue–which Best Buy discovered with their customer centric initiative. Even if you set up a “Jill” store Buzz and Barry will walk into it–and how do you meet their needs if everything is optimized for Jill?

Taking a step back I think if retailers thought more about customer centricity from a focus on training, customer service, in stocks and customer care, it would probably get them a lot further in the long run than almost any other initiative they could undertake.

Stephan Kouzomis
Stephan Kouzomis

Not spending as much time as I would like at store level, it is fair to say that the consumer-centric (different from customer-centric) efforts of a supermarket must be fully embraced and conveyed daily, shown and fortified in the activities of the owner, CEO, President,and COO of the chain, wholesaler, co-op and/or independently owned store groups. It is all in the ‘culture’ created by the top executive officers AND his/her direct reports! (NOTE: What, at times, is missing is the needed input from the district, operational-store level individuals…for ownership and contribution purposes).

With the previous said, if the communications line–up and down the organization–isn’t open to input, ideas, and some latitude at the store level, what can be–positively–said about implementation at any level? Customer-centric efforts, from strategies to programs, are deaf to all ears! Sounds like the same issue in Washington D.C….listening to the voters (the target audience) asking for input; and enacting on what was told, has no relevance. Very difficult way to manage, govern and enact! Hmmmmmmmmm

Sue Nicholls
Sue Nicholls

Another reason for low compliance may be the lack of buy-in from Retail Operations. Retail Operations departments represent the stores in many ways, and help them determine priorities. If they have not bought into the new planograms, or if they don’t understand the rationale behind them, they may not make them a priority for the stores. And the same goes for the stores–if they don’t understand the rationale behind them, or don’t agree with the consumer centric approach for their store, then compliance goes down.

Paul Waldron
Paul Waldron

Retailers that are still using generic planograms are missing the boat. With the versatility of the space management software available today, headquarters plans can easily be incorporated into planograms at store level. Retailers need to spend the money necessary in manpower and technology to make their customer-centric plans reach store shelves by way of more focused planograms.

J. Peter Deeb
J. Peter Deeb

The fallout from headquarters to store level falls off for more reasons than we can list in this limited space. Some of the reasons are:

1-retail store size and layout are not updated at headquarters as they are changed and reset and many planograms and display plans cannot be executed as written.

2-Generic distribution of products and merchandising from headquarters does not fit the merchandising and consumer needs of all stores.

3- Tight store labor means the plethora of plans that are forced down every week cannot be implemented.

4- Compensation plans do not place enough emphasis on compliance–what gets measured gets done!

Some retailers have the capacity to execute planograms and feature merchandising better than others By carrying the message up and down the supply chain. Their names are all over the publications as best in class!

Mark Lilien
Mark Lilien

Optimal planogram systems give alternate layouts for the same categories, so that stores can flex to their individual space and sales volume considerations by category. A Halloween candy planogram would be created in 3 versions, for example (10 running feet, 20 running feet, 30 running feet). Furthermore, folks who create planograms have to leave space for partial case packs, due to the replenishment issue noted in the story. If the case pack is 12, the allocated space has to be greater than 12, or there will be leftovers. There are skills to planogramming, and if those skills are exercised well, back rooms can be minimized and marketing to local tastes can be maximized. Planogram compliance rises when the store-level requirements and budgeted labor schedules are realistic.

Doron Levy
Doron Levy

The question category managers need to ask themselves is: Will field managers understand what I’m trying to do? Case study after case study would suggest that category managers are deploying their plans and maps without taking into consideration who will be implementing. It is critical that both parties understand what the heck each is talking about. A suggestion I made to a client is to have senior cat managers spend time with floor managers and speak to them one on one so that they can better connect and achieve the desired results and goals of any ongoing initiative.

Don Delzell
Don Delzell

At the risk of being redundant, we are all clear that existing software offers extremely flexible POG layouts and highly integrated processes. Merchandise planning is now possible with full integration with space planning modules, driven by all sorts of data including history, forecast and even attribute grouping.

We are also very clear that many retail operational models do not provide for sufficient store labor to effectively implement the output from these systems dynamically. On a seasonal basis the labor to set up a localized POG is no different from the labor to set up a standardized one. However, the true value of flex POG sets is in moving the set as the merchandise mix varies within and across seasons, not just at the beginning or end. And this takes labor seldom budgeted for.

Further, retrofitting these technologies to large scale retailers is almost impossible. I led an attempt to do that in Mexico with a chain of several hundred locations. The lack of standardized space and build out led to no less than 200 distinct layouts in existence…many of which utilized somewhat movable fixtures likely to change by the time the POG instructions were generated. The project was a disaster.

New retail concepts have no excuse, and should be designing the stores and capturing the information necessary to deploy fully integrated dynamic store-centric merchandising processes.

Paul Waldron
Paul Waldron

The crews responsible for implementation at the store level will unanimously agree that corporate can, in theory, implement store-specific planograms, but the reality is that this strategy won’t succeed if they don’t know the physical layout of each store in the first place. In our business, we are in the stores quite a bit observing set crews implementing the planogram. In many cases, the plan sent down to the store doesn’t match what the store has. For example, we recently observed use of our merchandising tools for a major grocery retailer on the East Coast. They sent down a 12’ planogram for implementation built in three 4’ segments. In the last segment, 3 of the shelves were staggered. In contrast, the store had 13’ of space for this category built with three 3’ segments and a fourth 4’ segment. You can see immediately the problems this presents…not the least of which is who decides what happens with the last foot of space not “planned” for. Ultimately, it is the store crew making that decision. Did they make the right decision based on a customer-centric approach?

Mark Hunter
Mark Hunter

Headquarters can be as smart as they want to be but there will always be a significant issue of non-compliance at the store level based on the high degree of mistrust the typical HQ has with their stores. Until retailers are willing to invest in developing store managers and then empowering them things won’t change. The problem is an empowered store manager has to understand the ramifications of decisions they make at the store level to the entire chain. To achieve this requires a commitment on the part of the retailer and the manager which few retailers are willing to make.

Hy-Vee understands this better than just about anyone else. What is interesting is in every market where Hy-Vee operates you can also find a Wal-Mart and without exception Hy-Vee is either holding their own or winning. This is the best example of how empowered managers working with HQ can and will win every time against a HQ centered approach. To achieve this, HQ must have the attitude that they are serving the store managers. Too often, the attitude is store managers are in the stores to serve the needs of HQ.

Andre Martin
Andre Martin

I agree with Ron Marqulis when he says “There are several disconnects between HQ and the store, not the least of which are in the areas demand forecasting and item level planning.” In my experience, it is not until retailers and their trading partners can jointly manage their complete supply chains (from the store back to the factory) through a “single set of numbers developed through a commonly shared system” that this problem will go away. It is not that retailers and their trading partners do not try hard, it is just that they have too many systems that are completely disconnected in their attempts to fine tune and streamline the way they do business today.

Thomas Mediger
Thomas Mediger

I have worked in Category Management for a number of years. Mark is correct in his assessment of Hy-Vee. When A Category Manager is basing all of their decisions on historical data, market research, consumer trends, market demographics , etc, all they are really doing is finding different ways to make up a consumer stereotype. The problem is that the person working on the planogram never really gets to know the store, its consumers, its location, its retail purpose. The person working on the planogram can never know what works for a store as intimately as the person who works daily in the department and hears the consumer comments and requests. If consumer centric planning is going to work at all, it needs to originate at the store with the store personals input. Hy-Vee suggests core product assortment, product flow, department space allocation, and section flow. The manager has the ability to alter the selection to fit the store’s consumer needs. The result the store manager has a deep pride in their store and takes ownership of the store. What effect do you think that has on store personal and the consumers experience at the store? It turns out to be a pretty good experience!

18 Comments
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Newest Most Voted
Inline Feedbacks
View all comments
Peter Fader
Peter Fader

Besides all these supply-side concerns–which seem quite legitimate–there are also major problems with “customer-centric” thinking on the demand side. Retailers tend to focus on the “average” customer or, at best, they think about maybe 3-4 different prototypical customer types. In reality, there is such massive heterogeneity across customers’ habits and tastes, that any attempt to be “customer centric” will badly miss the mark for the vast majority of customers. So these elaborate optimization plans are optimizing for a mythical customer that doesn’t exist.

Retailers are better off getting a deep understanding of actual, heterogeneous customer behavior, then gradually tweaking their offerings accordingly. This is far better than over-engineering an elaborate “solution” to an oversimplified view of who the customer is and how he really behaves.

Mary Baum
Mary Baum

What I see here is almost unanimous agreement that the data is largely going only one way–from corporate to the store level–and that customer-centric is essentially a name slapped on merchandising decisions that are about supplier relationships and distribution efficiencies.

Which makes our topic question ludicrous on its face.

If I’m reading this discussion right, the real customer-centric planning is failing to reach headquarters. What’s really happening instead is that store managers are doing it on their own, to serve their own customers, in their own markets, to build their own stores’ numbers. One comment here suggested tying compensation more closely to compliance with the corporate planograms that the consensus here seems to indicate get developed in a near-perfect state of innocence of the facts on the ground in the field.

Now, I’ve spent parts of the last decade hawking mystery shopping programs, preferably integrated into ongoing, comprehensive performance improvement processes that would get the field and headquarters on the same page on this and a host of other issues. And I have a dim awareness that some retailers have gone as far as to implement rather sophisticated versions of these processes.

(I just noticed Lisa Bradner’s comment–we’re on the same page here…)

Mark Hunter pointed out that companies who actually do what we’re talking about, like Hy-Vee, can even beat Wal-Mart.

So we clearly know why things aren’t working and how to fix them. I guess the question I would ask is–what would it take to motivate more of the right people to take a strong enough interest in fixing the problems such that it would actually happen?

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.

There are several reasons for the disconnect–any or all of which may be relevant.

1. Training of store level employees to understand and/or take responsibility for consumer-centric planning may be lacking.

2. Scanner data at the store level may not be analyzed.

3. Scanner data at the store level may not be matched with consumer data–especially with data for the store’s most valuable consumers.

4. Decisions for store planograms may not be made at the store level or store managers may not have the opportunity to modify planograms.

5. The efficiency of preparing similar deliveries for similar stores outweighs the “apparent” inefficiency of delivering what will actually sell at a store level.

6. Basing future orders only on historical data from a traditional supply chain perspective.

While all the problems listed in 2 – 6 can certainly be relevant, if they are all eliminated but #1 isn’t addressed the change still won’t happen.

Ed Dennis
Ed Dennis

It absolutely amazes me that an independent operator can execute a customer-centric plan with little effort but a corporation has a huge problems doing the same. Why is this? I believe it has to do with the motivation of management. The independent operator is motivated to build his business. The corporate executive is motivated to do what? There is you answer! Customer-centric plans aren’t successful because the motivation isn’t there. It isn’t a quick fix, it won’t effect the bottom line by the end of the quarter, you can’t get it done sitting on your butt. Only in a corporation are the people farthest from the customer in charge of the business decisions. They have the least direct exposure to the germs but feel they can contract the disease quicker than anyone else.

It doesn’t work quick, demands a commitment and those who do it well aren’t the ones initiating programs today. They enacted programs 20 years ago and now they eat their competition alive.

Herb Sorensen, Ph.D.
Herb Sorensen, Ph.D.

The discussion here is focused on getting the right merchandise into the store, and displaying there according to a planogram. Although these two factors may be related in some way to customer centricity, it doesn’t seem very connected to any customers in reality, but a perception of customers by someone at headquarters, looking at economic inputs and outputs to the store. However, the shopper is less interested in those economic inputs and outputs and more interested in their experience in the store.

The management of the store (operations) has to stuff 40,000 items into the store so that the shopper can by one of the 300 they typically buy in a year. There is no way there is anything customer centric about this process. This is a headquarters and brand centric process, since the retailers #1 source of profits is squeezing the brand. This is not a shopper centric process, and pays no attention to the shopper in the store, except as an agent to cart the stuff out the door. Why would the people doing the planning at headquarters know anything about this?

Ron Margulis

I agree with Professor Fader. There are several disconnects between HQ and the store, not the least of which are in the areas demand forecasting and item level planning. We do, however, need to give credit to retailers that are at least trying to get closer to some of their customers even if they’re not always successful. The worst thing a retailer can do in this day and age is to sit back, buy on the deal and expect the stores to sell everything.

Lisa Bradner
Lisa Bradner

Peter has eloquently hit both key issues on the head; from a supply chain perspective everything on the retailer and manufacturer side is set up to optimize shipping large quantities of goods on identical pallets through huge DCs based on regional needs. For manufacturers to start producing mixed pallets or cases or for retailers to break cases and build pallets someone would have to be willing to bear a lot more cost than the margin structure for either player currently allows–and nothing says customers are going to pay more for a planogram that’s tailored to them.

Heterogeneity is absolutely the other issue–which Best Buy discovered with their customer centric initiative. Even if you set up a “Jill” store Buzz and Barry will walk into it–and how do you meet their needs if everything is optimized for Jill?

Taking a step back I think if retailers thought more about customer centricity from a focus on training, customer service, in stocks and customer care, it would probably get them a lot further in the long run than almost any other initiative they could undertake.

Stephan Kouzomis
Stephan Kouzomis

Not spending as much time as I would like at store level, it is fair to say that the consumer-centric (different from customer-centric) efforts of a supermarket must be fully embraced and conveyed daily, shown and fortified in the activities of the owner, CEO, President,and COO of the chain, wholesaler, co-op and/or independently owned store groups. It is all in the ‘culture’ created by the top executive officers AND his/her direct reports! (NOTE: What, at times, is missing is the needed input from the district, operational-store level individuals…for ownership and contribution purposes).

With the previous said, if the communications line–up and down the organization–isn’t open to input, ideas, and some latitude at the store level, what can be–positively–said about implementation at any level? Customer-centric efforts, from strategies to programs, are deaf to all ears! Sounds like the same issue in Washington D.C….listening to the voters (the target audience) asking for input; and enacting on what was told, has no relevance. Very difficult way to manage, govern and enact! Hmmmmmmmmm

Sue Nicholls
Sue Nicholls

Another reason for low compliance may be the lack of buy-in from Retail Operations. Retail Operations departments represent the stores in many ways, and help them determine priorities. If they have not bought into the new planograms, or if they don’t understand the rationale behind them, they may not make them a priority for the stores. And the same goes for the stores–if they don’t understand the rationale behind them, or don’t agree with the consumer centric approach for their store, then compliance goes down.

Paul Waldron
Paul Waldron

Retailers that are still using generic planograms are missing the boat. With the versatility of the space management software available today, headquarters plans can easily be incorporated into planograms at store level. Retailers need to spend the money necessary in manpower and technology to make their customer-centric plans reach store shelves by way of more focused planograms.

J. Peter Deeb
J. Peter Deeb

The fallout from headquarters to store level falls off for more reasons than we can list in this limited space. Some of the reasons are:

1-retail store size and layout are not updated at headquarters as they are changed and reset and many planograms and display plans cannot be executed as written.

2-Generic distribution of products and merchandising from headquarters does not fit the merchandising and consumer needs of all stores.

3- Tight store labor means the plethora of plans that are forced down every week cannot be implemented.

4- Compensation plans do not place enough emphasis on compliance–what gets measured gets done!

Some retailers have the capacity to execute planograms and feature merchandising better than others By carrying the message up and down the supply chain. Their names are all over the publications as best in class!

Mark Lilien
Mark Lilien

Optimal planogram systems give alternate layouts for the same categories, so that stores can flex to their individual space and sales volume considerations by category. A Halloween candy planogram would be created in 3 versions, for example (10 running feet, 20 running feet, 30 running feet). Furthermore, folks who create planograms have to leave space for partial case packs, due to the replenishment issue noted in the story. If the case pack is 12, the allocated space has to be greater than 12, or there will be leftovers. There are skills to planogramming, and if those skills are exercised well, back rooms can be minimized and marketing to local tastes can be maximized. Planogram compliance rises when the store-level requirements and budgeted labor schedules are realistic.

Doron Levy
Doron Levy

The question category managers need to ask themselves is: Will field managers understand what I’m trying to do? Case study after case study would suggest that category managers are deploying their plans and maps without taking into consideration who will be implementing. It is critical that both parties understand what the heck each is talking about. A suggestion I made to a client is to have senior cat managers spend time with floor managers and speak to them one on one so that they can better connect and achieve the desired results and goals of any ongoing initiative.

Don Delzell
Don Delzell

At the risk of being redundant, we are all clear that existing software offers extremely flexible POG layouts and highly integrated processes. Merchandise planning is now possible with full integration with space planning modules, driven by all sorts of data including history, forecast and even attribute grouping.

We are also very clear that many retail operational models do not provide for sufficient store labor to effectively implement the output from these systems dynamically. On a seasonal basis the labor to set up a localized POG is no different from the labor to set up a standardized one. However, the true value of flex POG sets is in moving the set as the merchandise mix varies within and across seasons, not just at the beginning or end. And this takes labor seldom budgeted for.

Further, retrofitting these technologies to large scale retailers is almost impossible. I led an attempt to do that in Mexico with a chain of several hundred locations. The lack of standardized space and build out led to no less than 200 distinct layouts in existence…many of which utilized somewhat movable fixtures likely to change by the time the POG instructions were generated. The project was a disaster.

New retail concepts have no excuse, and should be designing the stores and capturing the information necessary to deploy fully integrated dynamic store-centric merchandising processes.

Paul Waldron
Paul Waldron

The crews responsible for implementation at the store level will unanimously agree that corporate can, in theory, implement store-specific planograms, but the reality is that this strategy won’t succeed if they don’t know the physical layout of each store in the first place. In our business, we are in the stores quite a bit observing set crews implementing the planogram. In many cases, the plan sent down to the store doesn’t match what the store has. For example, we recently observed use of our merchandising tools for a major grocery retailer on the East Coast. They sent down a 12’ planogram for implementation built in three 4’ segments. In the last segment, 3 of the shelves were staggered. In contrast, the store had 13’ of space for this category built with three 3’ segments and a fourth 4’ segment. You can see immediately the problems this presents…not the least of which is who decides what happens with the last foot of space not “planned” for. Ultimately, it is the store crew making that decision. Did they make the right decision based on a customer-centric approach?

Mark Hunter
Mark Hunter

Headquarters can be as smart as they want to be but there will always be a significant issue of non-compliance at the store level based on the high degree of mistrust the typical HQ has with their stores. Until retailers are willing to invest in developing store managers and then empowering them things won’t change. The problem is an empowered store manager has to understand the ramifications of decisions they make at the store level to the entire chain. To achieve this requires a commitment on the part of the retailer and the manager which few retailers are willing to make.

Hy-Vee understands this better than just about anyone else. What is interesting is in every market where Hy-Vee operates you can also find a Wal-Mart and without exception Hy-Vee is either holding their own or winning. This is the best example of how empowered managers working with HQ can and will win every time against a HQ centered approach. To achieve this, HQ must have the attitude that they are serving the store managers. Too often, the attitude is store managers are in the stores to serve the needs of HQ.

Andre Martin
Andre Martin

I agree with Ron Marqulis when he says “There are several disconnects between HQ and the store, not the least of which are in the areas demand forecasting and item level planning.” In my experience, it is not until retailers and their trading partners can jointly manage their complete supply chains (from the store back to the factory) through a “single set of numbers developed through a commonly shared system” that this problem will go away. It is not that retailers and their trading partners do not try hard, it is just that they have too many systems that are completely disconnected in their attempts to fine tune and streamline the way they do business today.

Thomas Mediger
Thomas Mediger

I have worked in Category Management for a number of years. Mark is correct in his assessment of Hy-Vee. When A Category Manager is basing all of their decisions on historical data, market research, consumer trends, market demographics , etc, all they are really doing is finding different ways to make up a consumer stereotype. The problem is that the person working on the planogram never really gets to know the store, its consumers, its location, its retail purpose. The person working on the planogram can never know what works for a store as intimately as the person who works daily in the department and hears the consumer comments and requests. If consumer centric planning is going to work at all, it needs to originate at the store with the store personals input. Hy-Vee suggests core product assortment, product flow, department space allocation, and section flow. The manager has the ability to alter the selection to fit the store’s consumer needs. The result the store manager has a deep pride in their store and takes ownership of the store. What effect do you think that has on store personal and the consumers experience at the store? It turns out to be a pretty good experience!

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