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- Managing a Category Range
- Merchandising
- Merchandising Rules
Managing a Category Range
Managing an ‘effective’ and ‘efficient’ category range is a balancing act.
- An effective range meets consumer demand by providing the variety and differentiation required and at the same time is readily available (on-shelf).
- An efficient range is one that is operationally efficient meaning that the inventory is cost-effective, ‘out of stocks’ are minimal and it is easy to implement in-store.
Range and merchandising are very powerful tactics when the balance between effective and efficient is achieved. Unlike promotions, that often require a significant level of investment for retailers and suppliers, range and merchandising are relatively low cost tactics.
Assembling an effective and efficient range requires the analysis of performance measures such as sales value, volume and distribution data. However, this should be done in conjunction with the information collated in the checklist below to ensure that the range is as targeted as possible and adheres to a retailer’s operational needs and strategy.
- Category Role
- Category Strategy
- Category Segmentation / Hierarchy
- Retailer Strategy
- Shopper Behaviour
- Understanding existing, potential and target consumers
- Space and store format variation
The sources of information that are required via a manual process, or using software are similar. It is important that collaborating partners agree.
- Which process is to be used?
- Which data sources will be inputted into the process?
- Which company is going to propose the range?
This will prevent wasted time and effort and increase the likelihood of the recommendations being implemented. The following chart summarises the range process at a top line level.
The Range Process
Source: IGD Research 2007
Merchandising
After the macro space allocation and range has been agreed, the information from the range and merchandising checklist can be used to determine the category layout. The output is usually in the form of a planogram which may be either:
- Generic
- Cluster Plans
- Store Specific
Generic plans are based on a master plan, and are the least effective as they do not take into account different store formats or shopper preferences.
Cluster plans are where a number of plans are created for store groups (these may be clustered by size, shopper demographics or fixture type). They provide some tailoring to specific criteria but reduce the complexity associated with store specific plans.
Store specific plans are where each store has its own plan that takes into account all the particular needs of the store. They help to ensure that each store has a planogram that is consistent with the retailer’s overall strategy and meets the needs of its shoppers.
Merchandising Rules
Merchandising rules will vary depending on the retailer’s strategy; rules around the following areas are common:
- Case Size Rule – the minimum number of cases required on the shelf
- Tray Merchandising Rule – trays are often used to aid stacking and speed up shelf replenishment. The configuration impacts the number of facings that can be merchandised. For example a tray with a 3x4 configuration can only have multiples of 3 or 4 facings
- Minimum and Maximum Facings – small products often have a minimum facing rule to ensure visibility on-shelf. High volume products may have a maximum facing rule to release space for additional range
- Days Supply Rule – used to determine how many days stock is on the shelf at any one time
- Order of Product Flow – some retailers have a predetermined order of product. For example, premium variants placed on the top shelf, standard on the middle and economy on the bottom shelf
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