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Manufacturers must become more consumer-centric

By: David Johnston, Danny Halim
17 March, 2011

Today’s consumer has more choices on the shelf than ever before.

Paired with growing private-label popularity, manufacturers are realising they must quickly differentiate themselves from their closest competitors by becoming more consumer centric at the shelf level.

In fact, an IDC Global Retail Insights survey indicated that the majority of retailers and manufacturers rank consumer centricity as a top-three success factor, and that there will be an increased focus on consumer centricity in the near term.

What does consumer centricity mean? This term translates into a company’s ability to execute its top-level category plan down to an individual store.

Traditionally, planograms are developed and executed for a group of similar stores – commonly referred to as cluster-level planograming. However, this method is dated, as consumer buying behaviour and space availability vary by individual store.

Leading manufacturers that can create and execute store-specific planograms have developed a market differentiator and, as such, are realising benefits that include better inventory management and increased sales.

Customising the solution

Developing store-specific planograms is not an easy and quick task without the support of an automated solution. There is a tremendous amount of data that must be analysed that could potentially tie up significant resources and time.

With cutting-edge technology, CPG manufacturers can produce thousands of store-specific planograms within minutes, increasing the ability to focus on other value-added activities such as closer collaboration with retailers and the management of promotions.

Companies can take their category management process to the next level by incorporating forward-view demand instead of historical point-of-sale or consumer insight data alone.

Category managers can also analyse the effectiveness of previous planograms based on store-shelf performance and improve upon them.

This includes evaluating factors such as product trends, how closely previous forecasts were met, as well as the productivity of the space allocated to a product or product family. Manufacturers that make this effort will improve shelf productivity and increase sales.

Increasing Flexibility for Planogram Adjustments

Companies generally conduct two major category reviews each year on their products. This means that as new products are introduced, old products are phased out or customer spending shifts, there is little room for adjusting planograms to account for these changes. The entire planogram must be rebuilt from the ground up or less-than optimal interim fixes are made – both of which cost time and money.

The innovation that is now available enables incremental adjustments to be made in real time. As such, CPG manufacturers can shift inventory and product displays to meet changing consumer demand without disrupting the entire process.

And, if needed, a category review can be added without requiring additional resources. The efficiency gains from this new innovation will enable leading CPG manufacturers and their retail partners to conduct more frequent and timely category reviews as needed.

Dealing with Private-Label Growth, Expanding Retail Relationships

Retailers have capitalised on the increase in shopper preference for value-based products by rationalising branded products within a category while increasing the presence of their own private-label brands.

To combat private-label growth scenarios such as this, category managers need to optimise the shelf productivity of their brands within the allocated space for everyday and promotional business. It is by far their best opportunity to protect their brand presence while growing the retailer’s overall sales.

An automated process enables easy incremental adjustments and provides companies with the ability to gain a competitive edge.

Retailers rely on manufacturers to have their finger on the pulse of consumer demand to determine optimal assortments and product layouts for maximised sales. The flexibility to mass produce tailored planograms that can meet the needs of retailers of any size enables manufacturers to enhance their appeal to both new and existing clients.

Increasing the business opportunities

Not only is automated planogram generation quick, easy and accurate, but it also opens the door to a variety of supply chain and business opportunities to drive market share and positively impact profitability as rapidly as possible.

Manufacturers that leverage consumer insights to create store-level planograms can use that data to work collaboratively with other divisions within the company to improve product quality – from packaging to the product attributes themselves.

Companies that take advantage of optimised planograms to close the loop on planning and execution will benefit from even more efficient replenishment, avoiding over- or under-stocking and driving bottom-line results.

Source: AAPMedianet