Analyse² Blog

Welcome to our blog. We'll use this blog to share some interesting things going on in our company and the food industry.

Join us at CMA´s Latin American Congress in Mexico!

Analyse² will participate in the Category Management Association’s Latin American Congress 2012 in Mexico City.

Dates: May 24-25th, 2012

Address:
Hotel Hilton México Reforma

Av. Juarez #70. Colonia Centro
Mexico City, CP 06010, Mexico

The agenda includes industry panels, discussion groups, demos from solution providers, training workshops and case studies. Topics covered include private label scorecard, trends by channel, purchase behaviors, category management ROI, promotional strategy, authorized planograms, and rationalizing SKU’s.

Please visit our stand at the event!

Guidance for future C-Store Category Managers

The basic idea of a convenience store (c-store) is to be close to the customer and to offer the basic items easily. They serve the customer’s sudden need to make top-up purchases or the desire to get a quick lunch or a snack. (Finne, et. al, 2009)

Because of their limited selling space, assortment planning in convenience stores is challenging. Customer needs have to be considered very carefully to enable convenience stores to have an optimal product assortment. Assortment management is highly developed, and assortments are refreshed daily based on point of sales (POS) data and other demand data. Customer demographics are analyzed closely, and even weather forecasts for the next day may have an influence on assortments. Accurate analyses aim at having an optimal assortment in the small space available. Stores receive deliveries two to five times a day. (Finne, et. al, 2009)

In early February 2012, Gordon Wade, Managing Partner and Director of Best Practices at the Category Management Association, spoke at Convenience Retailing University 2012 at Fort Worth, Texas with the aim of sharing category management best practices. During his speech, he shared his experience with 200 convenience store operators and helped them understand what they should expect from their suppliers for more efficient assortment planning and category management in c-stores. The following sections discuss some of Gordon’s advice during the speech.

Data sharing by suppliers and retailers

As Gordon mentioned, suppliers and retailers should share valuable information, such as the category structure and consumer needs, ethnographic research on shopper behavior, category & segment trends, and assortment optimization. Convenience store operators should also ask questions to their account representatives. Data sharing and working as a team will encourage best practices and better success during category management.

Focus on Answers to Really Big Questions

C-Store operators should concentrate on these questions to improve their assortment:

• Why does my consumer choose another store over mine?
• Why does a consumer in my store buy a category I sell but in another store?
• How do I fail to meet my consumer’s key wants and needs?
• How are my categories changing and how do I keep up?

As Gordon pointed out, “Facts are essential to insights; but insights are the levers that build the business.” Insights should be used to answer those key questions.

Using Insights to Improve Assortments

Gordon gave this example during the speech:

Fact: Men age 21-34 consume 80% of beer volume.
Insight: The beer you drink is the badge for the group to which you belong.

A fact is that beer out-of-stocks cost money. Therefore, reducing out-of-stocks is a significant opportunity for retailers. For example, at a certain convenience store, 5% of beer volume was out-of-stock on an average day, (nearly 4 times higher on promoted items). This resulted in 45% of beer shoppers avoiding purchases and 23% of beer sales being lost to competitors.

The C-Store’s beer out-of -stock problems were caused by mis-alignment of shopper segments and store clusters. Using this insight, the store developed a strategy to stay in stock at key times and days. New rolling fixture for weekend and peak time holding power alleviated out of stocks. Color-coded pallets and cases to match shelving enabled stocking ease. They also identified convenience opportunity via TLE to appeal to men and placed additional register for ease of check-out. The c-store created in-store smart sections with kiosks and information including education/information on synthetics. They placed appearance items in key location drive to impulse sales. This example shows how insight were used to improve store efficiency and sales.

Relevant C-Store trends

Many surveys on customer behaviors should also be noted by c-store operators. For example, according to a survey in the U.S. done by the NPD Group- a market research company, 43% of individuals from a group of 5.000 adults agreed that they ate smaller portion meals most of the time the past year. Additionally, 57% said they aspired to eat smaller portions in the coming year, which suggests that this eating strategy will become a trend in the future. (CSD, http://www.csdecisions.com/)

C-store operators should consider this and other trend information when stocking food items on their shelves. As the study showed, there is a trend for future years of eating more healthily among Americans, so offering smaller portioned meal sizes to customers might improve business in the U.S. (CSD, http://www.csdecisions.com/)

Additional Info

Presentation used by Gordon at the CRU event:

Click here to download presentation: “CRU-What to expect from Suppliers

For more info on the CRU 2012 event, click the image:

CRU 2012

 

 

Special Thanks

Special thanks to Gordon Wade, Managing Partner and Director of Best Practices at the Category Management Association, for his time and for sharing his speech with us.
Category Management Association

References:

-Finne, Sami; Sivonen, Hanna; The retail value chain: How to gain competitive advantage through efficient consumer response (ECR) strategies; Kogan Page Limited, 2009

-Smaller Meal Options, Customer Store Decisions, July 27th, 2012, http://www.csdecisions.com/2011/07/27/smaller-meal-options/

Anix´s choice for solving Assortment Challenges

Yuri Nikitin and Yaroslav Szyller, owner and CEO (respectively) of Anix, the largest retail food business in Biysk, Russia, explain the current situation in their company and the Altay region, and their reasons for choosing Analyse² to help face their challenges.

“We’ve chosen Analyse² because there is a certain uniqueness in its offering in terms of working with trends. Most of the other software tools work only with the current assortment and it is very rare to see a case where a very good solution helps identify trends and their development. It gives the possibility of being one step ahead of our competitors.” Yaroslav explained.

Anix’s Challenges

Anix has 150 stores situated in 4 Siberian Altay regions. Besides having 150 stores of their own, they are also developing the franchise part of the business which, at the moment consists of 120 independent stores. The situation in Anix and in the franchise business, on one hand, is linked to the general situation in Russian retail. Russia has a very big territory, thus the development of retail industry is not the same across the country. The levels of retail saturation and competition in the European part of Russia are very different from the ones in Siberia. Yuri estimates that “right now we have a gap of 3-4 years in terms of tendencies which exist now in central Russia and in Siberia.”

Heavy Competition

As Yaroslav explained, the competition is strengthening and in a situation where companies are similar to each other and offer similar products and services, Anix needs to formulate and define a competitive advantage. “One of our main working directions is to formulate more precisely our offering, which has to be directly linked to the buyers’ needs. That is why we are interested in working with Analyse².” Yaroslav said.

Analyse² Solution

Because Anix’s management understood the need for customer centric assortments, they’ve chosen Analyse² as a key partner to help them improve their assortment processes. “This need not only exists, but it is also our company’s strategy.” Yuri expressed. Analyse²’s place in this strategy, according to Yuri, is linked to the similarities in the philosophies and ideologies of our companies. “Our common ideology is to create in retail a unique store-level assortment proposition.” he says.

As Yuri put it, “This is a super-task and a super-challenge; we can rarely find companies which not only see this challenge, but also try to solve it. We see this challenge, and with Analyse²’s solution we are solving it.”

First Category Management Study in Mexico

Category Management’s State of Art in Mexico

The category management study dealt with the main subjects related to Category Management in Mexico’s retail and consumption industry.

The objective of the study was to establish a benchmark of the current situation of CATMAN practices that permits professionals of the consumption industry to understand where their company is in their current Category Management processes, where the competitors and partners are, and what best practices could be replicated to improve their results at the point of sales.

The Study’s Main Findings

  • 76% of suppliers use Category Management processes, while retailers use them 81% of the time.
  • The main reason for retailers and suppliers not to use CATMAN processes is the lack of infrastructure 26% of the time.
  • The 3 main CATMAN activities are the creation and execution of planograms (84.5% average), assortment and product category analyses (84% average) and product launches (76.5% average)
  • Both suppliers and retailers agree that in the following 5 years, the most important activity will be to understand the consumer (85% average).
  • 87% of CATMAN professionals from the supplier side consider their counterpart on the retailer side to be his/her strategic partner. 73% of retailers agree with this.

Subjects dealt with:

1. Best Practices (consumer & shopper insight, in-store execution, merchandising, space management, pricing)

2. Synergy Opportunities(practices, information, results monitoring, planning, forecast)

3. Needs and Information Exchange (ROI, performance, rotation)

4. Competencies (analytical capacities, task certifications, experience, marketing capacities)

Execution of the study

This first Category Management Study in Mexico was an online survey completed by Category Ideas and Logyt and promoted by ANTAD and GS1 in Mexico. The survey was filled by Directors, Managers and Analysts of the main retailer and suppliers chains in Mexico.

More than 300 Category Management professionals in Mexico, from 227 different companies, have shared their experiences and point of view during March and April, 2011.

Special thanks

Thanks to our contacts from Category Ideas, who provided the information about the study:

Carlos Adalid Martí, Bachelor in Publicity, with a Master’s Degree in Business Management from the Universidad Iberoamericana in Mexico, and more than 16 years of experience in category Management  in  Mexico as a retailer, category manager and consultant.

Luis Ma. Haces Montes, Bachelor in Business Management from the Universidad Iberoamericana in Mexico, with more than 16 years of experience in Wal-Mart México and as a consultant and over 21 years experience in retail.

To view the full documents of the study, click here:

Category Management Study

 

 

 

 

 

 

 

 

 

White Paper on the Study

For more information, please click here:

Category Ideas

Logyt

 

Analyse² at Anix´s Suppliers and Retailers Forum 2012

A few members of our Analyse² team, including Janne Anttila (our CEO), Liudmila Zyaparova (our Russian Project Manager), Tomi Kuittinen (our Vice President of Expert Services), and Jussi Autere (our Vice President of Products) travelled to Biysk, in Russian’s Altay region, to participate for the second time at Anix’s Suppliers and Retailers Forum – 2012, which took place in February.

The seminar was organized by Anix, the largest retail food business in Biysk, and had the participation of suppliers and retailers of the region. The guest speakers included consultants, suppliers, and Anix’s own retail experts.

It was a challenging and exciting week for our colleagues, as two of them were visiting Biysk for the first time and mainly because the temperatures during their visit reached -40°C, a 20° difference to the weather we’re used to in Helsinki! They had to pull out their warmest coats. As Anttila mentioned, “Anix is the coolest retailer in the world!”, literally!

During the first day of the conference, Liudmila Zyaparova gave a speech about Analyse²’s current ongoing project with Anix. The speech covered the project process and its main outcomes and attracted the attention of listeners, who consisted of suppliers and retailers of the Altay region. Later on, our team was happy to answer various interesting and challenging questions from the audience.

Janne Anttila (CEO) and Liudmila Zyaparova (Project Manager Russia)

Tomi Kuittinen and Jussi Autere

Tomi Kuittinen (VP Expert Services) and Jussi Autere (VP Products)

 

 

 

 

 

 

 

 

For more information about Anix, click below:

Anix

Sue Nicholls and the Category Management Knowledge Group

Sue Nicholls founded the Category Management Knowledge Group (CMKG) in 2005, after managing the Canadian category management team and sitting on the global category management team at Procter & Gamble for over 20 years.  “When CMKG was first started”, Sue recalls, “I spent much of my time travelling across continents including Asia, South Africa, Russia, Latin America and North America, running “live” category management training sessions to both retailers and suppliers.”

Her experiences made her aware of two things:

1)    Category management is the same no matter where you go – it’s the retailers and the data sources that differ; and

2)    There is a huge opportunity to find a way to create more accessible category management training for individuals, teams and organizations.

One of Sue’s objectives as President was to turn CMKG’s vision of the global category management e-Learning solutions into reality.  When CMKG was founded, the Category Management Association (www.cpgcatnet.org) also developed the industry standards in category management in the United States. “At that time,” Sue explains, “we also decided to focus our efforts on becoming the first training company globally to offer courses in accredited category management training.”

The importance of Global Category Training Methods

Global business is accelerating rapidly, and so is the global training business.  A key driver of the need for global category training is the expansion of global retailers.  This ongoing shift in business is creating huge opportunities.   The best way to meet this increased international demand for higher levels of training and performance is through e-Learning.   Global category training methods provide organizations with many advantages.  First, a global approach creates a common foundation of standards in category management, resulting in standardized and efficient business processes.  Secondly, it also gives organizations an opportunity to institute and communicate a global culture across the most important components of category management.  Finally, high-quality e-Learning programs provide a cost-effective, sustainable and flexible option for organizations.

Global training must not only be valid, but targeted and replicable over time.  As CMKG learned years ago, category management training’s foundations are similar internationally.  All of the CMKG’s courses and programs teach their students with hands on experience, and a thorough understanding of everything that relates to category management, regardless of who they purchase their data from, what categories they compete in, or if they are suppliers or retailers.  Thousands of international students have completed the programs, and they’ve all been happy with the education they’ve received.

Efficient procedure implementations and their benefits

The CMKG has been able to work closely with their corporate clients and students to figure out how to implement effective blended e-Learning programs.  As each client is unique, so should the implementation processes be executed. However, there are several components in the implementation process that are consistent across most of their clients.  Sue shares with us two components that have proved efficient for procedure implementations in the CMKG:

a) A pre- and post-evaluation of category management understanding for each individual, which helps to identify key areas where individuals require training and provides the organization with a return on investment measure for their training initiative;

b) Scheduled training, to ensure students stay on track and complete their training program.  Offering live webinars to corporate clients to be used as checkpoints for students keeps them engaged and on track in their program.

Sue Nicholls, President of the Category Management Knowledge Group (CMKG)

Sue Nicholls, President of the Category Management Knowledge Group (CMKG)

For more information click here:

Changes in Brazilian Consumption Behavior

Article by Leonardo Cyreno, Analyse²’s Brazilian Market Specialist

Changes or Phenomena in the Brazilian Market

There are so many changes in Brazil that affect product consumption and shopping directly, that it is hard to focus on primary things. Nevertheless, let’s give a general vision in three topics that will allow you to have an idea about changes in Brazil:

a) A, B and C classes’ growth and D and E classes’ reduction.

When we study Brazil’s changes in classes for less than 10 years you can see how big the change has been. In 2003, there were 66 million people in Brazil’s C Class (38% of total population). In 2009 this amount was 94,9 million (50% of Brazil’s population). This means that almost 29 million people moved to the C class and most of them came from the D and E classes. Therefore, those two classes had a reduction from 96 to 73,3 million in the same period.

If you take a look at the A and B classes, the change was even bigger. In 2003, the percentage of the population in this class was 7% (13 million); in 2009 the number was 11% (20 million). This means that from 2003 to 2009, 7 million people entered top class consumption in Brazil, an increase of 41% for the A Class and 38% for the B Class, compared to the C class, which was 34% in the same period. (See Chart below.)

Population by Social Class in Brazil

Population by Social Class in Brazil

For 2014, according to the FGV institute in Rio de Janeiro, we expect 31 million in A and B classes (an increase of 11 million), 113 million in the C Class (increase of 18 million) and 59 million in the D and E Classes (decrease of 14 million).

Now stop for a moment and imagine what happens with consumption and shopper habits and behavior at the stores with that change of money availability in the shoppers’ hands… They will buy different products, different categories and also increase the amount of what they already buy. In other words, they are looking for better products in general, making the market much more sensitive to product characteristics and the benefits that they want to receive from them.

b)     The amount of information that shoppers have available now is changing the consumption and shopping habits

Let’s use an even smaller period than the previous example. In 2006, the Internet penetration in C Class was 33%, basically one out of every three persons had access to Internet.

In 2009, just 2 years later, the Internet penetration rate rose up to 66%, duplicating in 2 years. This didn’t happen just for C Class, it also happened in D and E Classes, from 11% in 2006 to 33% in 2009; three times bigger.

Now imagine the amount of information that one person has with no Internet access, and then imagine what happens when they start to use the network. We could assume that they are using the Internet only for social networking, which by itself already changes the shopping behavior a great deal, through information and perception exchanges. However, that is not the main reason why people use Internet; 87% of the C class uses Internet for research against 69% for social networking, and additionally, 68% of C Class and 42% of D Class do price research in the Internet before buying something.

c)      Huge dimensions with huge social and economic differences between regions.

Brazil is a country with very large dimensions. This fact does not affect only geographical aspects, it is also easy to see different economic factors that are directly related to shopping and consumption behavior.

Just to give some dimensions about these facts, let’s use an example: For the A and B Classes which we talked about in the first topic, 63% of the population from these classes are located in the SE Region, 15% in South, 13% in the NE, 7% in the Center and 4% in the North.

However, this scenario is also changing. When you look at economic development, the NE region is growing much faster than the other regions. When you look at GDP in 2010, Brazil reached 7,5% and NE achieved 8,3%. This growth is making the changes even faster and more aggressive, forcing the national retail chains to be very flexible, fast, and assertive with assortment definition, trying to avoid the loss of market shares.

The growth in Brazilian’s C class changing the assortments in Brazilian supermarkets

If you want to keep sales growth and market share, you have to look very closely at the C Class. They are already the majority of the population in Brazil, have most of the consumption participation, and they are changing faster than any other segment. It basically means that, except for very specific retailers that offer solutions specifically for A and B class, if the assortment, layout and store merchandising don’t fit their needs, they will buy somewhere else.

About Leonardo

Leonardo Cyreno, our new Latin American Regional Director, has 13 years of experience in the Brazilian retail market. He started to work in the Bompreço (nowadays Walmart) in 1999, a retail chain located in Northeast of Brazil and had 116 stores at that time. Bompreço was bought by Walmart Brasil in 2004.

Leonardo started working there as a trainee in quality programs to increase the productivity and efficiency of the offices and stores. Then, he worked with projects, modulars, pricing, marketing, item file, and integrations, until finally he became Category Management Director, with the challenge of building a category management area and process for Brazil. He was also responsible for modular, store layout, assortment planning, business plan construction and merchandising strategies.

As Leonardo mentions, “building processes with the suppliers’ participation was a very interesting opportunity to know the Brazilian Market and also to understand much available research about Brazilian Shoppers’ change in shopping behavior and also consumption migration between classes A and B to C and D”.

Analyse²- Successfully Working with Kesko for Better Assortments

Ari Akseli, former Senior Vice President of Kesko Food and present CEO of KCM-Anttila which is part of Kesko, a Finland-based retailing giant, explains how Analyse² helped Kesko Food start building store-level assortments, resulting in various benefits. With the help of Analyse², Kesko Food´s gross margins increased by one percent and its sales by five percent, yielding over 40 million euros of yearly benefit. Analyse² also helped Kesko Food dramatically reduce the time needed to build the assortments for the K-chains.

The Challenge for Kesko

In the 1980′s K-Citymarket stores had around 5000 different stock keeping units (SKU) in the food section. Today there are around 20 000–25 000 units. With such a large number of SKU’s and the stores being so different, it is impossible to plan assortments without suitable tools.

In addition, according to Akseli the basic most important 1000 products still stand for 50% of the sales and the most popular brands remain the same from year to year for all the chains. The remaining percentage of sales is the big question; it varies enormously at store level. This is the assortment that should be planned most carefully and which gives every store its competitive advantage. This is where Analyse² comes in.

“We thought about this problem and started to solve it together with Analyse², and soon found a common idea of how to do it”, Akseli says.

Analyse² Solution

Analyse² and Kesko Food Commercial Department launched the category management tools related to assortment planning and pricing and a supplier collaboration system in the beginning of 2008.

According to Akseli the uniqueness of the system is that you can combine three important elements: the customer loyalty card (K-Plussa in Kesko’s case), rich product information linked to customer needs, and store level point of sales (POS) data.
“This combination is so effective that we are able to build very unique assortments at store level for the customers. It depends a lot on what kind of shopping the customers are doing in the store”, Akseli says.

With the Analyse² solution, Kesko can now find trends and look at the customer base in the stores. In addition they can see what shopping behavior is typical in each store, allowing them to better build the assortments.

“The assortment is not anymore just suitable, we are hitting right in the target.” Akseli says.

According to Akseli retail is “basically a very simple business”, but he adds that if a company wants to have a competitive advantage towards its competitors, it has to be open to new solutions. They are simply necessary.

“You may lose some money (while investing), but you can make hundred thousands more”, he says.

Akseli believes that you cannot compare standard software like ERP for assortment building to the versatile Analyse² Galaxy solution. He adds that the “safe road”, meaning using one integrated solution from one provider, is very typical of the IT department. It does not, however, always mean it is the best way to operate.

“It’s easy for the IT managers, but you are not the best in the business if you take decisions like that.” Akseli says.

Next Steps for Kesko

Akseli says the next step would be to refine the assortment planning tool to make the store level assortment planning even more accurate.

“Our main competitive advantage is having the right products. I think it’s one of the most important advantages; maybe the most important one”, he adds. It is therefore also the area he believes Kesko should focus on developing.

He concludes in reference to Kesko, “we are not the cheapest, but our pricing is very reasonable. We have better assortments for the customers, and they are not built only with what the customers are saying, they are built by what they are actually doing, and that’s the big difference.”

The customer

Kesko is a major Finnish retail specialist operating in the Nordic and Baltic countries, Russia and Belarus. It operates in the food, home and specialty goods, building and home improvement, as well as in car and machinery trades.

Kesko has approximately 2.000 stores in eight countries and their total retail and B2B net sales is 11 billion euros.

ECR Baltics Congress: Return of Baltic Tigers

Author: Constant Berkhout, an Independent Consultant in the areas of Category Management and Shopper Insights

In November 2011 the ECR Baltics committee organised its fifth congress. Analyse² is a proud sponsor of the ECR movement in the Baltic countries. We were pleased to deliver a presentation on shopping and retail trends and how these affect assortment decisions of both retailers and suppliers.

It was a great pleasure to meet the people from Estonia, Latvia and Lithuania, who are known for their warm welcome. They have kept their good and open spirits despite hectic economic turbulence. Professor Morten Hansen showed that after a boom, the economies in these countries collapsed deeply in 2008 / 2009. The Baltic countries managed to overcome strong negative growth figures of approximately minus 20% and turn these into the growth figures of 5% that we see today.

On behalf of Analyse², Constant Berkhout illustrated that the recession will not stop the shopper from looking for value once the recession is over. Once they have tasted private labels they will have more appetite. And Lidl has recently announced plans to open discount stores in Lithuania. The other shopping trend that will impact retailer decisions is the hunger for more convenience. This finds its origin in the demographic shift to an older population and the urbanisation trend.

These shopping trends need to be reflected in retailer decisions now. And this sounds easier than it is. When it comes to setting the right size of the assortment, some retailers cut off the tail too quickly without realising they miss out on unique shopper needs. Or they have too large an assortment with products that cannibalise each other. You need to find out if and, if so, which unique contribution each product delivers. Socio-demographic information is helpful but surely not enough. If we tell you about two Englishmen who were born in 1948, have been married twice, have children, are members of the Church of England and have a high income, the first assumption is they shop in the same way. However, this description is true for both Prince Charles and Ozzy Osbourne and their shopping behaviours and needs could not be more different.

For more information on Analyse2′s presentation at the ECR Baltics and case studies about setting the assortment size please contact:

Contact Information:
Jorge Monteso
Vice President International Sales & Marketing
jorge.monteso@analyse2.com
GSM: +34 686 63 40 84

 

Analyse² at the ECR Forum in Riga, Latvia

Analyse² attended the 5th annual Efficient Consumer Response Baltic forum in Riga on November 10th, 2011, where Contant Berkhout, consultant in the areas of Category Management and Shopper Insights, gave a speech for us.

ECR Baltic Forum is the annual meeting for the managers of various roles operating in both retail and manufacturing sides of Fast Moving Consumer Goods (FMCG) sector. The aim of the event is to facilitate the development of FMCG sector in the Baltic countries, knowledge management and implementation of new – globally existing solutions on the local market.

This year’s forum slogan was “Improving Together!” – retailers and manufacturers together to serve consumer wishes better, faster and at less cost by bringing efficiencies and removing unnecessary costs from supply chain and creating value for consumers.

Contact Information:
Jorge Monteso
Vice President International Sales & Marketing
jorge.monteso@analyse2.com
GSM: +34 686 63 40 84

To view the presentations during the event go to: http://www.ecr-baltic.org/en/ecr-baltic-forum/ecr-baltic-forum-2011/presentations/

For more information about the event, click on the image below to go to the ECR Baltic website: