Planogram Analysis: Key Display Performance Indicators [Webinar]

hi guys we are welcoming all of you at our today's webinar we are planning to talk about kpis in retail and let's begin uh so yeah as i mentioned before we are going to speak about kpis in retail and there will be some speakers for you guys today it's me mark rose i'm the business development manager and anna irma anna is the head of business development uh so hey anna one more time just hey hello everyone hello mark okay and let me start with a brief introduction of our company um yeah uh we have been working with the retailers for more than 11 years in the markets and lithium is a platform that help us to automate the different areas of supply chain with the help of ai and machine learning and platform consists itself of three modules i will give you a brief introduction about all of them so

inventory optimization helps us to automate the replenishment process both at the level of store and dc our promotion management is the solution that uh intended to manage all promo activities and forecast sales for the promo period and our shelf efficiency it covers end-to-end merchandising process started from planogram creation to its execution and analysis and currently we have projects in 16 countries we implemented more than 160 projects total and at the moment we have around 100 employees in our team and before start our webinar i just want to add a few more words about our customers and i want to say that we are actually working with different type of retailers from different verticals and our background mostly in grocery retail housing beauty convenience stores supermarkets and we also had experience working with the electronics oil and gas

diy and toy retailers and uh i will pass the word to anna so anna will start our webinar anna you're you're worried uh anna we cannot hear you uh i think you're muted yes sorry sorry i'm here can you hear me now cool yeah okay great thank you for the introduction mark uh before we go to the topic itself i would like to mention that uh they're like what we are going to cover today is based on our expertise in uh working with the retail industry in terms of the merchandising uh we have one of the solutions shelf efficiency that covers the end-to-end merchandising process and everything that we are going like to show today is based on our expertise here in this area and uh we will be providing some reports in like in our presentation and those

reports are also made from the leafer shelf efficiency system so let's start and before we go to the like the kpis itself uh i would like to mention like why the merchandising layout is that important so basically their merchandising layout so like the shelves where their products are situated as the way how retailer communicates with the customer so it's the area of communication of the retailer with the client and of course obviously this like layout it should be attractive to the customer it should be understandable clear and uh very easy to navigate through but uh there is a lot that lies actually like behind that attractiveness and besides of being like attractive the planogram should be like data driven and it should be based on some sales numbers on some profit and so on so what's like how they say

like what's get mad and measured gets managed so we can uh manage only things that we know like the data uh so how they're basically we can evaluate their merchandising layout from what angles first of all it's the capacity so basically it's uh how much we put in our layout in terms of money in terms of diversity in terms of like diversity of the assortment and diversity of brands maybe our like private label brands and so on so how much is in this planogram actually in terms of the money and in terms of like the placement itself the second one is how manageable this layout is so how we are able to uh control their uh first of all not only like the creation of the planogram but also like the execution how our uh like store managers or merchandisers they create the layout according to the

planogram that were built in the central office and secondly it's uh they're regarding the manageability it's how quickly we can adjust this planogram according to the data assortment rotation according to the some changes in the sales changes in the demand and so on uh and of course like we talked about that the planogram the layout it should be attractive it should be nice to have a look at and easy to navigate through and of course like for the retailer for the retailer it's important that it should be standard for the customer of in each store so for example if the customer visits their uh store in one area and after that he goes to the same retailer in another area he should like clearly recognize the plan around the layout and it would be with it will be uh like very uh like clear for him that it's the

same retailer and it of course it influenced the customer loyalty and of course it should be uh profitable it like the main aim of the retailer is actually like to to make money to get sales and that's why the main aim of the planogram the way of communication with the customer it should bring us money and it should based on like first of all like the sales and uh uh of course on profitability uh let's uh go further and uh like it might seem rather obvious but still it's worth mentioning that the planogram should be in this case like uh to uh to fill all these criteria it should be item based not like category or brand based it should be item based titan based planogram is the planogram when we clearly understand what sku is placed on the shelf in how many facings and why it is placed here because like it brings us

the sales it influence the customer loyalty uh it has a good margin for us and so on so we should know all these answers and for uh let's take a look like what's the difference between their like brand based or category based and item-based planogram and why it's critical to have the item-based planogram uh so when you have some like category based or a brand-based planogram we just like know the areas and highlight the areas on the planogram that is dedicated for each brand for example but when we have the item-based planning ground we can clearly see how many facings why like why this uh this uh sku is placed here in how many uh in how many facings uh and we make we fill the shelf according to the dimensions of each sku on the shelf and we are able to calculate like uh like precisely for the shelf how many pieces should be and that influence only not

only like the merchandising process but it can also influence like the logistic process the human resources because the manager should should have time on like refilling the goods on the shelf and so on and like the replenishment process of the client as well uh so of course it's like very critical for the retailer to have not the category based or brand based but the item-based planogram uh let's go further and uh what uh so what are the key performance indicators that we are going to cover today uh it's like we are kind of uh aggregated them by groups and we will consider each group of the kpis so first group is manageability so how we can manage the planogram how we can manage the planogram and execution of the planogram uh the second is uh the kpis regarding the product range so what

uh like how diverse it should be what kind of brands what how many in what quantity we should put in this planogram uh the third is capacity like how much in terms of money how much in terms of diversity is included in this planogram uh there uh next one is compliance so how it is in accordance to our abcd how the planogram is created according to the sales that it brings to us and the last but not the least is of course like about the money how much what is like the margin that is like we get from this uh layout from these planograms and with this being said i'm giving the word back to mark and he will he's going to talk about like the first uh keep a group of kpis about the manageability i'm ready i'm ready okay guys yeah we will we are going to talk about

manageability indicators and i want to say the first group uh uh the first group is uh manageability indicators like money when we start to analyze and evaluate the layout we need to understand uh how well we manage it and are all the goods that we are like introduced to the assortment and they're on the sales floor are they like in their places are they displayed in the right number of facings it happens that some products uh is sold in the store but it has some sales and it's not recorded anywhere in any planogram so that's why the important part to understand what uh proportion of goods from all activities good is manage manageable and we can calculate this in terms of money and in terms of of the number of sku we take the income of from the place goods in

the planogram and correlate it with the total income and get it to the share so ideally the share should be 100 percent or at least it's it's supposed to strive for 100 percent and exactly the same supposed to be with the quantity of products that place in a in a planogram so in our test planogram uh which we will continue to consider as example of these indicators we have worked and come up to the facts that the manageability of our product is almost 100 and that all the products that is already on the shelves they are placed in the right spots so uh yeah the next part that i want to cover is assortment indicators and um i want to say that the first indicator is the average facing of the category uh that it helps us to asset the density of the assortment and determine its with uh with the amount of pieces that is already like

placed we compare the number of sku and uh make up the assortment of the selected category with some number of facing and as a result we get uh some value that shows us how many average phasing of each sku of our goods can be placed so for example if the number of the average facing is bigger than one it means that there are like some more facings than sku and we have variances to add items to the assortments to our layout and uh the value of this indicator may depend on some categories and for which calc like categories that will be calculated and uh for example uh the bigger the store the wider the facing is and the smaller the store the more facing stands to go to one so the next indicator is the average whiz occupied by one sku

in our category so this kpi helps us to understand how much shelf space each item need to take sub and how much like for entire category it will take as a result and the indicator helps us to understand the density of our assortment but uh like based on our centimeter and visually like helps us to understand how many um how to say it in the right way um how how many centimeters we will need on how much one sku will take in our average width and the figure can be useful for us when for example you develop new formats a format like for a larger store let's say and with the same assortment policy that you will use you can understand how much you will increase the area of the category of your products and how much space in your shop

uh will eventually need to allocate like for it and we also interruption now we have one question in the chat uh what is product facing uh i will just quickly bump into your picture to explain what is what we call product facing so uh basically the facing is their uh number of esca use of a number of one sku for example if we have on the shelf for fanta and sprite uh coca-cola is in quantity like 10 pieces so the number of faces here will be like 10. so we call the facing is so they're like one item of each scale on the shelf uh is it clear now maybe if there will be any questions i will just like bump into and answered

them as well thanks anna for answering the question i wasn't paying attention to the chat so uh i also didn't mention our abc analysis in our assortment indicators so at the most simple and at the same time effective tool that helps us to work with the assortment uh since labc analysis will help us to evaluate some effectiveness of the assortment that we will have it also help us to assess some like completeness of our assortment as it divided the good into the groups according their sell sell ability based on abc categories uh yeah we can jump uh to the next slide and now let's look at our example of our planogram by using this indicator so for our analysis we already took uh ready-made planogram and it's like real-life example of working with the layouts so this uh this as an example we took a sparkling

water category and this category has the same features that many categories have so here is the shares of brands that can be redeemed and there are their own principles of layout like for example made by leader by type of packaging and so on and in our planogram assortment each specific brand is different and it's given that the shares that need to be redeemed and the density of the assortment in the like context of brands suppliers and they can be easy like different and our planogram will be indicated by that so we will go ahead and calculate the figures for the average facing and the average with output in the like table on the right that you see in here like by average facing so we see that the average facing for our category that we have is like approximately six phases so our six facings when we're working with

the sparkling water in the normal value of hyper markets let's say uh but here we see that the our like panorama is not normal that uh like it's not uh it's not uh so great so accordingly that uh we can conclude that category of the assortment of our example is not good also so we will pay attention to the like uh bigger selling brands in our example it will be relevy that have uh a that have like facing value 8.4 facing and we will ask like let's say why why why did this happen and well first of all it is like our sales leader in here and secondly the brand has bought itself uh and a certain part of the shelf as well so at the same time the density of the assortment of this pro producer like

uh wiela v uh it will have a rather narrow positions in a great number of facings and if you look at the other brand uh like in our example it will be coca-cola and propel uh the occupy for the usual number of facing will be like 2.83 per each category uh guys if it's not that clear you can type your questions to the chat and we will go ahead and answer okay yeah i will jump to the next slide then um and now uh let's talk about our abcd analysis and we took our planogram and color it with the abc with the abc analysis we also work with the layout and evaluate the effectiveness of the number of facings so the top planogram what it was before and we work with the planogram we

increase the number of facings of category a that colored by like green color in here uh and we mark it like uh best sellers and reduce the number of facing of the least sellers like it's example of like red colors orange colors and those black colors so uh visually you can see that we have like significantly expanded the layout of salt goods and try to narrow down the low sole goods as much as possible so you will see it on the bottom example so after that uh yeah there there will be like more selling categories for your shelves uh i will pass my word to anna again anna are you ready to pick up the mic yeah sure i'm here yeah uh so the next by the way the abcd analysis

which was covered by mark previously it is taken from our demo test like system uh lithium shelf efficiency where we are with the help of different tools we are able to highlight the planogram according to like the abcd according to sales and so on so regarding their next uh indica the next group of indicators it's actually like capacity indicator so it means like how much money uh we invest in like this planogram and uh of course so there are like basically two indicators one is uh inventory so it means like actually like how much money we invested is calculated like the uh shelf inventory so the inventory that is placed on the shelf the number of inventories and multiple by price and the second one is uh for how many days of sales we have the uh inventories on the shelves so for

example if like it's uh coca-cola is like 10 bottles on the shelf and we have sales like approximately uh two bottles in a day it will be like for five days so it's like the capacity of the coca-cola brand uh why it is important to understand the these two kpis is the first of all so the first one is that it allows us to understand how much money we actually invest in our layout and if we are increasing some category and decreasing some other category we may either like increase our investment in this vendor or in this particular sku or decrease our investment in this particular sku so it's important to understand that we don't have some like dead stock on the shelf for like for a lot of days of sales and maybe it's a sign for us to like decrease the facing and uh also it's uh uh like it allows us to maybe calculate

some marketing budget so that we can uh like sell this place on the shelf or to our vendor like for some marketing campaign or so on and the inventory in days the second indicator it help us to understand for how many uh days we have uh stock or like inventories on the shelf why it's important to calculate this indicator because uh it will help us to understand for example like i mentioned that we don't have a dead stop so for example we have there uh some sku for like a lot of days of sales for like 30 days and this good is like a good good turnover with inventory to nowhere it means that uh like we are just taking the shelf by this okay this this is just occupying the shelf and doesn't bring us a lot of money and from the other hand so if it's like more than one so that uh the days of sales it means that uh

like we can also calculate um the number of how many refills they should be done per day so if this indicator is one it means that uh like okay for one day we sell like all the uh all the layouts from the shelf uh if it's a couple of days it means that uh like uh okay we should we have the stock on the shelf for like two days uh and it helped us to uh their uh number of replenishments so for example how many times per day should the uh store manager go to the shelf and refill the shelf and also uh there is some like uh some moment that is important to mention for convenience store for example uh for those stores that uh have either like very limited space or in the warehouse in this store or sometimes they don't have any space any warehouse at all so it's important to understand uh for for example if

we uh refill this boot from the vendor and we get supplies each like two days uh so in this case we should have the stroke balance on the shelf like for two or three days so till the next refill so that's why these indicators are important to be taken into consideration and that's why it's important to calculate them now let's go further and have a look at our examples uh so what we did here we are highlighted the planogram according to the uh the capacity so for how many days of sales we have the stroke balance it's their uh planogram on the right side and we have inventories that we invested in the layout on the uh right side uh so the inventories in money we calculated uh for the category so for the uh like sparkling water in general and we also divided like have this information calculated by the supplier uh so

we have here like five suppliers and how much we uh calculated for each supplier on the shelf and inventories in days uh we understand that okay for example for uh we lobby we have rather a lot of space on the shelf and a lot of money is invested here but if we take a closer look to their numbers so we can see that on average there is like three or four the stock balance is for three or four days of sales uh now let's go further and uh the next uh indicators we are going to talk about they are really important for the retail industry uh the first one is return rate and second one is abcd compliance uh so what does it mean so return rate is basically the rate that shows us their uh correspondence of their share of sales that this sku occupies and share in their layout in the linear

layout that it occupies on the shelf so it's the correspondence and connection of their share in their revenue and share on the shelf ideally this coefficient should be close to one uh if this so it means that this is like the perfect balance uh but if with this coefficient is like more than one it means that we should uh like uh increase the number of facings and because this sku brings us more sales that is it is placed on the shelf and vice versa if it's lower than one we should uh decrease the number of face and so it means that it doesn't bring us that money as we have their face number of faces on the shelf and uh the last indicators here is the abcd so the second indicator basically is abcd compliance uh so it's like the correlation of their number of faces of category i mean category here is like a b or c category

or d category that is planned and number of phases that is like in fact so uh ideally like by every tailor has different situation but by default the abcd is like a is uh eighty percent b is fifteen percent and c is five percent but uh each retailer can have its own uh and we should understand so if in fact the a category occupies like the eighty percent of the shelf and like or more or less and b category occupies like fifteen percent of the shelf and so on uh and like we saw in mark's planogram when we changed the layout for willa v water uh the like green category it became like more uh spacious on the shelf and it has more faces on the shelf uh let's go further and let's uh take a look at the return rate that we calculated for our planogram uh f4 we calculated it for the each

category so for the first the soft drinks uh uh and uh we calculated it for like each like sub category uh so uh there are what we can see here that there uh soft drinks uh return rate it's like close to one okay it's like more or less fine uh but for example the energy drinks it brings us uh more sales that it has the space on the show so probably we should think about increasing the space for the energy drinks uh and uh vice versa called tea and sparkling water they don't uh they occupy much more space on the shelf but they don't bring us as many sales as like the other categories so maybe during like the next iteration we should think about the decrease about decrease of the number of faces and uh now let's uh go to the our next part and the next part we will understand the return rate not only at

the level of category but at the level of goods so here we can basically see that uh there uh like our banach and villa v it's like more or less fine because the return rate is close to one uh but we can see that san peligrimo is their coefficient is one and 74 so that means that it brings us more sales like we can see uh here and then it it's like a share in there with but we can see that actually the uh part of it in like the sales is really really small so maybe like even the coefficients is like bigger uh like maybe we should don't really like take a lot of time pay a lot of attention to that and uh the last one let's have a take a look at the abcd uh coloring uh for this planogram and compared to how it is uh it is in compliance with the abcd uh so basically what we can see here we can

see here the comparison of the initial planogram and according to abcd analysis and the abcd uh planogram after the changes and we calculated here the deviation between like our previous planogram and between the planogram after the changes and we can see that uh okay so uh and the deviation for the a category is decreased from uh 37 to 10 uh and actually like a categories the most important one to be analyzed and uh the most important one that we should pay attention to and for the other categories the deviation is also like became smaller so it means that our planogram it became like more compatible with their uh like classic planned abcd uh like consideration and now let's go further to their uh next group of indicators it's a profitability indicators uh so basically it indicates

indicators that help us to understand how efficient our planogram is uh so the first one is the profit per meter so basically it's like the profit that we're getting money and divided by the linear loyalty meters so if with this indicator we understand how much profit we get a per each meter of our layout which is like very important in terms of like maybe um considering uh maybe like during the space management where we understand how much place to uh dedicate for each category on the floor plan and we compare one category uh by the profit per meter with the other one category and that will help us to make a decision the next one is profit purchasing uh so we understand how much profit each can each facing so each sku uh each like quantity of each square uh brings us in terms of the profit so it's like basically the profit divided on the

number of faces and the last one is like profitability in general so it's like the merging so the profit divided by profit and money divided by inventories in money and of course it's important to track these indicators in dynamic because their sales are not stable first of all and secondly we don't know how like or uh what is the reaction time and so on so we need to track that in dynamics and we need to compare this in this indicator in dynamic uh allow now let's go to see uh how the these indicators are calculated for our example with the uh sparkling water and we can see that here we calculated the profit per meter the profit per facing and profitability uh so for the sparkling water for example it's like more or less close to their uh like middle or middle calculation uh like i mean like all vendors are close to the middle calculation uh profit profession

is also like more or less close the propel for example is a little bit bigger than the coca-cola uh but you know before that we decided there like there is no reason to increase the faces focus supplier and we can see also profitability for uh like each uh brand uh that is like placed on the shelf and as i mentioned it's important to understand and to track these kpis in dynamic and to understand how they changed how they changed after our changes in the planogram how they changed in time and so on uh but uh basically like what get measured gets managed so it's important to keep track of that all the time and create the planogram not on only on the attractiveness of the shelf but also on profitability uh this is it regarding our main part i will give the word to mark to just summarize what we talked about today uh

mark thank the floor yeah i'm ready i think we went all of like all through all of the indicators and we can like summarize the results of our analysis and work with like how how we work with our planogram so first of all we made sure that proportion of the place good is 100 which means that we manage the layout and we can change and influence the layout so the second part that i want to mention that we have assets the assortment density and it's low enough and we can easily expand it uh to the assortment of our category so the next step is like in terms of return the category that takes more space than salt and it's like in accordance to like with the fact of the density range uh it's not like high enough we can conclude that it is safe for us to reduce the category and we

will not lose as well as as well like in the layout and our presentability of our products okay and also after we had worked with our abc analysis we optimized the layout and we increased this some sales for uh for the share of the best-selling products in category a and the share of uh the layout and presentability a in category a was increased by 70 and also uh we calculated the profitability of our layout for the reporting periods and we mark these indicators by which we can uh we can check the next period so how much we are working with the efficiency by itself and how much it changes and increases and so on so we can like go ahead and just sum up everything that was said before also guys uh if you have some questions

left while we are still here we can just easy answer to them i think yeah we we still have like few minutes left until the end of our webinar yeah thank you for summarizing uh and i hope that this webinar was exciting and interesting for every participant and i will add that if this topic of the merchandising is interesting for you if this process is not well set up in your company we will be uh glad to jump on the meeting and discuss like this process with you and showcase our approach to that and the experience of our customers uh thank you everyone for participating mark thank you for being host with me thank you for your speech everyone has a good day have a good day ahead and hope that your merchandising process is running smoothly and brings you the results you you expect from it

bye bye guys bye bye