+

Merchandising and Assortment planning - across Retail formats

Group1B
Aditya Krishnakumar | Arjun Menon | Kapil Kumar Dhanania | Smriti Merhotra | Suraksha R | Vivek Singhal

Is there a match between retailer strategy and their in store Assortment and Merchandise Planning ?

Does the stores assortment planning help identify key store attributes ? Is there a mismatch between customer need and store assortment ?

The Goal
What are we trying to do ?

Formats Chosen

Breakfast Cereal Ketchup Shampoo Detergent Instant Noodles

Product Categories
Category should be available across all trade formats Category should have wide range of SKUs Mix of planned and unplanned purchase items

Chocolates
Soft Drinks

Variety : Product variations available in category Brands : Brands stocked in shelves Stock weight : Visual measurement of stocking density Avg mfg date : Random sampling to determine invetory turnover SKU Range : Minimum and maximum SKU sizes available

Attributes investigated

+
What we found

Big Bazaar
What we expect

Big Hypermarket

Destination for large bill value purchases with low frequency

Greater number of larger SKU sizes Limited assortment ; focus on fewer players

Big Bazaar
What we found

Product Category Confectionary Shampoo Ketchup Detergent Breakfast Cereal Soft Drinks Instant Noodles

Variety High High High High High High High

Brands Available All All All All All All All

SKUs Available Min Max 100g 180g 200g 160g 300ml 80g 700g 1200g 6kg 700g 2.25L 500g

Stock Weight 95% 70% 80% 80% 70% 90% 90%

Avg. Mfg. Date Aug-11 Jul-11 Aug-11 Aug-11 Jun-11 Aug-11 Aug-11

POS material Nil Nil Nil Nil Nil Nil Nil

Reliance fresh
What we expect

Destination store for groceries and essential-everyday items A typical basket would consist of essential items like groceries, toiletries and other FMCG products Large variety and mid-size to large SKUs for all products

Reliance Fresh
What we found

Product Category Confectionary Shampoo Ketchup Detergent Breakfast Cereal Soft Drinks Instant Noodles

Variety High High High High Low High High

Brands Available All All All All Quaker, Chocos, Local All All

SKUs Available Min Max 18g 90ml 200g 500g 200g 600ml 40g 95g 400ml 1kg 4kg 800g 2L 640g

Stock Weight 80% ~100% 60% 90% 40% 80% 65%

Avg. Mfg. Date Sep-11 Jun-11 Sep-11

POS material Racks for impulse Nil Nil Nil

Aug-11 Oct-11 Aug-11

Nil Refrigerator Nil

Kirana Stores
What we expected

Largely convenience oriented purchases

Smaller SKUs predominate

Variety would be low Brands available would be low

Kirana Stores
What we found
Product Category Confectionary Shampoo Ketchup Detergent Breakfast Cereal Soft Drinks Instant Noodles Brands Available Britannia, Bisk Farm Mainly P&G brands Maggi, Local Brands Henko, Wheel, Tide Local Brands Coca-Cola, Pepsi Maggi SKU's Available Min Max Small SKUs only Only Sachets 200g 500g 500g 300ml Rs.5 1200g 5kg 1kg 500ml Rs.60 50% 50% 70% Aug-11 Stock Weight 80-90% Avg. Mfg. Date POS material Nil Display Sales Nil Nil Nil Refrigerator Fliers

Variety High Low Low Low Low High High

Yes! Store assortment planning is in line with store strategy Hypermarkets store larger SKU sizes than Super Markets Kirana Stores stock smaller SKUs exclusively in certain categories Greater importance given to unplanned purchases in Kirana stores

The humdrum stuff

We found what we were looking for

Unwarranted presence of smaller SKUs in larger formats SKU range of RF similar to BB EDLP pricing format yet larger variety and assortment in large formats Discrepancy in layout strategy regarding placement of planned and unplanned purchases Unwarranted presence of larger SKUs in smaller formats

Something different
What the theory didnt quite support

Lower variety in planned purchase product categories in kirana stores

Big formats stock smaller SKUs to exhibit variety Reliance Fresh facing problems in Assortment planning

However : Assortment is a success for unplanned purchases in RF

Destination categories differ dictate layout design

Meat of the matter

What do these discrepancies mean ?

Kirana Store purchase behaviour product driven and not brand specific
Kirana Stores stock SKUs according to customer (pre)order

As Category Manager/Retail Manager

Reduce smaller SKUs increase inventory turns and GMROI Lower variety in brands better strategy for EDLP

Unplanned purchases in modern retail : provide largest SKUs as well

What do we learn ?
Real world implications

As Area Sales Manager :

Kirana Stores ideal for brand switching Kirana Stores sell large SKUs as well (If data collection permits) Obtaining customer pre-orders will assist in bundling

+
Thank You