Business Objective: With increase pressures coming from e-commerce, specialty chains, and reductions in center store sales performance, our retail client, Retailer Y, was looking to develop a more effective way to develop, validate, and communicate innovation to their executive leadership. By implementing ShopperMX™, they expected to reduce costs, drive efficiencies in their reset process, and build in rigor that didn’t exist.
Business Functions Impacted:
Store Layout & Design
Business Situation: Retailer Y challenged InContext to help them develop a model using virtual solutions that would allow them to save time, reduce their investment, and mitigate their risk through validating their ideas. Historically, Retailer Y used an innovation center which was costly to maintain (facility, labor, fixtures, and products), took extensive time to set and reset, provided little flexibility to make real time changes, and was limited to research that could be conducted in a single physical location.
While meeting with the client's leadership team, InContext identified a few alarming concerns:
- In most cases, final arrangement and assortment decisions were based on subjective decision making (using historical sales data and other sources), ultimately by the buyer and buyer’s leadership.
- Resets could take up to 6 months to activate in-store
- 60% of their resets did not yield category growth
Additionally, the maintenance and labor costs of maintaining their two facilities was extensive:
- $1.5M to complete initial setup
- $300k to staff annually
- $250k to maintain annually
- $400k in leased space
The final arrangement/assortment was seldom tested prior to rolling out in-store. For high risk resets, a controlled store test could be deployed within 25 to 50 stores, would take 3-6 months, was limited to the geographic footprint of the test stores, and lacked control as there was limited exposure to competitive activities, store promotions, and other variables.
Engagement and Collaboration
When communicating resets to the stores, the organization would distribute physically printed and bound merchandising books, the costs of which were $500/store each year, and were produced off of ad-hoc pictures or JDA files.
InContext partnered with them to design and implement an enterprise virtual platform through ShopperMX™.
Phase 1: Create An Ideation Tool-Kit
- Store Layout & Design teams work with InContext to build their top 3 store footprints in VR.
- Merchandising teams, in collaboration with their agency, worked with InContext to build product, signage & display libraries that could be integrated and moved throughout the store.
Phase 2: Design New Shopping Experiences
- Store Layout & Design created multiple new store concepts by moving aisles, categories and fixtures to update the flow and open up areas for category reinvention.
- Merchandising and marketing partnered with a focus on high-margin categories to differentiate themselves from the competition. They experimented with a destination-focused center store, combining merchandising tactics with navigational signage focused on benefits; enhancing the shopper experience through innovative gondolas and displays.
Phase 3: Collaboration: Store Layout & Design, Merchandising, Marketing and Executive Leadership reviewed each new comprehensive concept within ShopperMX™.
- New store concepts were visualized on a life-size screen for a real-world perspective on the proposed shopping experiences.
- Teams conducted store walkthroughs to envision what shoppers would see when they entered the store and how their navigation and interaction with key categories would change.
- ShopperMX™ highlighting tools enabled presenters to call attention to product placement of key manufactures and high-margin products.
- Sign-off was gained from executives.
With ShopperMX™, Retailer Y was able to establish a best-in-class innovation process that cut innovation timelines in half. Their Post It notes with SKU-level data were migrated to visuals overlayed on the virtual wall. Leadership walkthroughs went from three rounds down to one session.
The costs for resets were reduced significantly:
- $200k – $400k to setup
- $75k – $170k to staff annually (assumes 1 – 2 employees)
- $25k - $100k to maintain annually
- $7k - $10k in leased space annually
In this particular scenario, the client recaptured 3% market share that had been previously lost to specialty channels.
Retailer Y was also able to mitigate risk. During the course of the launch, InContext worked closely with one buyer who was making significant category changes, yet there was no plan to test the new planogram in-market. The buyers’ assumptions were proved incorrect with an alternative recommendation generated from ShopperMX™. This was validated subsequently through a controlled store test: the resulting sales data was .02 brand share points from the reporting data from ShopperMX™.
With the final planograms integrated into ShopperMX™ and their virtual store, they had a great medium to communicate to their store managers. The new ShopperMX™ Connect deployment enabled store managers to walk the floor and visualize the changes and how they would need to come to life in-store, rather than reviewing 80-100 pages of paper.
And while difficult to pinpoint, the company felt strongly that the improved process and its accessibility to merchandising and store design teams made store innovation the norm instead the exception.
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