Optimizing the Category Management process for an international Grocery Chain
A customer focused, structured and streamlined approach on reducing number of SKU have resulted in a more efficient assortment with increased sales with less number of articles
Challenge
REMA 1000, a leading Nordic grocery chain, faced challenges managing an increasing number of articles in the assortment. The proliferation of suppliers and SKUs per category, coupled with undefined floorplans and planograms, resulted in subpar customer experiences. With 680 stores in Norway, REMA 1000 sought Forma 5's assistance to revamp its category management processes for a more efficient assortment and enhanced performance
Discovery
The project adopted a staged approach, closely collaborating with the client to grasp the company's current category management processes. Key project phases involved a thorough assessment of current performance, focusing on assortment, planograms, and operational issues within the stores. Forma5 then provided recommendations for the new approach. The overall project had a pilot phase and four waves across a total of 40 categories. During the discovery phase, our team diligently collaborated with REMA 1000 to gain a comprehensive understanding of their existing category management processes, profitability goals, and growth aspirations
Current Performance Evaluation
Forma5 conducted a comprehensive assessment of REMA 1000’s category management performance, focusing on assortment management, planograms, and operational challenges within the stores related to these topics. Drawing insights from our evaluation, proposed recommendations for an improved approach were developed. This novel strategy included a pilot phase followed by four subsequent waves. The overarching goal was to enhance customer experiences, streamline operations and alleviate the workload for shop owners. The project was tasked with not only devising the strategy but also executing and implementing it within the stores.
A key ambition was to clearly define a customer-focused assortment and create effective planograms that drive sales and profitability for the merchants. Total assortment was evaluated based on profitability and importance for the customer
Setting the right assortment
An efficient assortment is key to an effective supply chain. To optimize the assortment, a clear process including tools where developed. A clear ambition was to cover the most critical customer needs nationally and regionally with as few duplicates as possible at the SKU level, ensuring efficiency and effectiveness.
The project developed a value-based product segmentation, looking at criteria such as, rate of sales, sales predictability, and volumetric information.
A clear target was to increase sales with less SKU’s and still cover all important customer needs, but also to evaluate if certain customer needs were not covered by existing assortment
Crafting good planograms
Creating compelling and effective planograms that drive sales and profitability for Merchants and ensuring maximum impact, was key for the project.
Based on the new assortment per category, the project developed an improved total process for setting the new assortment and creating new planograms.
The key factor was the implementation of new way of working, significantly enhancing the efficiency of category managers.
Forma5’s partnership with Flow Insight, focusing on retail shopability from entry to exit, was important for the project’s success. This tool enabled REMA 1000 to benchmark, identify, and address shopability challenges effectively, testing in real-life settings at REMA 1000 shops
Secure a quality rollout in store
Securing implementation of the new assortment and planograms where early on addressed as a key ambition.
The categories were rolled out gradually to ensure learning along the way. All categories were assessed in a wave approach with feedback tools for measuring execution and satisfaction scoring from a store level.
To secure quality in implementation and roll out in the store, the collaboration between store managers/staff, regional sales department, and central category team was essential.
By implementing these changes, Rema 1000 aimed to elevate its category management practices, benefiting both customers and shop owners
Impact
The proposed category management approach offers substantial operational improvement over pilot phase and 4 waves.
Figures on the right: Illustration on share of reduction in number of SKU’s pr wave.
Although the resulted in reducing the number of unique products sold, sales are still growing – removing duplicates in the assortment and redirecting sales to other products.
Like for Like sales on the categories effected was growing substantial more then the total store. (*incremental growth for related categories vs. total store)
Another crucial KPI was the satisfaction by the franchisee’s on the implementation of the new planograms and assortment.
The implementation was meassured on a satisfaction score by all stores. In average the satisfaction scoring was 4 on a scale from 1 to 5. (*wave 2, 3 and 4)
Please contact Forma5 for more details on the project.
