Focusing on space management will maximize and drive incremental sales at the store shelf.
Over the past decades, we have observed considerable innovative advancement in many of our daily tools. From phones and cars to how we shop and watch television, they have all been reinvented in much more imaginative ways and have become simplified and intelligent. At the same time, they opened a world of new opportunities, each on its own. This is normal. What is abnormal is the speed at which we are seeing innovation take place. This is opening a world of opportunities daily for startups to disrupt.
All is true except in category management. Innovation has been fragmented and highly repetitive. The most challenging and most stagnating component is space management. It has gone through two decades of more of the same, just with different platforms, different skin and different lipstick. This type of advancement isn’t innovation. Space management is way overdue for a “burn the boats” approach – a whole new way of thinking.
Focusing on space management or building planograms and supporting tools for building these visual schematics and all of the components around them will maximize and drive incremental sales at the store shelf. This seems simple and harmless enough, but not quite. In addition to working with sales data and many other sources, the most complicated of them all is the space component of determining the product location and real estate on the shelf. The complication comes from balancing the art and science of building a schematic, not to mention all the negotiation aspects of getting a product to the shelf.
How We Got Here
The tools evolved and advanced through the years, but the process remained focused on moving boxes on the shelf and manipulating facings. Many careers were built literally by moving boxes on a digital shelf, analyzing and considering sales performance data from chain to store level, and mainly using rules and formulas to generate a planogram for the optimal shopping experience for that chain and store.
This was a laborious effort, especially when the localization of planograms became the norm. Expanded customization, scripting and formula-based rules capabilities in core solutions were needed to solve this problem. This mainly consisted of automating repetitive tasks without the benefits of artificial intelligence (AI) advancements.
Those responsible for the birth of category management, and who built the industry from day one, still influence it decades later. The ingenuity and discipline they introduced to retail are everlasting. Here’s Dr. Brian Harris’ view of the current state of category management: “The industry focus on automation of repetitive tasks held it back. We must think of ways to leverage AI and deliver meaningful solutions. New technologies available can enable scale, speed and accuracy to advance well beyond legacy approaches.”
Things Are Changing
We are starting to see a wave of change in user expectations. Can you imagine a recent graduate using a ’70s- or ’80s-style tool to spend their day moving boxes on a digital shelf? It’s time to pass the baton and give new thinking a chance.
Several emerging solutions from innovators are showing promise and introducing new approaches. I’ve highlighted a few in the next paragraph. This needs to be more comprehensive, but I hope it provides a window of possibilities to consider and support.
Companies like 345 Global are rethinking the end-to-end category management solution. Cantactix and Nuqleous built automation to simplify the use of space management tools. The MerchLogix store solution now includes cloud-based floor planning and space planning.
The Future of Space
For years, plans have been primarily based on historical data, but data has become more granular and available over time. The challenge consistently has been that space-to-sales analysis is based on space plans rather than on actuals. It was deemed good enough for several reasons. With the growing adoption of cameras and robotic data collection at the store level, however, an AI-driven space management solution will be possible and reliable. Relying on humans to manually move boxes on shelves or scripting automation and rules will slowly take a backseat to more intelligent systems able to learn and adjust more rapidly than any overengineered system that we currently have. How are solution providers getting ready for that day?
For leaders, it’s time to unleash and reclaim the creativity that helped build your market share and start to foster innovation internally and with others in the market in a collaborative, nurturing way. Yes, it makes a difference.
For newcomers, the market is ripe and has long awaited a fresh approach. This is resonating globally. Collaborate and partner where possible. The old rules and preconceived status quo are changing. Retailers are more open and willing to explore and consider new solutions than ever before.
Now is the time to take advantage of this opportunity. The company that can provide genuine AI capabilities for planogram solutions will significantly disrupt an industry that desperately needs innovation. This will result in a more efficient way to scale and increase speed and accuracy, ultimately providing customer satisfaction at the shelf.