Rise of the Retail Robots

Robo-ClerkFRUSTRATED WITH STORE EMPLOYEES? Maybe a mechanical clerk is the answer.

The retail industry today is making some fascinating, promising, and perhaps troubling moves toward the routine use of autonomous robots in human environments. The efforts seem energized by technical advances, affordability gains, and increasing wages for their human counterparts.

“Everybody is beginning to talk about robotics as a way to remove labor from the system,” said David Marcotte, a senior vice president with consulting firm Kantar Retail, a friend of this blog, in an interview in the Star Tribune newspaper.

As a confirmed sci-fi geek (occasionally prone to paranoid fantasy), I’m both fascinated and a bit leery about this development. There’s little doubt, however, that the robots are coming to retail from numerous directions.

Tenser’s Three Laws of Retail Robotics:

1 – A retail robot may not harm, mislead or impede a shopper, or, through inaction, allow a shopper to fail to complete a sale or have an otherwise poor experience.

2 – A retail robot must faithfully implement the merchandising plans given it by retailers except where such orders would conflict with the First Law.

3 – A retail robot must encourage and protect the sale, as long as such protection does not conflict with the First or Second Law.

(Adapted with great reverence from i Robot, by Isaac Asimov.)

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Movin’ On Up

TENSER’S TIRADES HAS RELOCATED to this much finer neighborhood following a dispute with the old landlord.

You’ll find the entire blog (past and present) here, along with some useful new features.

If you subscribe to our RSS feed, you can update it using the link you will find at right.

Jamie Tenser

© Copyright 2012 James Tenser

Why In-Store Implementation Is the Next Frontier

I CALL IT the Paradox of Scale: Grocery chains keep getting bigger, but industry profit performance remains stagnant.

It’s been a doggedly persistent trend. Between 1992 and 2009, the top 20 U.S. grocery retailers increased their cumulative market share from 39% to 64%, according to the U.S. Economic Research Service. Meanwhile from 1996 to 2010, industry net profits have hovered consistently around 1% of sales, according to the Food Marketing Institute.

These facts seem to run counter to intuition. After all, bigger chains are supposed to have top-of-the-line executive talent, fine-tuned supply chains, advanced IT systems, greater buying clout and economies of scale. A deeper look reveals the paradox: Bigger chains also suffer from intensified store operational complexity, larger assortments and poorer visibility from the home office.

Bottom line – as chains expand, store performance management gets much, much harder. This begins to explain why out-of-stocks continue to run at 8.2%, unchanged in 15 years, yet 78% of items sell fewer than 3 units per week. It begins to explain why as many as half of all authorized in-store display promotions are never erected or erected late. It begins to explain why most retailers have no effective process in place to ensure or even monitor everyday planogram compliance.

A Rich Prize

Where some may find darkness and frustration in these statistics, others identify a golden opportunity. The In-Store Implementation Sharegroup identified tens of billions of dollars at stake – a rich prize indeed. Bold retailers and marketers who commit to improve retail compliance practices in the next few years should gain a distinct performance advantage over their less nimble competitors.

In-Store Implementation is not an isolated solution; it’s a multi-threaded initiative that incorporates improved in-store sensing and measurement; better inputs into planning processes; a performance-oriented culture; and alignment of trading partner resources. Many of the enabling practices and tools already exist, ad hoc. Still needed is an organizing principle that can tie them together into an effective set of best practices for the industry.

Workshop at LEAD

In just two weeks, a select group of industry thought leaders will come together to explore how to make this ambitious agenda a beneficial reality. They will be participating in a pre-conference workshop at the LEAD Marketing Conference in Rosemont, IL, on Sept. 19.

The workshop is presented by the In-Store Implementation Network, a membership organization with an educational mission centered on advancing awareness and knowledge of ISI practices. The group boasts more than 1,400 practitioner members in 28 countries who share a common goal – the establishment of a culture of performance at retail that makes stores work better, shoppers more successful and businesses more profitable.

Thanks to the generous sponsorship support of our friends at Gladson, ISI Network has assembled an all-star faculty to address key facets of the opportunity. The workshop format is intended to ensure that participants will leave the half-day event with a fresh perspective and practical ideas that may be applied immediately to their own ISI business challenges. As Executive Director of the ISI Network, I will be the lead facilitator of this workshop.

A few seats remain available; admission is complimentary to retail and CPG practitioners. I look forward to greeting many of you in Rosemont!

To register for the LEAD Marketing Conference, click here.

For a detailed agenda about the ISI Pre-Conference Workshop, click here.

© Copyright 2011 James Tenser

What Constitutes Compliance?

Is this shelf set correct?

IN MY ROLE as Director of the In-Store Implementation Network, the challenge of merchandising compliance is frequently addressed, from a variety of perspectives – both theoretical and solution-oriented.

Several recent conversations have centered on the question of measuring the accuracy of a shelf set; that is, its degree of compliance with the schematic or planogram. This is actually a non-trivial matter when seeking a practical solution. Since a planogram is a complex tool covering many details (items, facings, positioning, quantities, etc.) determining what data to measure, how often and to what end(s) requires a thoughtful process.

Our valued colleague Mike Spindler, CEO of ShelfSnap has championed this discussion in several items posted on the ISI Network LinkedIn Group page. He is one of the better thinkers we have on this topic, and his company offers a promising tool for digitally comparing an image of an actual shelf set with its associated planogram.

How Close is Close Enough?
If the comparison is “perfect” – that is, all item are present in their proper locations and quantities – we can safely declare that a shelf set is compliant with the plan. This is, however, a rare occurrence which probably exists only for a few minutes after the re-set work is correctly completed. The moment shoppers get to removing items into their baskets, perfect compliance begins to deteriorate. Darn those pesky shoppers!

As I like to say, the “half-life” of a typical shelf set is less time than it takes the re-set crew to leave the building. A slight exaggeration, maybe, but you get the point.

So when do retailers declare a merchandise set to be “out of compliance”? When 9% of items are out of stock (the industry average in grocery)? When 15% of items are present but mis-located? When the number of facings is off on more than 25% of items? Alternatively, what criteria define “in compliance”? All items present and accounted for? 90% of items in the correct place? 99% in-stock? How close is close enough?

Evidently, the ways a planogram can go wrong are numerous but not always numerical. More significantly, they are not easily recognized by human inspection. That is, compliance issues can be hard to spot without a scorecard in hand – and even then it takes concentration and focus and time. 

Compliance Shorthand

What if we could define a short-hand method instead – perhaps three to six yes/no metrics that could be taken as a proxy for overall compliance? ISI Network member Larry Dorr, a respected expert on retail merchandising and founder of Jaguar Retail Consulting, described an approach that is worthy of discussion.

He proposes measuring the condition of approximately five or six “destination” items for each category or major subcategory. These are often the highest-velocity items in their respective sections. “Measure the items adjacent to those items,” he says. “If those five and their adjacencies are in correct shape, then the set is probably in good shape overall. If two of the five items are off, you may assume a compliance problem.”

This approach offers economy, speed and ease of implementation. A limitation, he concedes, it that this doesn’t provide a measure of item distribution. While the five-item rule may deliver a directionally correct conclusion about planogram compliance, it may not help very much with gauging the performance of non-destination items.

Also worth noting is how the criteria for compliance may vary across different product categories and classes of trade. Our example above is drawn from a grocery/mass perspective. In specialty apparel and department stores, where color, size and style factor in, the definition and metrics for compliance will differ. Consumer electronics retailers will face their own compliance issues. 

Storecard Metrics Needed

So let’s grant that merchandising compliance is a slippery quantity using presently available methods. That doesn’t absolve practitioners from the requirement that they track and measure merchandising performance. In fact innovation in Shopper Marketing, segmentation and automated planograms only intensify the need.

We need creative thinking and some consensus on what constitutes compliance success; on what to measure, how and how often. The goal is to define some compliance best practices and incorporate the metrics into in-store scorecards – what I like to call storecards – that support and enable those practices.

Which leads me to offer this challenge: Use the comment form on this post or on the ISI LinkedIn Group to help us define: What constitutes merchandising compliance? How do you/should we measure it? What are the thresholds? How good is good? What’s the cost of good?

This could be the first step along the road to In-Store Implementation Best Practices. I look forward to reading your thoughts.

© Copyright 2010 James Tenser
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