19 Jan The category and space management challenges for electronics chains
19 January, 2022
Electronics chains merchandisers know it well: “Making well-thought and detailed planograms can be a valuable start to their company’s efforts to increase its revenue, but having them executed properly is something quite different”.
The day-to-day problems of category and space management teams are difficult to tackle effectively, and the recent pandemic has come to prove that things can get even more complicated, especially when there’s a low level of digitization and information integration. In the following paragraphs, we will analyze these past and new challenges, and identify key areas where electronics store chains could focus to massively increase their in-store sales.
Superficial metrics and out-of-date data
Management teams have always been measuring the success of a store by its revenue numbers, which are meticulously monitored and recorded. However, such metrics don’t provide much information about which marketing strategy or product assortment has worked well and why. This incomplete data provides insufficient feedback to visual merchandising teams and prevents them from properly evaluating their methods and being confident when rolling out changes to multiple stores.
Additionally, this old way of operating fails to provide data on potentially fast consumer interest shifts. Such a phenomenon was observed during the first wave of the pandemic, when the electronic goods customers’ needs changed overnight. Forced by lockdown and remote working, people had to be equipped with all kinds of electronic equipment to remain digitally connected, which put all the supply chain and retail store operations under great stress, especially in the companies that didn’t have in place any automatic monitoring system for their space or inventory management. In the absence of real-time information and central guidance, personnel were replenishing shelves and stock as they saw fit, visual merchandisers couldn’t see upcoming shortages on specific products, or provide alternatives to help maximize the sales potential. So, the companies kept leaving money on the table for months.
Disconnected information systems
Traditionally, physical store, customer and marketing information are stored in different systems which are not directly connected. Therefore, valuable data and processes knowledge isn’t being shared or translated in a combined manner. Moreover, any random changes in planograms and marketing tactics are very difficult to be safely and timely propagated throughout the enterprise communication chain.
The absence of a central operation platform makes email the most common communication channel between different teams. However, we all know that it is not the most effective one. For example, long email bodies describing complex issues, while incorporating sales floor or product photos can be overwhelming for merchandising people who receive such messages daily from multiple locations. Apart from the communication delays and the compounding fatigue, quite frequently information is misinterpreted or overlooked, and it takes longer for problems to be resolved. Let alone the proper execution of the store planograms.
Parallel decision and operation silos
In order to be profitable, electronics chains require the streamlining of multiple strands of work. But do they have the right synchronization tools? Unfortunately no, as we find out from our clients, who once struggled to keep their teams aligned.
Let’s assume that a category management team comes up with a new set of store planograms. These are usually presented as long and wide spreadsheets, where all information about store areas, bays, displays, exhibition stall levels and products are saved. Although these files are available to the cooperating teams (i.e. visual merchandising implementation team, commercial department, store space managers), the volume and the complexity of the interwoven information, together with the different levels of proficiency when using such software, makes this communication method ineffective and prone to mistakes.
Moreover, there are many things to be taken into consideration before creating the best visual merchandising planogram for each specific store. These may be inputs about costs on physical fixtures, product supply and stock management, or about which stores are open, when have they last been refurbished and what product sections they have available. Failing to have such information centrally stored and managed means that all cooperating teams will work without having a common, realistic view of each store, leading to further miscommunication and badly executed merchandising strategies.
Repetitive unproductive tasks and processes
From printing piles of documents as references when executing store planograms, to regularly printing price tags or writing long, descriptive emails when asking for guidance on implementation, there are several manual, unproductive tasks performed daily by in-store staff. These tasks entail labor and material (i.e. paper and printer ink) costs for electronic retail companies, and waste crucial personnel time that could be invested in a more profitable way.
The solution is digital
Quite fortunately, the incorporation of technology in the retail process has enabled electronics store chains to find solutions on the above chronic problems and concerns. Today, digital planograms and other visual merchandising trends can offer an accurate, digital view of all business aspects, providing a much better level of detail and automation with the same number of people. This means that space and category management teams have the tools they need to be more productive and make the best possible, data-driven decisions. Cloud-based platforms can help all parties involved to be fully aligned with every current merchandising strategy, while the use of product e-labels can unlock a series of new capabilities and functionalities.
Such technology can really become a point of reference for any retail chain, providing a single view of stock with a highly accurate inventory visibility to facilitate profitable online fulfillment from stores. This way, the online store becomes the expansion of the physical one and vice versa, and effectively serves the increased demand, especially in certain product categories. In essence, the efforts to create a digital twin of the entire retail organization are accelerated.
Here at Yodiwo, we have been collecting information on the problems of electronic product retailers for years. Working with our clients to address their everyday challenges, we have seen that even minor changes in the merchandising process can yield significant results. If you are interested in knowing more on how a scalable and tailored digital solution can work miracles for your business, please book a 30-minute free consultation call with our retail experts.