OK –first of all, why should you believe what I am about to say? Because I have been in Space Management since we were using magnets and steel plates to create toothpaste planograms in the 1970’s. I bought Spaceman 1.0 (for DOS!), Apollo 1.0, Intercept 1.0 (which would later become Intactix then Pricer/Intactix then JDA.) I have lead Space Management teams for consumer goods manufacturers, retailers and was a business consultant in the field for the #1 market share Space Management software provider in the world. PLUS, I’ve done the actual work: moved gondolas, moved power poles, washed shelves, killed vermin – all in the name of optimally merchandising stores .
Lie #1: Space Planning can help you grow customer loyalty with the right product at the right place at the right time.
Are you kidding me? Space planning does little more than create pictures for your store managers of what a potentially perfect assortment might look like if all those products were in their store at the same time – and the store was to prototype. But it does NOT guarantee that will ever happen. Space planning (and here I am talking about Planogram creation) is nothing more than a picture with an Excel worksheet behind it unless allocation, replenishment and store prototype data is integrated into the item::store data that is necessary to create anything close to right product, right place, right time. And that does NOT come with the users license.
Lie #2: Space Planning allows retailers to see their store environments in advanced 3D modeling so that stores can be planned and see in advance.
Well, unless you want to be able to include your entire apparel business. Or seasonal. Or footwear. Or jewelry. Or floral. Or bakery. Or fresh produce. Or meat. Get my picture?
Space planning was NOT created for retailers. It was created for fast-selling consumer packaged goods companies to sell their vision to grocers who needed a way to keep up with the explosion of new items that occurred in the 1980’s. CPG companies’ regurgitation of new item introductions went from 500-600 per year in the early 1970’s to over 7,000 per year in the 1980’s. (That’s 135 every week.) How was a lean grocer to keep up with it all? Why, let the vendors create planograms, of course. And so, with the bank roll of Procter & Gamble and Frito-Lay behind them, Nielsen and IRI began the Software Wars of Spaceman versus Apollo – not to help retailers merchandise their stores better. It was another tool in their arsenal as CPG companies fought to retain some of their power which was slipping to the side of retailers with the rise of scanner data and its subsequent customer knowledge.
(Don’t believe me? If you were there, you will remember that Spaceman files and Apollo files did not talk to one another. In a “brilliant” marketing move, Nielsen and IRI began a war locking up retailers and vendors which required companies buy both systems and their non-integrated file formats to be able to share information. Dale Byrne created Intercept to translate between them both. Every retailer and vendor bought the program and he had the funding to create Intactix – the most widely used tool in this space today….because he was actually listening to what customers needed and not following the directions of the big 5 CPG companies.)
Retailers, who felt they were getting a bargain in “free help” from the vendors, never really got what they needed from their software providers: information that integrated customer data (which the vendors wanted) with store prototype data (which vendors could care less about) so that stores could actually execute the plans being made by the vendor/planogrammers.
The latest 3D capabilities being publicized by software companies still only do one thing well: Render static categories like “Canned Fish” and “Condiments” into their soldier straight aisles. Don’t believe me? Ask them to render a seasonal apparel set where the final designs are not yet back from Asia with mannequins that will sometimes include a folded assortment focused on black, gray and navy sku’s for small urban stores and hanging merchandise in peach, yellow and plaids for large rural stores. The DMM wants to show it to the COO tomorrow. GO.
What is my point? Retailers continue to accept that space management is effective when it only handles a portion of their store assortments. Really? Would you say your car was effective if it could only carry a portion of your family? The nirvana of right product/place/time cannot be achieved without integration at a level that very very few retailers acquire because legacy and acquisition stores have fixtures, dimensions and obstacles that create a level of complexity that renders the planograms worthless once they hit the store. Since vendors aren’t rewarded for solving that complexity, retailers under optimize their space planning investments every day.
Is there a solution? There is. But like other things worth achieving, it isn’t easy and it isn’t cheap…..stay tuned. See the next Post in this series “So What’s My Problem with Space Management?”