BO1.4 Category Management – Solutions for Successful Implementation Facilitated by
Peter Lloyd, Partner Chris Leach, Partner The Partnering Group
1
ECR Europe 2008 – Berlin
Category Management
Welcome! Objectives for the Session To share real life examples of Category Management in action..
To provide you with ideas to help implement Category Management in your own businesses..
2
ECR Europe 2008 – Berlin
Category Management
The Partnering Group • Introductions • Peter Lloyd, Partner, The Partnering Group (TPG) • Chris Leach, Partner, The Partnering Group (TPG)
• Who are The Partnering Group? • International strategy and general management consulting firm • Working with Retailer & Suppliers since the mid 1990s delivering consulting and skills development solutions • 50+ partners globally with broad cross functional ‘hands on’ industry experience • Intellectual capital that is regarded as Best Practice – Category Management – Brian Harris • Clients that span the globe in broad array of categories • Working with ECR since the mid 90’s
3
ECR Europe 2008 – Berlin
Category Management
Session Overview
1. Three cases selected with ECR from a number of submissions
2. The case studies focus on: 1. Collaboration 2. Implementation 3. Creation of Shopper Value
3. They demonstrate the continued
need to focus on making it happen in store
4
ECR Europe 2008 – Berlin
Category Management
The Case Studies Time
17.05 – 17.25
5
Case Study 1. Successful implementation of a category concept in a cooperative structure • Karsten Papst, EDEKA • Detlef Koch, L’ORÉAL
17.25 – 17.45
2. Using Collaborative CRM to grow the Oral Care Market
17.45 - 18.05
3. Creating Shopper Value in the Mobile Handset Market
18.05 – 18.15
4. Questions
ECR Europe 2008 – Berlin
• Pietro Poltronieri, SELEX • Francesco Marchese, COLGATE PALMOLIVE
• Burkhard Elberg, NOKIA • Florian Dadre, NOKIA
• All Speakers
Category Management
Successful implementation of a category concept in a cooperative structure
Tuesday 27th May 2008 Karsten Pabst, EDEKA Detlef Koch, L’ORÉAL Germany
6
ECR Europe 2008 – Berlin
Category Management
The companies
100 years of expertise in German trade market No 1 in Germany More than 10.000 stores Cooperative structure
40 years of retailing expertise Headquarter in Binzen (South Germany) Different store sizes: from very small (550qm) to large sized stores (3.600qm) 24 awards within the past 10 years
7
ECR Europe 2008 – Berlin
Category Management
The companies
Channels Brands 100 years of expertise in cosmetics Professional
17,1bn Euro consolidated sales turnover Food, Drug and Mass
19 global brands
Parfumeries and department stores Experience
in all distribution channels
560 million Euro investments in R&D Pharmacies
The Body Shop
8
ECR Europe 2008 – Berlin
Category Management
The Role of Cosmetics or “The Beauty Exception”
A highly profitable category Historic growth and lots of reasons to continue that path: social, demographic Consumers with above average basket of goods Different consumption behaviour
Î The beauty category is different and hence needs to be treated in a different way
9
ECR Europe 2008 – Berlin
Category Management
The Role of EDEKA or “The EDEKA Exception”
Extremely successful in current destination categories such as wine, vegetables … EDEKA is currently not profiting from the positive development in beauty (not core business)
Î EDEKA is different: Co-operative structure in 7 regions and
10
ECR Europe 2008 – Berlin
with about 4.700 independent retailers A central management of the beauty category is currently not possible Several different store sizes: from very small to large sized stores
Category Management
Hieber‘s Philosophy and their cooperation with L‘ORÉAL
Customer satisfaction is the main focus of Hieber’s philosophy:
11
Highest product quality In-store experience of freshness and well-being Regional products and producers Convenience and service
To date the beauty division is not considered as one of Hieber’s main competencies
Strategic decision to either reduce the H&B category or to enhance its competency
Strategic partnership with the no 1 H&B expert L’ORÉAL
ECR Europe 2008 – Berlin
Category Management
The CM-Project Objective: Make beauty a successful business for EDEKA
Develop category solutions adaptable for different store sizes by taking each sub-category and its individual specification into consideration
Method:
12
Appropriate shopper research methods that fit to different store sizes (e.g. POS interviews, video surveillance, traffic analysis) Adjustment of assortment and placement
ECR Europe 2008 – Berlin
Category Management
The CM-Project
Strategy: Bottom-up approach
Key retailers in EDEKA regions were
identified who are able to function as multipliers
L’Oréal cooperated with these key
regional retailers to “upgrade” their beauty department
To be able to develop suitable
concepts that best fit to the given store size three store sizes were determined
13
ECR Europe 2008 – Berlin
Category Management
The small store concept: Before Methods adapted to a small sized store: Video-surveillance* POS interviews
shoppers contacting H&B department
3%
shoppers buying in H&B department
1%
245
102
Shoppers in store total: 8921
* Measurement of frequency in department, shoppers are kept anonymous
14
ECR Europe 2008 – Berlin
Learnings: low frequency, mainly daily products no guidance and orientation for shoppers no cosmetic-like shopping environment
Category Management
The small store concept: After Implementation in a small sized store:
clearly arranged product categories optimised assortment & placement guidance and orientation through labelling of product categories and use of distinctive visuals cosmetic-like shopping experience through an appealing lighting system and the use of wooden floor are eC n i Î Increase of traffic and salesemin ; TP
F
+59%
shoppers contacting H&B department
389
245
after before
+115%
shoppers buying in H&B department
219
102 shoppers in store total before: 8921, after: 9053
15
ECR Europe 2008 – Berlin
Category Management
The medium store concept: Before
Methods adapted to a medium sized store: Analysis of shopper flow in H&B department POS interviews
Damenhygiene
3x Hand + Body4x Deo Haarentf
------------------------dekorative ---- Kosmetik ----------------
Learnings: low customer and purchasing frequency in most parts of the beauty department High shelves hinder orientation No long distance visibility of dept. no sub-category guidance no cosmetic-like shopping environment
0-4,9% 5-9,9%10-14,9%15-19,9% 20-24,9% 25-29,9%30-34,9%>=35%
16
ECR Europe 2008 – Berlin
Category Management
The medium store concept: After Implementation in a medium sized store:
>=35% 0-4,9% 5-9,9%10-14,9% 15-19,9% 20-24,9% 25-29,9% 30-34,9%
Shopper flow in H&B department after re-designing
Creation of a new floor plan Lower shelves Long distance visibility (key visuals) optimised product assortment & placement clear orientation (Guiding systems) cosmetic-like shopping atmosphere
Share of sales after implementation (in comparison to EDEKA stores with same category proportions)
Total H&B: 35% higher Colour cosmetics: 191% higher Skin/ Body Care: 25% higher Hair care: 20% higher Oral care: 11% higher
Î Increase of traffic and sales
17
ECR Europe 2008 – Berlin
Category Management
18
ECR Europe 2008 – Berlin
Category Management
The large store concept: Before Methods adapted to a large sized store: Analysis of Shopper flow in H&B department POS interviews
In general the current in-store approach is quite good but there is still room for improvement: in comparison to other categories no enticing shopping atmosphere difficult category neighbours (colour cosmetics and condoms) no clear guidance and orientation for shoppers no special advise or help for shoppers lowest traffic in the most profitable sub-categories
19
ECR Europe 2008 – Berlin
Category Management
The large store concept: After
Implementation in a large sized store: optimised category neighbours optimised product assortment & placement Long distance visibility (Header) integration of cold and warm lightening systems clear orientation (Guiding systems) shopper advise: testers, colorants advisor Î Increase of traffic and sales
20
ECR Europe 2008 – Berlin
Category Management
Key Learnings In order to make the beauty division a successful business in a cooperative retailer structure with different store sizes you need to: 1.
Understand the shopper and his/her expectations in different store sizes through adapted research methods
2.
Provide a pleasant shopping atmosphere to entice consumers to stay longer and spend more via
increase category visibility use of key visuals and lower shelves provide category guidance revise assortment and placement
But most importantly: 3. Choose a way of implementation that fits with the retailer’s structure The idea to work with key regional retailers that operate as multipliers proved to be successful: two large EDEKA regions have requested L’Oréal to guide them into the next beauty generation
21
ECR Europe 2008 – Berlin
Category Management
The Case Studies Time
17.05 – 17.25
22
Case Study 1. Successful implementation of a category concept in a cooperative structure • Karsten Papst, EDEKA • Detlef Koch, L’ORÉAL
17.25 – 17.45
2. Using Collaborative CRM to grow the Oral Care Market
17.45 - 18.05
3. Creating Shopper Value in the Mobile Handset Market
18.05 – 18.15
4. Questions
ECR Europe 2008 – Berlin
• Pietro Poltronieri, SELEX • Francesco Marchese, COLGATE PALMOLIVE
• Burkhard Elberg, NOKIA • Florian Dadre, NOKIA
• All Speakers
Category Management
“Driving Category Growth”
Tuesday 27th May 2008 PIETRO POLTRONIERI BRAND MANAGER SELEX
FRANCESCO MARCHESE CUSTOMER DEVELOPMENT DIRECTOR COLGATE PALMOLIVE
23
ECR Europe 2008 – Berlin
Category Management
Agenda
• Selex and Colgate business Background - Oral Care Trend & Shopper Situation The Opportunity The plan Results
24
ECR Europe 2008 – Berlin
Category Management
Who are Selex and Colgate Palmolive?
Selex
2007 Turnover € 7,375 Billion Market share 7.7% 5th largest retailer in Italy 18 associated groups Selex associated firm leading this project is DOK Supermarket (160 proxy stores) leading banner in Apulia region with 30% Market Share
Colgate Palmolive
25
$ 13,8 Billion Global Company In more than 200 countries around the world Focus on 4 core categories Global Leader in Oral Care Succeeding with Consumers, The Profession and Our Customers
ECR Europe 2008 – Berlin
Category Management
Agenda
• Selex and Colgate business Background - Oral Care Trend & Shopper Situation The Opportunity The plan Results
26
ECR Europe 2008 – Berlin
Category Management
Background: The Oral care Challenge In Consumers’ Mind
Rationality
- Clean - Fresh Breath - Health
27
ECR Europe 2008 – Berlin
When Shopping
Emotions
- Self Confidence - Social Interaction
Category Management
Shopper – Consumer Dynamic Opportunity to Educate & Engage
28
1. Consumers brushing 3 times a day
46%
2. Consumers going to dentist once a year
32%
3. Consumers using Mouthwash
38%
4. Consumers changing TB every 3 months
37%
5. Time to spend to choose a toothpaste at shelf
10 sec
ECR Europe 2008 – Berlin
Category Management
68%
The Local Market Situation
68%
Market overall flat in Apulia region + 0,3% 6.000 2006
5.000
2007
-1,1%
4.000 3.000
-8,1%
2.000
+36,0%
1.000 0 Toothpaste
Toothbrush
Mouthwash
OC TOT IRI Ago YTD ’07 H+S Apulia Region
under performing in Oral Care Category : -1,9% 29
ECR Europe 2008 – Berlin
Category Management
Agenda
• Selex and Colgate business Background - Oral Care Trend & Shopper Situation The Opportunity The plan Results
30
ECR Europe 2008 – Berlin
Category Management
What is the Opportunity?
“Align Fair Share Oral Care in DOK” ESTIMATE POTENTIAL 600.000 € F.Y. 08
OPPORTUNITY GAP
31
ECR Europe 2008 – Berlin
-1,9
-1,8
-0,3
-10.5
Category Management
-1.6
-3.0
How Did We Do This? Phase 1. Improving Purchase Mix between Basic and Premium Product GAP
More 62% € per Trip
65%
38%
35%
Italy Basic
Region Premium
IRI Ago YTD ’07 H+S Apulia Region 32
ECR Europe 2008 – Berlin
Category Management
-9% VS Italy -6% VS Region
56%
44%
DOK
How Did We Do This? Phase 2. Improving Assortment in the new pharmaceutical store format 4 Top Sku’s in this segment Not Listeded in DOK assortment GAP 4
15 11
Italy
DOK
IRI Ago YTD ’07 H+S Apulia Region- Average Number of Sku’s in Premium
33
ECR Europe 2008 – Berlin
Category Management
How Did We Do This? Phase 3. Improving Shelf Impact engaging shopper through the shelf What do you think of the Oral Care shelf ?
43% of DOK Shoppers said …. “It is not helping me to make decision” 34
ECR Europe 2008 – Berlin
Category Management
Agenda
• Selex and Colgate business Background - Oral Care Trend & Shopper Situation The Opportunity The plan Results
35
ECR Europe 2008 – Berlin
Category Management
The Plan – Project Objective Two Key Strategies GROW ORAL CARE CATEGORY VALUE
Strategy 1
Strategy 2
INCREASING PREMIUM PRODUCT CONSUMPTION
36
ECR Europe 2008 – Berlin
CREATING EDUCATION AND PLEASURE OF SHOPPING
Category Management
We developed an Integrated Approach
From Home Strategy 1
Targeted CRM
INCREASING PREMIUM PRODUCT CONSUMPTION
To The Store Strategy 2
Full Category Management
CREATING EDUCATION AND PLEASURE OF SHOPPING
37
ECR Europe 2008 – Berlin
Category Management
Targeted CRM – What We Did
Targeted CRM
Fidelity Card Basket Analysis
Selex with Catalina have selected shoppers that purchase Oral Care Category
Shopper Premium with Un-Loyalty CP Shopper Premium with Loyalty CP Shopper Basic with Loyalty CP
Defined 4 targets
Shopper Basic with Un-Loyalty CP
38
ECR Europe 2008 – Berlin
Category Management
Mapping Shoppers and applying Tactics
Targeted CRM
Free points Loyalty
Accrued on Fidelity card
Gift Satisfaction Via “Web”
Coupon on Premium Trade UPProducts Shoppers of Basic Products 39
ECR Europe 2008 – Berlin
Category Management
Loyal to Colgate
Unloyal to Colgate
Shoppers of Premium Products
We developed an Integrated Approach
From Home Strategy 1
Targeted CRM
INCREASING PREMIUM PRODUCT CONSUMPTION
To The Store Strategy 2
Full Category Management
CREATING EDUCATION AND PLEASURE OF SHOPPING
40
ECR Europe 2008 – Berlin
Category Management
Category Management – What We Did
Defined New Roles for each Sub category
TP Routine – TB Routine/Destination – MW Destination
Reviewed Oral Care assortment
41
More premium product – 4 Sku’s plus
Revised Shelf Layout and Increase interaction with Shopper
1. 1. Category Category Definition Definition
2. 2. Category Category Role Role 8. Category Category Review Review 8.
TP => Brand Blocking – -Vertical for Brand and Horizontal for Benefit TB & MW => on top of TP - from left to right for price
ECR Europe 2008 – Berlin
Full Category Management
Category Management
3. 3. Category Category Assessment Assessment
4. 4. Category Category Scorecard Scorecard
5. 5. Category Category Strategies Strategies
6. 6. Category Category Tactics Tactics
7. 7. Implementation Implementation
Category Management – Shelf Layout
Full Category Management
Bringing The Strategies To Life At Point Of Purchase
1. Align to brand blocking Eye level
1. Layout: Vertical by Brand 2. Horizontal by Benefit
42
ECR Europe 2008 – Berlin
Category Management
Agenda
• Selex and Colgate business Background - Oral Care Trend & Shopper Situation The Opportunity The plan Results
43
ECR Europe 2008 – Berlin
Category Management
The Results – Quantitative Benefits 84% GAP REDUCED
9
Reduced Gap Dok Oral Care Fair Share
Grocery Oral Care
Grocery Oral Care
Before
9
44
Targeted CRM
ECR Europe 2008 – Berlin
Redemption Card Holder
After Only 6 Mth
18%
Penetration Premium purchase
+7 pts
Share Premium purchase
+8 pts
Category Management
The Results – Qualitative Benefits Before implementation
After implementation
…AND NOW, HOW DO YOU “FEEL” ?
75% 45
Said they have an improved shopping experience
ECR Europe 2008 – Berlin
Category Management
What are our key learning's ?
9 Focus on Shopper Value drive results
9 Common goals are the best premise for success
9 Integrated Approach : Supplier and Retail data utilized together with innovative approach are key to Grow
46
ECR Europe 2008 – Berlin
Category Management
The Case Studies Time
17.05 – 17.25
47
Case Study 1. Successful implementation of a category concept in a cooperative structure • Karsten Papst, EDEKA • Detlef Koch, L’ORÉAL
17.25 – 17.45
2. Using Collaborative CRM to grow the Oral Care Market
17.45 - 18.05
3. Creating Shopper Value in the Mobile Handset Market
18.05 – 18.15
4. Questions
ECR Europe 2008 – Berlin
• Pietro Poltronieri, SELEX • Francesco Marchese, COLGATE PALMOLIVE
• Burkhard Elberg, NOKIA • Florian Dadre, NOKIA
• All Speakers
Category Management
BO1.4 Creating Shopper Value by applying Category Management in the Mobile Handset Market Tuesday, 27th May 2008 Burkhard Elberg Head of Customer Category Management, Central Europe Florian Dadre Customer Category Manager, France 48
ECR Europe 2008 – Berlin
Category Management
AGENDA Category Management For Mobile Handsets:
Why? Market Development
How? Categorisation Case Study: Auchan France
Key Findings
49
ECR Europe 2008 – Berlin
Category Management
Nokia at a Glance
Everybody knows Nokia… … #1 mobile handset manufacturer 1bn users, 51bn€ net sales, 8bn€ op. profit* … but what you possibly do not yet know: Mobile service offers Consumer focus, category management
*2007 50
ECR Europe 2008 – Berlin
Category Management
Mobile Handsets: A changing Market Market complexity
Market growth % Unit sales vs. PY Europe Top 5 markets
# handset models
+22
2100 1700 1200
2005
+9
+8
2006
2007
700
2004
2005
Source: GfK trade panel (GER, FRA, UK, ITA, ESP)
51
ECR Europe 2008 – Berlin
Category Management
2006
2007
Different Consumer Needs
“Capture and share the moment”
52
ECR Europe 2008 – Berlin
Category Management
Different Consumer Needs
“Work together”
53
ECR Europe 2008 – Berlin
Category Management
Different Consumer Needs
“Express yourself”
54
ECR Europe 2008 – Berlin
Category Management
Different Consumer Needs
“Connect in a simple way”
55
ECR Europe 2008 – Berlin
Category Management
The POP “Challenge” for the Shopper…
56
ECR Europe 2008 – Berlin
Category Management
Nokia Consumer Segmentation: 12 Segments, based on Attitude + Behaviour Technology Leaders
77.000 interviews in 21 countries
HIGHER INVOLVEMEN T
Pragmatic Leaders
Technology Stylists Young Explorers Life Builders Style Leaders
Life Jugglers
RATIONAL
ASPIRATIONAL Image Seekers
Mature Acceptors
Family Providers
Simplicity Seekers
57
ECR Europe 2008 – Berlin
Style Followers
LOWER INVOLVEMENT Category Management
4 Product Categories based on major Needs 1. Business
High Involvement
2. Multimedia Technology Leaders
Technology Stylists Pragmatic Leaders
Young Explorers
Life Builders Life Jugglers
Style Leaders Aspirational
Rational
Mature Acceptors Image Seekers Family Providers
Style Followers
Simplicity Seekers
3. Essentials 58
ECR Europe 2008 – Berlin
Low Involvement
Category Management
4. Style
Example: Segment Needs and Implications Technology Leaders
Consumer: - Latest technology - All-in-one
HIGHER INVOLVEMEN T
Pragmatic Leaders
Æ Product development Shopper:
Multimedia Technology Stylists Young Explorers Life Builders Style Leaders
Life Jugglers
RATIONAL
ASPIRATIONAL
- Test new features
Image Seekers
Mature Acceptors
- Experience, “wow” effect Æ Shelf planning, Family Providers Live experience Simplicity Seekers
59
ECR Europe 2008 – Berlin
Style Followers
LOWER INVOLVEMENT Category Management
Shopper Understanding is Key in Store: Brand as Key Driver of Choice Brand
5%
Phone layout
2% 4%
Design
29%
Format
4%
Camera
4%
Cost Music
8%
Bluetooth 3G 14%
12%
Functions Email
14%
Battery life Others
Source: Nokia shopper research 2007, Europe total 60
ECR Europe 2008 – Berlin
Category Management
Pilot Project Case Study France
61
ECR Europe 2008 – Berlin
Category Management
Category Management Pilot Project France: Background & Opportunities Shopper survey findings:
30% of the shoppers did not even think about buying mobile phones at Auchan
50% of the potential buyers did not buy, “confusing shelf & complexity”
75% want to touch the device before buying
Lack of sales staff expertise
62
ECR Europe 2008 – Berlin
Category Management
Category Particularities & Category Management Action Plan
63
Market particularities:
Implication / action taken:
Short product life cycles, high innovation rate
Speed in range planning
High complexity
Range reduction + product information display
Network operator & brand preferences
Shopper insights-based floor / shelf planning and categorisation
Store staff interaction
Sales staff training
New features to be demonstrated
Live device testing on new furniture
ECR Europe 2008 – Berlin
Category Management
Implementation
AFTER
BEFORE
64
ECR Europe 2008 – Berlin
Category Management
Implementation AFTER
BEFORE
New product info cards with brand logo Only 4 major features Simplification of price information Shelf placement by 4 categories within brands 65
ECR Europe 2008 – Berlin
Category Management
Assessment by the Retail Partner
66
ECR Europe 2008 – Berlin
Category Management
Pilot Project Results Index pilot vs. mirror stores
Sellout-development:
Implementation
160
Volume sales +35%
140 120
New no. 1 store within Auchan ranking (March 2008)
100 80 60 JUL
AUG
SEP
OCT
NOV
DEC
Shopper satisfaction: 10% satisfaction increase Conversion rate increased from 50% to 89% Æ Broad category management concept roll-out 67
ECR Europe 2008 – Berlin
Category Management
JAN
FEB
Category Management in a non-FMCG Environment Key Findings:
Understanding consumer and shopper behaviour is key Æ Invest in shopper research Æ Translate in product categorisation Æ Respond to needs at POP
Adopt the process to market particularities, e.g. Æ Need for speed Æ Different priorities of catman tactics Æ Live experience and features explanation Æ Complexity reduction
68
ECR Europe 2008 – Berlin
Category Management
Thank you!
Contacts: Burkhard Elberg +49-151-55 15 77 33
[email protected]
69
ECR Europe 2008 – Berlin
Florian Dadre +33-6-85 44 69 00
[email protected]
Category Management
The Case Studies Time
17.05 – 17.25
70
Case Study 1. Successful implementation of a category concept in a cooperative structure • Karsten Papst, EDEKA • Detlef Koch, L’ORÉAL
17.25 – 17.45
2. Using Collaborative CRM to grow the Oral Care Market
17.45 - 18.05
3. Creating Shopper Value in the Mobile Handset Market
18.05 – 18.15
4. Questions
ECR Europe 2008 – Berlin
• Pietro Poltronieri, SELEX • Francesco Marchese, COLGATE PALMOLIVE
• Burkhard Elberg, NOKIA • Florian Dadre, NOKIA
• All Speakers
Category Management
