Giant Eagle - Optimizing promotional space
Supermarket chain now generates eight times the amount of store-specific promotional planograms weekly
About promotional display optimization
Promotions have proven effective in the past at attracting and retaining customers. However, consumer buying patterns vary substantially based on variables such as location and customer demographics. Most retailers simply don’t have the capacity to provide localized promotion assortments and display plans to every store, and settle for a few variations of one generic plan. As a result, execution suffers and full sales potential is not realized. Consumer purchase variables are critical when determining promotional items.
Choosing the right products to promote and ensuring that the appropriate level of inventory is stocked will make or break a promotion. Promotional plans based on store averages encourage poor promotional display execution, resulting in lost sales, inventory wastage, and inconsistent end-cap execution.
A single store in a typical fast moving consumer goods retail chain constructs over 750 promotional displays per year. If planograms are used in the display execution process at all, they are most often generic planogram illustrations, not specific display plans that address their individual store constraints and shopper demands. Rarely do they incorporate the right inventory levels, let alone on a store specific basis.
Galleria’s Promotional Display Optimization solution enables retailers to generate thousands of store-specific display plans on a daily basis.
Each plan has the right capacity for each SKU while maintaining a consistent, overall look. The promotional merchandise plans are designed automatically to fit the available space and fixture constraints, optimizing the space, improving availability for key SKU’s and reducing inventory for slower moving ones. This effective approach to promotion planning minimizes lost sales opportunities, increases the value of the basket shop as well as improves the shopping experience for the customer whose loyalty will be strengthened.
Improving promotional effectiveness
Founded in 1931, Giant Eagle, Inc. is a leading multi-format regional U.S. food and fuel retailer with approximately, $9.3 billion in annual sales, operating 170 corporate and 58 independently owned and operated supermarkets, along with 166 fuel and convenience stores throughout western Pennsylvania, Ohio, north central West Virginia and Maryland.
Led by Dan Schnorr, Giant Eagle’s Retail Space Planning team is responsible for maximizing the in-store space for the company’s wide array of offerings. And, by utilizing retail planning software such as the Promotional Display Optimization Solution from Galleria, the team is able to find efficiencies in the way Giant Eagle merchandises products to customers. For many food retailers, weekly sales promotions act as a notable driver for customer traffic. “For many years, for the vast number of food retailers there was no formal planning at store-level when it came to end-cap promotions from week to week – and nothing that took the variations by store into account,” Schnorr said.
“Each individual store leader received the copy of next week’s ad plan and product distribution plans, and it was up to them to take care of it based upon their knowledge of their customers.”
For Giant Eagle, since the level of planning expertise and knowledge varied from store to store, planning did not take store variations into account. For stores with a similar layout, there was little variation on product placement on end-caps, side wings and specialty display paces or within large lobby displays.
“Our store leaders possess a high level of experience, and would previously make product placement decisions themselves and just build the displays,” Schnorr added. “We knew there had to be a better way to help them, and that there had to be another method to determine how to provide the proper amount of inventory and the right assortment of products for our customers in each store.”
Knowing that there had to be a superior method to ensure the right categories of products were on display, the company started to manually develop store-specific end-cap planograms for each of its supermarkets.
Developing store specific end cap planograms
Faced with the challenge of developing a better process of planning and forecasting promotional displays, Giant Eagle turned to Galleria – a leading provider of customer-centric merchandising solutions – to streamline and optimize its weekly promotional display planning initiatives and build upon the process improvements Giant Eagle had already initiated.
Working in tandem with Giant Eagle, Galleria designed a system that treats every Giant Eagle supermarket uniquely – with end-cap displays now based on the anticipated demand within each store. This resulted in improved in-stock position, and fewer out-of-stock, increased sales and more satisfied customers.
“We were already developing end-cap planograms, but Galleria certainly enabled us to complete the process more efficiently,” Schnorr said. “As Giant Eagle implemented the process, and it was further refined working with Galleria, I was initially surprised to the degree that each end-cap looked so different from store to store. All of our end-caps now feature more product family items than we displayed in the past.” In addition to product categories, SKUs within each product line were also further refined.
“Before we started this process, if we were to have an end-cap displaying soups, the store leaders might identify what they thought were the top-five most popular soups to inhabit that space,” Schnorr said. “Today, you will probably see 20 to 25 different soup SKUs on the end-cap – products selected based on demand and very specific information about that store. This really ensures our customers, at each store, are seeing the products they want.”
Galleria began working with Giant Eagle on the project three years ago – with their software capabilities now at work within 193 stores.
Fast return on investment
“We rolled the system out by region at first, picking up new stores, both corporate and independent, as we went,” he said. “It took a little bit of lead time, but now we’ve implemented the solution chain-wide for most of our Giant Eagle and Market District locations.”
Today, many of Giant Eagle’s stores have varied layouts with a different number of end-caps at each location that still require Schnorr’s team and store managers to prioritize what items should be displayed on end-caps and the areas of the store that will be targeted with certain items. However, with the Galleria solution, Giant Eagle can generate literally thousands of end-cap planograms on a weekly basis – cost-effectively and with more accuracy.
Schnorr says Giant Eagle is currently using the technology strictly on end-caps devoted primarily to the grocery line of the business, and intends to use the system on other lines where it would serve as a useful tool.
“Retailers wouldn’t be surprised that if you provide the right product in the right quantity at the optimum location in a store that it will impact sales,” Schnorr said. “But it would probably surprise some of them to know how big the return on investment can be in implementing a solution like Galleria’s.”
Key benefits realised by Giant Eagle
- Double digit sales lift for some promotional display items
- Increased merchandising effectiveness & compliance
- Double digit reduction of ending inventory for some promotional display items
- Consistent In-store promotion execution
- A deeper understanding of in-store labor needs
- Reduced initial replenishment
- More efficient use of team resources
“Retailers wouldn’t be surprised that if you provide the right product in the right quantity at the optimum location in a store that it will impact sales, but it would probably surprise some of them to know how big the return on investment can be in implementing a solution like Galleria’s.”Dan Schnorr, Director, Retail Space Planning, Giant Eagle