Velocity Category Management, Demand Chain and Demand Signal Repository (DSR) Solutions

Food Lion Completing CAO Rollout

2012-01-26T10:47:00.001-05:00

ORLANDO, Fla. — Food Lion is close to completing a rollout of computer-assisted ordering (CAO) to all of its more than 1,500 stores, according to Scott Craig, director of supply chain, Delhaize America.

The implementation of the CAO system from SAF (now part of SAP), began in October 2010 and was almost completed last year, Craig said at the Supply Chain Conference here this week. The Supply Chain Conference is sponsored by the Food Marketing Institute and the Grocery Manufacturers Association. About three-fourths of the remaining 140 stores were deployed this month, with the rest to be done shortly, he added. The system triggers replenishment orders from distribution centers based on forecasts and inventory counts, among other factors. Food Lion uses a home-grown perpetual inventory system with the CAO application.

As a result of the CAO rollout, “our in-stocks are way up,” Craig said. “We’ve reduced store inventory, reclaims and shrink in fresh departments.” Food Lion’s sister Delhaize America chain Hannaford Bros., Scarborough, Maine, also uses the same CAO system.

Walmart's Chasing the Dollar Stores Again.

2011-01-26T11:05:00.001-05:00

Forget "cheap chic." Wal-Mart just wants to be cheap.

After years of trying to mimic Target's trendy fashions and house wares with mixed results, Wal-Mart is shifting its cross-hairs and taking aim at dollar stores' rock-bottom prices.

According to several sources close to the company, the world's biggest retailer in recent weeks has begun aggressively hitting up its suppliers for "opening price point" goods -- that is, the cheapest items in any given product category.

That means opening its shelves to new manufacturers who can deliver ever-lower prices for cosmetics, party favors, appliances and greeting cards.

Wal-Mart plans to go down market — in areas where dollar store rivals are scoring big gains — as it tries to kick-start growth. Likewise, it means pressing big partners like Procter & Gamble and Kraft Foods to produce smaller, more affordable packages for everything from diapers to laundry soap to instant soup.

"The message is, 'Anybody who can deliver opening price point [goods] for us will become a vendor -- anybody who can't, can leave,' " according to one longtime supplier to the mega-discounter.

"Not since the 1990s have we seen Wal-Mart signal this level of competition on price."

With gasoline prices soaring and unemployment still hovering near double digits, Wal-Mart executives sniff an opportunity to return decisively to the company's low-price roots.

Sources close to the company speculate the move will further Wal-Mart's plan to enter urban areas, including the Big Apple, with smaller stores this year.

This month, Wal-Mart merchants took the unusual step of actively contacting vendors to get out the message on lower prices, according to several sources close to the company.

"It's pretty unusual to have them calling you instead of the other way around," one manufacturing executive said. "They told us, 'The dollar chains are eating our lunch, and we're not going to let them do that anymore.'"

Wal-Mart is preaching to the choir, according to Cameron Smith of Cameron Smith & Associates, a dominant executive-search firm for Wal-Mart suppliers. Dollar stores led by Dollar General and Family Dollar pose the greatest threat to Wal-Mart over the next five years, according to a survey of Wal-Mart's vendors released last month.

"To be honest, I didn't really expect that," Smith told The Post, noting that most chatter typically surrounds Wal-Mart's rivalry with Target.

A Wal-Mart spokesman declined to comment.

Wal-Mart began to refocus on low prices last summer as CEO Mike Duke ousted chief merchant John Fleming, an ex-Target exec, and tapped Wal-Mart veteran Bill Simon to head the company's US division.

Simon, who has since pressed for stricter adherence to the company's "Everyday Low Price" mantra, said last October, "I don't really find it acceptable" when asked by an analyst about dollar stores that were stealing Wal-Mart's lowest-income shoppers.

Dollar stores have siphoned away Wal-Mart's lower-income shoppers with more convenient locations and smaller package sizes, according to Jefferies analyst Daniel Binder.

Revlon Selects VMT’s Velocity® to Drive their Demand Sensing and Analytics Strategy

2010-09-17T17:54:00.001-04:00

Ann Arbor, MI – September 1, 2010 - Vendor Managed Technologies, Inc. (VMT), the leading provider of enterprise Demand Signal Repository (DSR) and Analytics solutions for the consumer products industry, today announced that Revlon has selected its Velocity® Solution Suite. With VMT’s award-winning Velocity® Demand Signal Repository (DSR) using Microsoft® SQL Server 2008, Revlon will increase product performance and inventory visibility from the time of shipment through store-level scanned sales at the register.

Piotr Prussak, VP of Application Development stated that "Revlon selected VMT’s Velocity on the Microsoft software platform to facilitate a single view of our customers across all departments including Finance, Marketing, Sales and Demand Planning."

"VMT’s sixteen year history enabling suppliers to leverage demand and inventory data has uniquely positioned us to accelerate finance, marketing, sales and demand forecasting efforts," said Jennifer Beckett, Vice President of Sales and Marketing at VMT. "We are excited to support our customers in becoming more consumer-centric and appreciate their commitment to partner with VMT and Microsoft."

“Understanding consumer demand in a constantly shifting economy is challenging, making it critical for companies to have access to the right information to more accurately manage demand and supply,” said Kevin Tigges, director of U.S. consumer goods industry solutions, Microsoft. “VMT’s Velocity Solution Suite empowers business analysts with the integrated data and demand analytics they need to help increase customer demand for its products, meet sales objectives and improve margins.”

Want to learn more? Contact VMT’s Velocity team at sales@vmtsoftware.com or check out www.RetailVelocity.com.

Contact:
Jennifer Beckett
Vendor Managed Technologies, Inc.
(734) 426-2300
Jennifer.Beckett@VMTSoftware.com

About Revlon
Revlon® (NYSE: REV) is a global leader in color cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirant / deodorants and beauty care products and is one of the strongest consumer brand franchises in the world. Revlon’s global brand portfolio includes Revlon® color cosmetics, Almay® color cosmetics, Revlon Colorsilk® hair color, Revlon® beauty tools, Charlie® fragrances, Mitchum® anti-perspirant / deodorants, and Ultima II® and Gatineau® skincare and its products are sold in over 100 countries across six continents. Websites featuring current product and promotional information can be reached at www.revlon.com, www.almay.com and www.mitchumman.com.
About Vendor Managed Technologies, Inc. (VMT)

Through its flagship Velocity Solution Suite, VMT enables consumer goods manufacturers to become consumer–centric in their category management, sales, marketing, merchandising, trade promotion, demand planning and replenishment strategies.

For over 16 years, VMT has equipped consumer goods manufacturers with best-in-class demand signal repository (DSR) and business intelligence solutions. Velocity cleanses, harmonizes and integrates store-level POS with third-party and internal data to provide end users with best practice analytics and processes geared towards maximizing sell-through and profitability across their retail and distribution accounts. Velocity provides harmonization adaptors for over 200 retailers and distributors covering all classes of trades and geographies.

For more information, please visit www.retailvelocity.com. VMT is a Microsoft Gold Certified Tier-One Managed Partner.

Walmart Takes Control of Transportation

2010-06-01T08:40:00.002-04:00

Wal-Mart Takes Back Its Supply Chain, IT In The Spotlight
Written by Frank Hayes May 26th, 2010

Supply chains don’t get a lot of love from IT. They’re not sexy; no customer-facing payment systems or kiosks to love, just pallets, diesel and rubber. But Wal-Mart is about to change that. Retail’s $405 billion gorilla is taking over the trucks that deliver products from thousands of its suppliers. That may not sound like it has much to do with IT, but boy, does it ever. True to its contrarian roots, Wal-Mart is turning just-in-time inventory inside-out–and taking back its supply chain.

Officially, Wal-Mart hasn’t said anything about IT’s role in the trucking plan, which is spearheaded by Transportation Vice President Kelly Abney. Abney says it’s all about squeezing out costs by keeping Wal-Mart’s own trucks busy and by accepting delivery of merchandise at the supplier’s loading dock instead of at a Wal-Mart distribution center. Wal-Mart figures it can cut wholesale prices by 6 percent if it hauls the merchandise itself. The company is also positioning the change as a benefit for suppliers, who can “focus on what they do best, manufacturing products for us,” Abney told Bloomberg news.

But Wal-Mart isn’t in the trucking business any more than its suppliers are, and just squeezing out a little savings in fuel costs would be a wasted opportunity. By stretching its supply-chain perimeter though, Wal-Mart will get much better control over the inventory coming in: when it arrives, how it arrives and how quickly it can be turned around. And that’s all about IT.
Right now, Wal-Mart begins tracking every pallet as soon as it’s delivered to a distribution center. When the RFID tags on the pallets are scanned there, the information is linked to what EDI documents say should be in the shipment. That’s when any unpleasant surprises show up, such as missing pallets or delayed shipments. At that point, there’s nothing the truck driver can do about those problems but shrug. By the time the truck has arrived, the inventory system is at the mercy of suppliers.

Those delivery surprises are enough of a problem for Wal-Mart that in February the company began imposing a 3 percent penalty for any merchandise that is not delivered on time.
In the new regime, when a Wal-Mart driver picks up a load at a supplier’s loading dock that same driver will have to scan each pallet’s RFID tag as it’s loaded. The driver will then transmit the data so it can be matched up in real-time with EDI documents that specify what’s in the shipment. Sending that data ahead doesn’t just give Wal-Mart the inventory information a few hours earlier. It gives the retailer the chance to have unpleasant inventory surprises corrected in minutes at the supplier’s loading dock, not days later.

Once the pallets are on the truck, Wal-Mart also gains complete control over when that truck will arrive at the distribution center. Such knowledge creates much more predictability for arrival times, which in turn produces better scheduling options for the loading dock. It also means faster turnaround times. And, stores will know what they’re getting, and when.
By taking over the trucking, Wal-Mart is turning conventional just-in-time inventory on its head. Instead of being at the mercy of suppliers to deliver whatever shows up on the truck, Wal-Mart is literally going after it.

That reverses conventional wisdom, which says to leave things like delivery from suppliers and other non-core functions for the business, to someone else. But Wal-Mart has never shied away from being a contrarian. After all, this is the company that started out by putting stores in tiny rural towns where no other chain retailer would go.

Sending its trucks to pick up the goods lets Wal-Mart’s inventory systems reach all the way to its suppliers–not just figuratively, but physically. That gives Wal-Mart better inventory accuracy, visibility and predictability. And that, in turn, makes those trucks part of a core function.

So much for diesel and rubber.

Newly Published Microsoft DDSN and DSR White Paper

2009-06-30T20:11:00.003-04:00

Getting the Intelligence to Build Demand Driven Supply Networks

Introduction

Building an effective Demand-Driven Supply Network (DDSN) presents an ongoing challenge. Most companies remain in the early phases of developing this business capability. The necessary information on which strategies are based is very complex and can change quickly. Businesses must not only respond quickly to market requirements such as demand, supply variables, and seasonal trends, but also maintain a balance between high levels of customer service and manageable inventory levels.

This paper identifies the challenges of building a Demand-Driven Supply Network, explains how to use near-real-time data in an integrated Demand Signal Repository (DSR), and shares examples of current successes and ideal states.

The Challenges of Building a Demand-Driven Supply Network

A Demand-Driven Supply Network (DDSN) is designed to improve the responsiveness of a company’s value chain. Some of the challenges of building an effective DDSN include an improper understanding of consumer consumption, not enough IT resources, and outmoded business practices around the tracking and use of Point of Sale (POS) scan data. A primary objective is to use real-time POS consumption data to build a better DDSN.

Aligning Demand and Supply with Consumer-Driven Planning

Aligning demand and supply with Consumer-Driven Planning means using real-time consumption data to ascertain what is really happening in the marketplace, and creating an effective and accurate forecast and plan to more accurately manage demand and supply. Consumer-Driven Planning supports organizations in creating realistic and achievable sales targets, developing detailed market intelligence, managing promotions more effectively, and establishing optimal inventory levels for a maximum return on investment at stores and in distribution across the value chain. In other words, it enables a company to establish a clear and unified vision of current and future demand, so that it can develop an execution plan that aligns all supply and sales processes around that vision.

Consumer-Driven Planning can help companies:
- Eliminate Out-of-Stock (OOS) conditions.
- Reduce safety stocks and remainders.
- Decrease stock levels and inventory costs.
- Cut unnecessarily long lead times.
- Improve promotion effectiveness.
- Increase customer service.
- Drive down costs.

Good demand planning requires communication among stakeholders across the organization, particularly in the areas of marketing, sales, and supply chain management. Consumer-Driven Planning enables effective collaboration between key individuals and departments, and helps maintain the security of confidential information.

Building Business Efficiency with a Demand Signal Repository (DSR)

A Demand Signal Repository (DSR) is a powerful enterprise data warehouse that stores large volumes of external and internal data that has been harmonized to provide visibility up and down the supply network. It can also be used to feed line-of-business applications that support DDSNs. A DSR stores retailer data, third-party data, and internal data in order to drive demand-driven business insights across the value chain of stakeholders. The following outlines some examples of these enterprise data sources.

Retailer Data Sources
 Point of Sale (POS) Scan Data - EDI, AS2, Retail Link, Partners OnLine, Workbench, VendorPulse, etc.
 Store and DCs Inventories
 Planograms
 Store Clusters
 Retail Item Hierarchies
 Events

Internal Data Sources
 Sales
 Promotions
 Events
 Item Hierarchies and Attributes
 Store/Location Hierarchies
 Forecasts
 Shipments

Third-Party Data Sources
 Syndicated Data - Nielsen, IRI, NPD
 Weather Data
 Map/Spatial Data

A DSR is an important building block of an efficient DDSN for the following reasons:

 It is the central database for all demand data.
 It harmonizes external data with internal line-of-business data to support multidimensional analytics across the organization.
 It supports cross-functional reporting and analysis with integrated demand analytics embedded into critical spend areas such as trade promotion management.
 It can be used to support business monitoring and trigger alerts for impending business issues (for example, Retail Out of Stock).

An effective DSR is extremely useful in gathering data from disparate sources. A DSR provides item, location, and calendar harmonization for disparate data types—for example, POS data from stores, warehouse withdrawal data, and syndicated data. It is the source of retail-specific information for retail forecasts, store withdrawals, shipments, and planograms, providing demand insight data on what customers bought within a category, and who they bought it from.

.......

Conclusion

A Demand Signal Repository (DSR) –based Demand-Driven Supply Network (DDSN) can transform the way a company negotiates the demand and supply chain. Integrating good business strategy with effective technology can have a significant impact on a company’s financial performance.

Building a successful DDSN can help businesses:
 Increase business efficiency through the use of DSR data.
 Optimize demand and supply cycles.
 Deliver integrated analytics for use in decision making.
 Reduce operational complexity.

Authors
David Kane
Consumer Goods Industry Market Development Manager
Microsoft Corporation
David Rice
Consumer Goods Industry Technology Strategist
Microsoft Corporation

For the full report, go to http://download.microsoft.com/download/E/5/5/E554F0BC-41D5-4641-AF2D-4DD23A995BC3/GettingtheIntelligencetoBuildDemandDrivenSupplyNetworks.pdf

Sales down, profits up at Wal-Mart

2009-06-30T20:04:00.002-04:00

Sales down, profits up at Wal-Mart

Sales at Wal-Mart declined 0.6% to $93.5 billion during the first quarter, as currency exchange rates negatively affected international growth, while strength at the U.S. stores division enabled the company to achieve earnings per share at the high end of its guidance.

Total U.S. sales increased 3.8% to $61.2 billion primarily due to a 3.6% same-store sales increase. Operating income grew at a slightly slower pace, advancing 3.3% to approximately $4.5 billion. International sales declined 11.1% to $21.3 billion and operating income declined 16.2% to $880 million. However, if sales and profits are calculated on exchange rates in effect during the prior year first quarter sales would have increased 9.1% and profits grew7.8%. Exchange rates were not a factor at Sam’s Club where sales declined 1.4% to $10.9 billion although same-store sales including fuel increased 4.2%. Overall sales were also negatively affected by the loss of one selling day since 2008 was a leap year.

Despite a challenging sales environment, president and CEO Mike Duke said a per share profit of 77 cents, a penny higher than the prior year period, was a very good start to the year in light of a very challenging global economy. The company’s guidance at the beginning of the quarter was for earning per share in a range of 72 cents to 77 cents.

“When economic conditions improve, we believe customers who shop Wal-Mart today will stay with us, because of the business improvements we’re making and continue to make,” said Wal-Mart president and CEO Mike Duke. “Across the company, we are building our brand by reducing costs, sharpening our merchandising and updating our stores. Customers trust Wal-Mart. As a result of the increasing shift to value, they have long term loyalty to the Wal-Mart brand because we save them money.”

Looking ahead to the second quarter, CFO Tom Schoewe said the company expects earnings per share to be in a range of 83 cents to 88 cents. Earnings per share in the second quarter of last year were 86 cents.

“Our guidance takes into account Wal-Marts’ strong underlying performance and the difficult economic environment. Plus, our U.S. businesses will be up against the economic stimulus checks in the second quarter last year.”

Is Amazon the New Wal-Mart?

2009-06-30T19:55:00.001-04:00

Is Amazon the New Wal-Mart?

BY Clay DillowTue Jun 30, 2009 at 2:56 PM

Egos at Amazon must be riding high this month. The retailer sold out of its flagship product, the Kindle DX, not once but twice. Then, to cap it all off, this morning investment research and banking firm Cowen and Company called Amazon a "next generation Wal-Mart."
Analyst Jim Friedland wrote in a research note: "In our view, Amazon is a next-generation Wal-Mart, and we believe the company's focus on lower prices and a superior shopping experience versus online and offline competitors will result in substantial share gains over time."

The reasons for Cowen's vote of confidence are numerous, citing greater penetration in non-media categories, more orders per customer resulting from Amazon Prime (a discount shopping program) and the ability to reinvest profits (a la Wal-Mart) from higher margin revenue sources into lower prices across the board. The report notes that Wal-Mart has 7.7% of U.S. retail share, while Amazon owns only 0.3%. That's a lot of room to grow.
Friedland was particularly impressed by Amazon's positioning as a result of the Kindle's success. The company estimates Amazon will sell 900,000 this year and 1.4 million next year. By 2013, Kindle penetration could reach 10% of Amazon's customer base, or 2% of the U.S. population, the report says.

So is Amazon on the way to Wal-Mart-like highs? Much like Wal-Mart, Amazon's growth potential stems from its ability to sell everything from Kindles and MP3s to patio furniture and kitchenware, and to do so at very competitive prices. A recent push into private label products suggests Amazon has its eye on those non-media categories, and the immediate availability of many Amazon products, its easy searchability, and its investment in customer service lend it a competitive advantage over both online and brick-and-mortar rivals. Much as Wal-Mart redefined the retail model over the past three decades, Amazon may rewrite the book for the Internet age.

U.S. consumer spending rises 0.2 percent

2009-04-06T11:54:00.002-04:00

U.S. consumer spending rises 0.2 percent
Fri Mar 27, 8:41 AM EDT

WASHINGTON — U.S. consumer spending rose for a second straight month in February, while incomes reversed the previous month's gains, government data showed on Friday.
The Commerce Department said spending increased by 0.2 percent, after rising by a revised 1 percent in January, previously reported as a 0.6 percent increase. However, after adjusting for inflation, consumer spending in February fell 0.2 percent.

Incomes fell by 0.2 percent after January's revised 0.2 percent rise. Analysts polled by Reuters had forecast spending to rise by 0.2 percent and incomes to fall 0.1 percent.

Savings fell slightly to an annual rate of $450.7 billion. The savings rate was at 4.2 percent in February, indicating that households were still remaining frugal.

Prices edged up in February, with the overall personal consumption expenditures price index rising 1 percent on a year-over-year basis from 0.8 percent in January. Excluding food and energy, the index rose 1.8 percent after gaining 1.7 percent in January.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)(Reporting by Lucia Mutikani; Editing by Neil Stempleman)

Major CPGs Partner with Food Lion To Optimize Shopper Card Data

2008-05-16T08:48:00.004-04:00

Major CPGs Partner with Food Lion To Optimize Shopper Card Data
By John Karolefski

http://www.cpgmatters.com/loyaltymarketing0508.html

Major CPG manufacturers are partnering with Food Lion in a new program that involves sharing and optimizing data obtained through the chain’s frequent shopper cards. The vendor collaboration program aims to maximize and optimize the data by more thorough analysis and a coordinated approach to targeted marketing.

“We want to leverage our database in partnership with our vendors in a data sharing and optimization way, while totally respecting the privacy that we value so greatly around that data,” said Carol Herndon, Executive Vice President of Accounting & Analysis, Chief Accounting Officer and Information Technology for the supermarket chain operating in the southeast.

About 8 million households actively use the chain’s MVP loyalty card. Through the program, Food Lion offers discounts on some 2,400 items each week and sends coupons and product promotions directly to shoppers’ homes.
According to company officials, marketing data collected from MVP Card transactions helps Food Lion know more about and better serve its customers. By tracking their shopping preferences, the retailer can manage more efficiently the product selection and quantity of items in its stores to ensure that the items shoppers want most
are available.

The marketing data, officials added, also enables Food Lion to target coupons and promotions based on customer needs and preferences. For example, MVP customers who make regular purchases of dog food receive coupons for dog food and other pet products. MVP customers who begin purchasing diapers receive coupons for diapers and other baby products.

According to Herndon, the vendor collaboration program is part of the way Food Lion is improving its relationship with shoppers. One goal is to enhance targeted offers to customers and build the supporting technology. Overall, the idea is to be more customized in an effort to drive item count and sales.

“The CPG companies have mounds of data on consumer buying habits and purchasing trends,” said Herndon. “To be able to merge all of that information in a collaborative way is a very powerful. Not just summarizing the data, but understanding what it says and what it doesn’t say and having collective insights around that data. It absolutely supports the work that we’re been doing around segmentation and clustering.”

At first, the program is open only to major vendors which collectively account for 80% of the volume at Food Lion. Ultimately, it will be open to all vendors. “The challenging thing for us is that once you get beyond {major CPGs}, you have thousands of vendors that are not necessarily prepared from a technology perspective. We want to be sure not to avoid or ignore those folks. We have to be sure we modify our approach to vendor collaboration to allow them to participate.”

Whether the vendors are large or small, Food Lion will apply metrics against the program to measure its progress. “We’ll be very deliberate in identifying expectations in that regard,” she said, “coming up with metrics and measurements against which to judge our performance and using that to help modify, expand and accelerate the program going forward.”

With its loyalty marketing programs, Food Lion takes great care to protect the privacy of its shoppers. The company does not sell, rent or lease customer information. All card data, including names, addresses, telephone numbers, e-mail addresses and other identifiable information, is secured. Customers who do not wish to provide such information can still obtain an MVP Card and take advantage of the additional discounts. However, they do not receive coupon mailings and other offers.

Tracking Sales Promotions

2008-04-14T08:25:00.007-04:00

This response to a question was on a Yahoo blog and it relevant especially in regards to leveraging a Demand Signal Repository (DSR) to track the various promotion types. Of the 12 promotion types listed, only a few are easily tracked and reported. But if the manufacturer, retailer and/or promotional company have very good methods for tracking the promotions and correlating them back to either the store or region for integrating within the DSR, the benefits would be monumental for tracking the ROI for these investments.

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Several sales promotion techniques are highly effective in exposing customers to products for the first time and can serve as key promotional components in the early stages of new product introduction. Additionally, as part of the effort to build product awareness, several sales promotion techniques possess the added advantage of capturing customer information at the time of exposure to the promotion. In this way, sales promotion can act as an effective customer information gathering tool (i.e., sales lead generation), which can then be used as part of follow-up marketing efforts.

Why is the value of Sales Promotion?

* Creating Interest – Marketers find that sales promotions are very effective in creating interest in a product. In fact, creating interest is often considered the most important use of sales promotion. In the retail industry, an appealing sales promotion can significantly increase customer traffic to retail outlets. Internet marketers can use similar approaches to bolster the number of website visitors. Another important way to create interest is to move customers to experience a product. Several sales promotion techniques offer the opportunity for customers to try products for free or at low cost.

* Providing Information – Generally sales promotion techniques are designed to move customers to some action and are rarely simply informational in nature. However, some sales promotions do offer customers access to product information. For instance, a promotion may allow customers to try a fee-based online service for free for several days. This free access may include receiving product information via email.

* Stimulating Demand – Next to building initial product awareness, the most important use of sales promotion is to build demand by convincing customers to make a purchase. Special promotions, especially those that lower the cost of ownership to the customer (e.g., price reduction), can be employed to stimulate sales.

* Reinforcing the Brand – Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty (see loyalty programs below). Many companies, including airlines and retail stores, reward good or “preferred” customers with special promotions, such as email “special deals” and surprise price reductions at the cash register.

Sales Promotion Forms and Objectives

There are many sales promotional techniques (and the number is still growing with the development of new ways to reach consumers), but they can apparently be reduced to 12 classical and widely used. The rest of the techniques usually include some kind of combination of these 12 most used techniques of sales promotion.

1. Sampling - the use of various distribution methods to deliver actual or trail size products to consumers with the purpose to initiate trial

2. Coupons - A promotional device that provides a price-off to consumer upon redeeming the coupon

3. Trade incentives - incentives that are given to retail managers and sales people for performing tasks such as displaying merchandise or selling certain lines of merchandise

4. Trade allowances - deals that are offered to retailers for performing activities in support of manufacturer brand

5. Price-offs - promotion which entails a reduction in the brand's regular price

6. In, on, and near-packs (and reusable containers) - specially designed pieces that retailers give to consumers who purchase the promoted product

7. Free-in the mail premiums - a promotion in which consumers receive premium item from the sponsoring manufacturer in return for submitting a required number of proofs of purchase

8. Self-liquidating premiums - a method where the consumer mails in a stipulated number of proofs of a purchase along with the fee to cover manufacturer's costs of shipping and handling of premium item. From manufacturer's point of view, this form of promotion is cost free, and therefore the name is self-litigating

9. Contests and sweepstakes - a form of consumer oriented promotion in which winners receive prizes, cash, or merchandise

10. Refund offers - A cash reimbursement to the consumer by the manufacturer whose product the consumer has purchased

11. Bonus packs - Extra-quantities of a product that company gives to consumers at a regular price

12. Stamp plans and continuity premiums - type of promotion where the consumer is getting rewarded for continuos use or repetitive purchase of a product or service, such as a frequent flyer programs.These techniques can be trade or consumer oriented.Because sales promotional tools are so varied in form, no single unified objective can be identified for them

There are three major contributions of sales promotions that have practical influence of the objectives of promotion: (Kotler 1988)

1. Communication - promotions gain attention and usually provide information that may lead the consumer to the product

2. Incentive - they incorporate some concession, inducement or contribution designed to represent value to the receiver.

3.Invitation - promotions include a distinct invitation to engage in the transaction now.

Source: http://answers.yahoo.com/question/index?qid=20070602104110AANfRTs

New Product Introductions' Success Rates

2008-04-14T08:05:00.004-04:00

According to a new study by The Nielsen Company, there were more than 122,000 new SKUs rolled out in 2007 but only 3,701 or 3% reached the million dollars a year in sales mark. Only 206 or 0.2% earned more than $10 millioin in sales, and 10 or 0.01% made it to the $50 million in sales level. The full article from Phil Lempert-Facts, Figures & The Future is below but one of the key takeaways should be the need to micro-manage your product launches from factory to shelf. What isn't stated in this article is the average cost to launch a new product.

Study findings include:
* The failure rate for new product introduction in the retail grocery industry is 70-80 percent.
* The U.S. Top 20 enjoy a 76 percent success rate for new product introductions.
* The "Bottom 20,000" U.S. food companies have an 11.6 percent success rate for new product introductions.

A major difference between Top 20 new product introductions and Bottom 20,000 introductions is the apparent lack of research and strategic marketing done by the Bottom 20,000.
* The new product introduction cost for retail grocery stores averages $270 per product, per store. (Approximately 5,000 new products are introduced into a supermarket annually).
* Each year, retail grocery stores spend an average $956,800 per store to introduce new products that will fail.
* Market research and strategic marketing can increase new product success rate and save money for manufacturers

New Products May Be Plentiful, But Success Remains Fleeting

http://app.subscribermail.com/dspcd.cfm?ec=c1e545a420754899b69af53c33025f7a&email=58c6042b1a6448cabd21b19ce2d9ad9c

from Phil Lempert-Facts, Figures & The Future

As usual, there was a plethora of new products arriving on store shelves last year...and as usual, the vast majority of them were unsuccessful. According to a new study produced by The Nielsen Company, there were more than 122,000 new SKUs introduced by manufacturers last year, and yet only 3,701 of them, or three percent, managed to achieve more than a million dollars a year in sales; just 206 of them, or 0.2 percent, generated more than $10 million in sales; and 10 of them, or 0.01 percent, managed to ring up more than $50 million in sales.This means, of course, that more than 118,000 of the new items introduced weren't even able to hit the million-dollar sales threshold.With that being said, if you start adding up the numbers on the products that were successful - whether marginally or wildly popular - it may actually be true that new products are the life blood of the industry.

The fact is that new products in total did manage to generate in excess of $20 billion in sales during 2007, with food and beverage items bringing in more than $9.2 billion in sales, general merchandise generating in excess of $4.2 billion, HBC items generating more than $3.4 billion and nonfood/grocery bringing in more than $3.2 billion in sales.Then again, it all depends on what your definition of "new" is.

Of the top 10 new brands introduced during 2007, nine of them were actually brand extensions - only one was a completely new product. Ironically, experts say that the best way to launch a new product is to create the image of an item that is specifically differentiated from others in the category, and yet to do so from a strong foundation - which ideally means being a brand extension that builds on a brand's core and fundamental value proposition.During 2007, the categories with the most new items were cosmetics and candy, each with close to 5,000 new SKUs available for store shelves; the categories most driven by new items, generating the highest amount of new market share, were women's fragrances (with 32.1 percent of its category) and men's toiletries (with 26.8 percent of its category).

Nielsen notes that shorter life-cycle categories such as fragrances tend to be new-product-driven, in part because they are fueled by heavy levels of co-branding and celebrity licensing that capitalize on trends; high turn, variety-driven categories like snacks and cereal, which often see high levels of new product activity, are geared to satisfy consumer needs for something different. On the other hand, the categories with the least new item impact were flour, frozen juices and drinks (each with new products generating just 0.1 percent of their categories), canned seafood and fresh eggs (with 0.2 percent of category share apiece), and ice (in which, amazingly enough, new products actually generated 0.3 percent of category share).Still, the release of new products is a near universal phenomenon - with 104 of the 105 categories reported by Nielsen having new product introductions last year. There was only one that did not - refrigerated yeast.

Don't Put All Your Eggs in One Wal-Mart Basket

2008-02-26T20:51:00.004-05:00

The latest victim in the shelf space wars is now Cott Beverages. It is estimated that 38% of Cott's sales are from Wal-Mart. Many companies, especially with large offices in Bentonville, have high exposure to this risk with average WM % of business estimated at 25-30%. With one buyer change, they could be at risk for substantial losses as evidenced below. What was the reason for this cut in space? Was it replaced with other soda products or did another category grow and gain space? It just goes to show that you aren't just competing for space with people within your category but everyone in the store. Micro-managing your accounts at store-level with category management processes and demand signal repositories (DSR) help keep your eye on the pulse of what is going inside and outside your company.

Cott Shares Sink on Wal-Mart Shelf Space

Tuesday February 26, 2:58 pm ET Cott Shares Fall After Company Confirms Wal-Mart Will Cut Shelf Space for Its Sodas

NEW YORK (AP) -- Shares of Cott Corp. sank Tuesday after the private-label soda maker confirmed that Wal-Mart Stores Inc. was reducing the amount of shelf space in its stores for Cott-made sodas. UBS analyst Kaumil S. Gajrawala responded by downgrading the shares to "Neutral" from "Buy." Shares fell $1.53, or 37.8 percent, to $2.52 in afternoon trading. The shares earlier bottomed out at $2.42, their lowest point since the stock began trading on the New York Stock Exchange in 2002. The stock previously traded between $3.81 and $17.33 in the past year. Trading soared to nearly 12 times normal volume as investors sold off the shares. Cott confirmed the news after rumors that Wal-Mart was cutting space for Cott's private-label carbonated soft drinks brought shares down 23 percent Monday before they rebounded slightly. Wal-Mart is Cott's biggest customer. Cott makes Sam's Choice sodas and waters for the world's largest retailer.

In a statement before the market opened, the company said it is still "actively negotiating" with Wal-Mart to determine space allocation and other merchandising support for the brands, which include Sam's Choice. Cott also said there was no indication that Wal-Mart would cut shelf space for Sam's Choice water. Gajrawala slashed his profit estimate for 2008 to 7 cents per share from 19 cents per share -- which was a penny below the average estimate, according to Thomson Financial. He also lowered his price target to $4.50 from $8, calling the shelf space loss "cause for concern."

The analyst estimated that Wal-Mart makes up about 38 percent of Cott's sales, and said the Toronto-based company could lose as much as $70 million this year, about 10 percent of Cott's Wal-Mart revenue. Lehman Brothers analyst Michael Branca cut his price target to $3 from $6 on the news, calling it "a significant blow." He added in note to clients he believes Cott will need to scale back its new-product investments "in light of the frontal attack on their core business."

The Continued Rise of Internet Shopping?

2008-02-21T09:53:00.005-05:00

Poor Customer Service and Out-of-Stock Products Driving U.K. Shoppers from Stores to the Internet, Accenture Survey Finds

Source: www.businesswire.com

LONDON--(BUSINESS WIRE)--Poor customer service and out-of-stock products are driving U.K. shoppers out of shops and onto the Internet, according to an Accenture (NYSE: ACN) survey of nearly 1,000 U.K. consumers released today.

The research into consumer attitudes found that 55 percent of respondents said that shops often did not have enough tills open and nearly half (49 percent) said that stores are frequently out of stock of the products they want.

Worryingly for retailers, the survey results make clear that if consumers do not find what they are looking for in one store, they do not hesitate to go to other stores. This is particularly true of shoppers for entertainment equipment and devices (91 percent) and for furniture (90 percent). “Retailers know that issues such as poor customer service and out-of-stock products frustrate their customers, but what is shocking is that only a small number of successful retailers translate this customer insight into meaningful operational customer service improvements across their retail and product channels,” said Richard Wildman, head of Accenture’s Retail practice in the United Kingdom.

The Internet’s growing influence Internet-savvy retailers appear to be benefiting from these disgruntled consumers. The survey found that more than half of male shoppers (56 percent) said they prefer to buy via the Internet than in traditional bricks-and-mortar stores, and 44 percent of all respondents — both men and women — expressed a preference for online shopping over in-store shopping.

The Internet is also becoming an integral part of the shopping experience for those visiting traditional high street stores. Almost three-quarters (71 percent) of respondents said they use the Internet to compare prices and then go to the store with the lowest price, and nearly half (44 percent) said they go online to determine if a product is in stock before starting their shopping trip. In addition, two-thirds (67 percent) of respondents said they research products via the Internet before shopping in a physical store.

“The Internet has become an extension of the in-store shopping experience,” said Wildman. “UK consumers are making wide use of it to not only buy products, but to check availability and find the best prices. Retailers need to make sure that if their website says they have a product, it really is on their shelves and not out of stock.”

New products not hitting the mark
New products appear to be having only a limited impact on consumers. More than one-third (36 percent) of respondents said that new products were introduced that they do not need, while just over half (51 percent) said that new products were introduced before consumers realize they need them. Only half (50 percent) of all respondents said they are more efficient today than they were two years ago because of new products.

“It’s critical to understand customers’ wants and needs so that new-product launches can be as effective as possible,” said Keith Barringer, managing director of Accenture’s Consumer Goods & Services practice. “A keener understanding of the customer can help manufacturers time new-product launches for maximum impact and help retailers know when to offer promotions to increase revenue and customer loyalty.”

Awareness and loyalty
When asked to identify the factors that have the most powerful influence on purchase decisions, the greatest number of respondents -- 48 percent -- cited word-of-mouth, followed by traditional advertising (31 percent). Nearly half (47 percent) said special promotions are the best way to retain their business, while 40 percent said improved customer service is the key to making them loyal shoppers.

Among the survey’s other findings:

Consumers say price and product selection matter most. The key criteria respondents cited for deciding where to shop are: price (87 percent), product selection (62 percent) and proximity to home or office (53 percent).

The top three places or ways respondents said they would like to learn about new products are: TV, word-of-mouth and Internet search engines, cited by 59 percent, 55 percent and 44 percent of respondents, respectively.

Women are more likely than men to shop at five or more stores for clothing (46 percent vs. 37 percent), while men are more likely than women to shop at five or more stores for consumer electronics (38 percent vs. 27 percent).

About the research

The Web-based survey of 977 U.K. consumers over age 18 was fielded in August 2007.
This research is part of a global study Accenture is conducting of consumers in the United States, United Kingdom, Germany, Brazil, Mexico, China, Japan and India, sponsored by Accenture’s Retail and Consumer Goods & Services practices along with the Accenture Customer Innovation Network.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With more than 175,000 people in 49 countries, the company generated net revenues of USD 19.70 billion for the fiscal year ended Aug. 31, 2007. Its home page is http://www.accenture.com/.

Contacts
Accenture UK Press Office
Kirsty Whitehead, 020 7844 9267
kirsty.whitehead@accenture.com

Latest on RFID from University of Arkansas

2008-02-12T14:16:00.000-05:00

After attending the RFID seminar at the University of Arkansas, I realized we still have a long way to go. I knew that going into it, but I had hoped for some new revelations. The process of RFID inventory tracking can play a key role in ensuring inventory accuracy in the demand chain. And as we all know, more accurate inventory counts can lead to more accurate inventory levels or "right stocking" your inventory investment.

Some key takeaways from the meeting are that apparel is ripe for RFID. Dillard's is doing some pilots with their jean category suppliers that are providing great results. This category doesn't have the overwhelming problems that exist for categories that use metals or liquids in packaging for their products. Canned soups and sodas probably won't happen anytime soon at the item level and it is difficult at the case or pallet level too.

However, the potential value proposition for RFID is enormous if we can get past the challenges. Some of the value points floating around were the following:

Analyze and Fix Chain Inadequacies
Repair Problems Early in Cycle
Real Time Visibility
Enable Exception Management
Addl. Transparency throughout Supply Chain by
- Tracking Merchandise
- Reducing Shrinkage
- Processing Claims Easier
- Providing Targeted Recall Measures
- Improving Global Piracy Protection
Improve Efficiency in Supply Chain
- Improve Decision Making
- Reduce Time to Receive Goods
- Optimize Inventory Management
- Decrease Warehouse Costs
- Automatic Monitoring
- Allow Event Driven Notifications
Full EPC Inventory Management Systems
- Integrate with business process is key
- Deliver excellent customer service
- Location management
Improved Speed to shelf
- Precise execution on promotions
- Accurate data (33% increase in promotion sales)
- Reduce OOS
- Increase sales

So why should a supplier invest in RFID? Try these benefits and see if there is a big enough ROI for you to make the investment.

Enhance sales via information prompting
Improvement in execution
Customer Satisfaction which leads to brand loyalty
Increased Supply Chain visibility of inventory provides enhanced execution
Supply Chain and sales floor visibility in real time
Improved level of execution
Decreased sales floor OOS (out-of-stocks)
Efficient inventory levels
Recall and claims process
Decreased expenses
Decreased shrink
Decreased out of date products (fresh inventory)

Someone also mentioned that OOS (out-of-stocks) account for 2% lost sales in the retail industry. I actually thought it was more. But if you multiply the 2% by the total retail sales from Q42006 through Q32007 of $3,884,752,000,000 or $3.9 trillion * (total retail sales less e-commerce sales) that accounts for $77,695,000,000 or $77 billion dollars in lost sales for those 4 quarters. That sounds like a pretty large benefit to me if you can see that in your demand chain. This is where an integrated Demand Signal Repository, like Velocity (www.retailvelocity.com), could help you get the real-time visibility that you need to insure you "right stock" every shelf.

* http://www.census.gov/mrts/www/data/html/07Q3.html

Category Management Collaboration Gap Narrowing

2008-01-17T22:44:00.000-05:00

Here are some excerpts from an interesting article on Category Management from cpgmatters.com Category Management newsletter.

http://www.cpgmatters.com/categorymanagement0108.html

“Leave your brand shoes at the door,” advised Bill Bean, Director of Global Shopper Marketing Insights & Trade Research for Colgate-Palmolive. “Talk about the category, not the brand. Once that happens, just about everything magical happens.”

Barry Thomas, Director of Global Category Management for the Coca Cola, Co. added, “Move beyond the category to the entire aisle. Any work you do in the aisle has to be in context of the retailer’s view of category management.”

Thomas and Bean were participants in an all-star panel discussion at a category management conference recently in Bonita Springs, Fla. The event was produced by the Institute for International Research (IIR) with support from CPG CatNet, the trade association. CPGmatters was the official media sponsor of the event.

Added Wal-Mart’s Mertes, “In our experience there are different methods of category management. A lot of it is intentional. Companies A, B and C may offer opinions that are based on different key performance metrics. One emphasizes consumer insight; one profitability; another presents a turn model. So the buyer has to decide. We don’t get mad, we get challenged.” Mertes continued, “In chilled juices, Tropicana versus Minute Maid will present different approaches that serve their interests. But Wal-Mart 101 is ‘never run out.’ We also know we can’t run out of Sunny Delight on weekends, despite what either model says.”

Join the Velocity Team at the Walton College of Business RFID Lab

2008-01-07T15:06:00.001-05:00

COME JOIN US!!!

Item-Level RFID: Future Direction - Current Status Seminar

Item-Level RFID Forum with initial focus on Apparel & Footwear Hosted by the University of Arkansas Fayetteville, Arkansas

Co-Sponsored by Dillard's Procter & Gamble

Date: January 30-31, 2008

What can RFID do for Item-Level merchandise, demand signal repositories (DSR) and category management? How does RFID improve processes and accuracy? How can RFID data be integrated with Retail Link and EDI 852 POS data?

Many of these questions will be answered as Dr. Bill Hardgrave presents the results of the University of Arkansas' Apparel and Footwear Item level tagging RFID research project conducted on behalf of VICS and CSCMP.

The two-day event starts with lab demonstrations at the world-class Sam M. Walton College of Business Information Technology Research Institute. Day two consists of research results, case studies and white papers.Stay on top of the future trends and attend this hands-on forum. This ground-breaking research is just the beginning of improving inventory management.

http://cscmp.org/events/rfid/index.asp

Expect Slight Sales Results Shift from Year Ago

2008-01-07T14:51:00.001-05:00

The hottest gift in 2007 seemed to be the gift card. Wal-Mart had a slight snafu when people tried to redeem but eventually worked it out.

What does this mean to the Velocity user? It means that same store sales results compared from 2007 to 2006 week to week may show significant differences. Gift cards may not be used until weeks or even months after their purchase. When analyzing Wal-Mart's Retail Link, EDI 852, Target's Partners OnLine, Lowe's Vendor Dart, Kmart's (or Sear's) Workbench or other POS data sources, keep in mind that this shift is occurring.

Consumer RFID Education Website Published by EPCGlobal

2008-01-07T14:39:00.000-05:00

EPCglobal has developed this consumer-oriented website to enable consumers to understand what is behind RFID and EPC and how the technology helps companies, institutions and organisations make their lives easier and safer.

http://www.discoverrfid.org/

Category Management Newsletter

2008-01-07T13:46:00.000-05:00

Check out our new ad in CPG Matters on-line Newsletter which focuses on the latest and greatest in the world of category management.

http://www.cpgmatters.com/010308.html

Welcome to the Velocity Blog!

2007-12-28T13:21:00.000-05:00

Welcome to our new blog!!

Within this blog, we hope to keep our Velocity community informed on all the latest and greatest new related to the retail supplier world. We will post articles and links to interesting sites along with our knowledge of recent changes to retailer POS data feeds. Our goal is to insure that your Demand Signal Repository (DSR) or POS data warehouse is fully up to current retail data standards.

We welcome comments from anyone involved with category management, sales, account management, demand chain management, customer service and in-store merchandising management.

If you would like to learn more about our expertise and solutions, you can find us at http://www.retailvelocity.com/ or email us at sales@vmtsoftware.com.

Happy 2008!
The Velocity team at Vendor Managed Technologies, Inc.

2007-12-28T13:00:00.000-05:00

www.retailvelocity.com