Strategies Traffic building –Consumer drawn to store/category –Hi share, lo margin, frequent purch. Trial and Entry/Turf Protector –Consumer enters store for initial shopping exp. –Freq. purchased, intensely preferred, featured by target competitor (maintain mkt. share) Transaction building –Consumer spends more in the category or market basket –Larger transaction size

Strategies Excitement creation –Sense of theater/urgency/opportunity –New products, seasonal, rapidly growing Cash generating –Consumer shifts purchases to more profitable products –Hi margins, hi loyalty, hi ring, not price sensitive Image creator –Category builds consumer’s image of store –Reinforce store theme or topical subject

Pasta Category StrategyExamples Traffic builder Std. Packs of dried spaghetti Transaction builder Parmesan, fresh herbs, pasta sauces Cash generator Lge. economy packs of dried pasta Image creator Filled pastas: ravioli, tortellini…. Excitement creator Fresh, less well-known: tagliatelle….

Case Study - Toothpaste ResultsPreviousCurrent% Diff. Sales12.3m12.64m2.8% Gr. Profit1.66m1.52m(8.4%) GP Margin13.5%12%(11%) Turns % Days supply (16%) GMROI %

Tactics – Traffic building Aggressive pricing on loyalty products/low margins Media on frequently purchased items Prominent space

In Class #4 – list names Select product category –Carbonated beverages –Ice cream –Cereal –Salad dressing –Beer –Salty snacks Develop strategy for category products

___________ Category StrategyExamples Traffic builder Transaction builder Cash generator Image creator Excitement creator

Space Management Overview Exceeding customer expectations through merchandising excellence

Training Objectives Understand why Space Management is important Identify the key responsibilities of Space Management Describe the primary tools used by Space Management Explain the goals of Space Management At the end of this session you should be able to:

So, exactly what “Space” are we talking about?

Space is the medium that we use to: Display and promote our products Racks and Shelves Gondolas and Endcaps

Space is the medium that we use to: Communicate the brand Interactive Displays Creative Signage

The Best Buy Experience

A multitude of inputs Many departments have input on how the store should look & shop Strategic Marketing Brand management Buying Buys product Inventory Manages inventory stock levels Store Planning Implementation of prototype standards Communication Internal communication, public and community relations Visual Merchandising Develops fixtures, graphics, interactives Retail Operation Efficient processes and programs for the company Space Planning Space allocation and evaluation

So, who develops and communicates the merchandise plan for this valuable space?

Space Management Mission To provide product placement that compels our customers to purchase complete solutions.

Space Management Goals Enhance the Best Buy brand by improving our customer’s shopping experience. Provide Retail with easy-to-execute Maps and Planograms Analyze category and item effectiveness to determine the optimal use of space Provide customized maps and planograms to support market specific assortments

Key Responsibilities Where do the categories go? Where do the products go?

Key Responsibilities What is the best use of the space? Hmm… Not a lot of free space here!

Space Management Organizational Structure Director of Space Management - Heather Elliott-Kirsch Merchandise Layout Team Planogram Team Space Planning Team SR. VP John Thompson SR. VP John Thompson

Merchandise Layout Each small block is an individual “section” Store maps are created using AutoCAD

“Educated” Layout Financial Objectives –Revenues, Turns, Margins, etc. Operational Objectives –Aisle Width, # of Registers, LP Desks, Stock Capacity, etc. Aesthetic Objectives –Best Buy Branding, Clear Sight Lines, Fun Interactives, etc. Each and every store needs to be designed with the following criteria in mind:

What is a Planogram? Planograms are created using Intercept

How to read a Planogram Displays Boxstock Product Listing Fixture Placement Signage

New Planogram? When section performance is down New products are added to assortment Major trends indicate changes Competition demands Seasonal space needs Other categories need space Modification of store plans/fixtures

Space Planning Square Foot Analysis (Store, Dept, Class, Subclass) Store Capacity and Cubic Space Store Overstock and Closeout Analysis Adjacency Recommendations Marginal Return on Space Analysis Ad Hoc Retail Space Related Investigations Mission: Providing Best Buy with Space Allocation and Evaluation Recommendations which Enable the most Effective use of Retail Space.

Benefits to Stores Balance inventory Reduce costly out of stocks Eliminate wasteful overstocks Cut instore inventory costs Increase inventory turnover Influence shopping behavior Match mix with demand Position products by retailer goals

Benefits to Stores Improve customer service Organize for shopping ease Being instock fosters loyalty Increase store efficiencies Ensure optimum case packs Cut backroom overstock Speed reset times – planograms Proper placement for new items/performance

Space Planning All the “Right” stuff Space Allocation Positioning Adjacency & Attachment The Right Place The Right Neighbors The Right Space

Positioning The Right Place

Adjacency The Right Neighbors

Opportunity Report Key Acct.GapMkt. shareFair share Mergatroid-2.4%29.6%32% Irv’s-1.8%6.2%8% Big Pig-0.1%9.9%10% Big Al’s0.4%20.4%20% PriceCo1.6%14.6%13% Stop&Spend 2.2%19.2%17% Total MKT100%