Planograms, new methodology for skus listing/delisting recommendations

Current situation:

Counters and skus performances analysis to plan the best assortment and to understand consumer trends are one of the most strategic decisions to improve Retail and Manufacturer businesses.

The best way to measure the counter is based on sales or sales growth. However the difference between sales ranking and sales growth ranking could be important and lead to quite distinct conclusions. That because there are lines in the market were just launched as example (posting big growth), or the ones are already establish in the market for a long time (posting big sales).

Manufacturers and Retailers always come to the point to make decisions about skus, as increase or decrease facings or list or de-list products. It is difficult to select the most appropriate ranking (sales or sales growth), to make the correct decision.

Based on the experience, some decisions are made following sales and some sales growth. There are times, it is important volume and some other times growth comes first.

Let's get the example we try to list some new skus, and we look for bad performers in counter. It is really clear to target skus are low in sales and sales growth at a time. We won’t get any objection on those. Nevertheless everybody is at a “tricky” decision when the ranking shows high sales for sku “living” in the market for a long time, and in the other hand is losing “speed”.

Manufacturers and Retailers get also difficult time to decide some de-listings, when they are in the market for enough time, and post small sales and fast growth.
The Retailers have the final responsibility and decision, to break the set down in the most efficiency way in Manufacturers, Segments and skus to make their business profitable. The Manufacturers have to make also objective recommendations, to assure a good performances and profits for Retailers and themselves.

It is fundamental, to have a method to combine both facts (sales and growth) to comprehend the real importance of every sku in the counter.

Proposal:

If Manufacturers and Retailers can have a methodology to combine sales and growth in one number for listing-delistings will solve the way to do objective recommendations.

What we can do is to standardize sales and growth. We calculate z-scores, that means every single sales and growth is subtracted by average and then divided by standard deviation. At this point sales and growth are in the same scale.

Then adding skus zsales and zgrowth scores and then re-rank generate the new ranking. With the new ranking, Manufacturers and Retailers can analyze again the counter and make more solid and objective decisions. New ranking has also the advantage that is understandable and easy to communicate between Manufacturers and Retailers.