Assortment Management in Retail:
 can the manufacturers policy be harmful to the company itself?

1. Assortment
Management in
Retail:
can the manufacturers
policy be harmful to
the company itself?
The business model is based on the Ukrainian market in the
largest producers of FMCG sector analysis
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2. Since in Ukraine all the
information about the goods is
confidential, the only product
which is openly displayed is
underwear.
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2

3. 7
3

4. What are the usual discussions
happening these days, specially in
a big company like
“Flying Panties”?
4

5. Our characters …
Marketing
director
CEO
5

6. Our company does not
fulfil the sales plan!
Soon we will run without
panties, because the
only remaining thing left
is rubber!
6

7. The company is
distracted by storm,
sales are falling: for
everyone came testing
time – survive or be
eliminated!
Do you still have
place, marketing
director!?
7

8. Unambiguously,
because I'm super
cool!
8

9. Previously we sold panties
through advertisement but now the
budget is cut, and you need to find
other sales opportunities for
improvement!
Do you have any ideas?
9

10. Without the
budget !? There
are some ideas …
10

11. First, I will wake up
“sleeping” clients – Also I
will increase sales to
clients, who bought little!
11

12. Why they will
buy more?
12

13. I mastered discount art!
Either it will work
or . . .One out of two!
13

14. First standard advice – we will wake up
“sleeping” clients or we will sell them
more, who bought little!
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15. In other words …
Value more important than price, we will sell to her clean
panties!
15

16. Second idea – we will
knock and for us the door
will open. We will look for
new segments and
markets. Marketing
Classic! We will “Collect”
new clients!
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17. Will they give you?
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18. For me? Yes.
IF we will have more
sellers! Either it will work
or… One out of two!
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19. Second standard advice
– seek new clients.
“Blue Ocean” Strategy – lets go there, were are no
competitors. Seeking niche.
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20. “Blue Ocean” Strategy – lets go there, were are no
competitors. Seeking niche.
20

21. Third idea – to
be Creative!
21

22. How so?
22

23. Boss, behold, here are for you 2 out
of 60 free or nearly free trade push
techniques: here is the new way to
sell old products!
23

24. Third standard advice - to find new
creative ideas. For example: Life is
going on, but panties sings!
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25. 25

26. Or crazy PR event
“Fishnet underwear”
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27. 27

28. What happens, if companies listens
those advices?
5 suicide ways for marketing director:
1. The first advice destroys profitability, because when
discount is given to some companies then later all other
will start to require it to;
2. Second advice increases cost, because it requires
the recruitment of additional sales agents and all so
“to arm them”;
3. The third advice is proposing new ideas, which
require investment and ROI from them are in the fog.
Do you need to continue with the advice if the
core problem will stay the same?
28

29. Sales continue to fall...
Wait until autumn, or will
you give the results here
and now?!
29

30. . . .and some underwear
we have for half a
year. . . How to reach the
sky, and make the
clouds rain in money?
30

31. Пробовали акции,
давали хорошую
скидку…
Не помогло!
Yo, I know!
Shelves Optimisation!
Cheap analogues!
We will give the plan,
we will change sales
team and we will rope
them with real sales
results!!!
31

32. But boss, we have
already changed 3
teams in 3 regions,
but sales fell even
more…
32

33. And so sellers
bonuses are tied up
to the panties and
shelves... I have no
clue what to do and
to whom to tie!
33

34. Ana-logically!
34

35. Work with HR. Undressing the
sellers, ukrainians are world
champions.
No fixed payment at all!
Ukrainians versus World: 4:2.
35

36. Работа с персоналом. В раздевании украинцы
лучше всех!
Ukrainians versus World: 4:2.
36

37. Boss, I have an idea!
We will go to the store
and we will show how
to fight with them!
37

38. How?
38

39. If we are going to go, we will have to
get bigger negotiating muscle! This is
a technological approach! It is so
called harsh negotiation phenomena!
We will use the opponents 'script
breaking' tactics!
39

40. MAXIMA
40

41. What is
granted?
41

42. Your shelf is kind empty!
You don’t have very
important assortment!
Either
something
happens,or...
One out of two!
42

43. So you are saying, that I can
get panties that I don’t have?
43

44. Underwear's that are gone:
Top Movers
guarantee 80% of sales, they are needed to everyone:
Dealers
Deputys
Electricians
Soldiers
44

45. That’s how looks clients who are
missing. . .
45

46. You can get it. But it is
necessary to optimize the
assortment, You need to
order the 'priority' panties!
46

47. Priority products, up to marketing - they will
guarantee the future!!!!!!
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48. My whole family already have this priority
product! Even I wear 2 underwear's at the
same time! I worked hard to clean them
from the shelf!
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49. This is my lovely daughters photo!
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50. Crisis is outside, we still
need to make sales!
50

51. I wont sell any new
stuff until I will sell the
old products that you
obtrude!
51

52. Here are they: Slow Movers
Slowly sold products
52

53. Here are they: Out Movers
Products which nicely reflects the
trading history and no one buys them
anymore. . .
53

54. The fact is we didn’t foist, but
your “Masha” (shop manager)
ordered!
54

55. This is a headache.
Perhaps the sales
agent gave bonuses in
panties to the Masha,
so she ordered more. .
Agent done his job,
Masha got her
“bonus”, and what
should I do?
Buyers stopped going
to the shop,
underwear's they
need I don’t have!
Either they don’t like
the color or the color
is bad.
55

56. So say to them – buy what is here. . . tell
them they can’t see underwear's under
the cloths, what's the difference what
color they are? Panties, is a product that
can be substituted. . . Or one out of two!
56

57. Men product substituted for
women
57

58. 58

59. Women product substituted for
men
59

60. 60

61. We will assign to
you the best
merchandisers,
which will be able
to explain to
people.
61

62. 54
We will give you new
stuff too – cheap
crisis panties!
For real it’s a good stuff, just
take as much as you can! Not
less then EURO pallet! I give
you my word. Or. . . one out of
two!
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63. New Movers
Goods, that are introduced in to assortments
63

64. 64

65. New Movers for men's
Goods, that are introduced in to assortments
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66. Yeah, you know, we
would like to bring to
you and top movers…
but, you know, how
our logistic and
production works .
When I will get it in
my warehouse I will
bring you first!
66

67. When you will solve your damn
problems come back. Tomorrow
“Carlsperg’s” panties will arrive,
may be they have what I need?!
67

68. I don’t get it... For some crazy reason
assortment and shelf optimizations for
all Ukraine and for this shop doesn’t
work?
68

69. Now I will show where are we looking
• First we are analyzing main business
process, we check how well the TOP
clients are served with TOP assortment
69

70. What do you need for that?
1.To identify TOP clients by sales
2.To identify which products are in TOP
assortment by regional sales
3.To know analysis methods that allows you
to calculate lost sales
4. And of-course not to forget your head at
home!
70

71. We check if all top movers
are in top shops. . .
. . . and this is what we found:
71

72. Data analysis and during shelf
observation time we found:
• Regional TOP assortment in TOP shops was
displayed between 36% and 60%. That why
potential to increase sales was from 40% to 56%.
• However, at the same time there also was lost
sales, which fluctuated between 16%-25% and thus
in certain circumstances, when producer had his
'focus team' for work with assortment and whole
bunch of merchandisers!!!
• And at the same time from 12% till 36% was
overstock, though they haven't been delivered the
whole month, but usage was daily!
72

73. Current
Marks
TOP Products
Marked in Black are
not listed in the
shops assortment at
all.
TOP Products marked
in red are in
assortment, but at
analysis time they
weren't on the shelf -
OutOfStock
TOP Products marked
in blue which weren't
delivered during the
month but they are
still in the shop.
(OverStock)
73

74. Assortment surplus, shortage and
potential
Shop Address
Assortment
74

75. How is it possible that the most wanted
products are not in assortment at best
shops?
Life without panties?
75

76. Rules, which affect shortage of needed
products:
1.Planogram creation policy (one planogram for 1
region or maybe for the whole Ukraine for one year);
2. Priority products policy (in the best shelf places put
products you want to get rid of, not what the consumer
wants to buy);
3. High margin products get priority, even so the final
benefit might be little;
4. Business way: employees works to fulfill sales plan
but not for clients (shelf's) 'service'.
76

77. And other rules, aggravating
sales:
1. Retailers belief that product substitution fully
replace products that are short (shop don't need
to order sold products till they have substitution).
2. To put products which are sold-badly, which
front look is damaged or the valid time is over in
the best place.
3. Belief, that does not need to order sold
products until stock of product (or group!)
decrease till minimum (most of the time it is '0')
4.- etc.
77

78. 78
I see we have a very
interesting situation!
Apparently we are
making one
planogram for the
whole Ukraine. But
usage in regions and
even in separate
shops is quit different!
78

79. 79
yeah, and during the year everything is
changing, during the winter we need warm
panties and during the summer light. . .
79

80. 80
What if competitors
creates new
product...
80

81. So boss. . . You think we are
dealing wrongly of what and
how much of it should be in the
shelf's?
81

82. You know colleague. . . if only we
could review the planogram in every
shop, and knowing what and how
much of it are exactly are sold. . .
82

83. 83
If your are interested in how to improve your sales,
how to find the solution to control your shelf
spaces, how in three months to get real ROI from
your investment in to changes, you need to contact
us.
We can reach fast results, we have real Know
How, real supply chain management experience
(for Production, Distribution and Retail) and
knowing how to be mediators between production
and retail.
83

84. Author of “God, Quantum physics,
Organizational structure and
Management style”
http://www.versloknyguklubas.lt/en/component/virtuemart/?
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You can order a book,
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just a dream at:
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+37069841027
 Darius
Radkevičius
84

85. www.god-­‐physics-­‐management.com
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