One Stop is a leading UK convenience retailer. Combining everything from cereal to cider, they provide a number of services including cash machines, post offices and The National Lottery. Operating more than 700 stores across England and Wales, they currently have more than 9,000 employees.
The Business Need
One Stop and RELEX have been working together for more than a decade, during this time the retailer has taken its space strategy on a constant development, from a crawl phase via manual space planning, through to a walk and run approach with full automation and optimization abilities.
Following exponential growth, One Stop identified the next stage in its micro space planning evolutionary journey. The retailer identified an opportunity to further improve its customer centric strategy to support a greater focus on localized merchandising across its expanding estate.
“We needed to create targeted space and assortment recommendations in every category.”
Mervin Nugent, Senior Range Planner, One Stop
The RELEX Solution
With a key focus on being the best store for customers in the neighborhood, One Stop needed a more powerful merchandising solution to support and facilitate that fresh fundamental focus. RELEX’s space planning provided a platform for fully automated and optimized planograms that meet individual, localized store requirements and drive dramatically increased customer satisfaction.
The Benefits
Over the course of its long standing relationship with RELEX, One Stop has made the transition from a manual plan generation, to the automation of over 30,000 store specific planograms per year.
The latest step in the evolution of their conjoined strategy saw the retailer realize impressive operational efficiency gains, caused in part by the additional ability to align inventory with a locally optimized assortment, which enhanced the shopping experience and increased customer satisfaction and loyalty across the brand.
The Opportunity
Experiencing exponential growth in recent years, One Stop recognized that its traditional manual approach to space planning could no longer support the business in its drive for complete customer centricity. Recognizing an opportunity to become more in tune with its customers, One Stop set about to review the organization of its current estate to learn more about the distinguished differences between customer groups, and as a result, a number of new concept stores were established in early 2014. These stores would deliver the differences that the retailer identified; from an increase in fresh food availability to a greater concentration of convenience products.
The retailer’s existing methodology behind planogram production lacked the data integration required to combine merchandising strategy with sales data and store fixture information.
This lacking functionality prevented it from being able to deliver high numbers of automated, optimized plans to store in an efficient manner.
One Stop was looking for a chance to really reflect the consumer shopping variances across its estate.
The Strategy
One Stop’s mission to grow the business with new stores in the right location did not come without its challenges; employing a strategic approach to being the best store in the neighborhood through a customer centric approach, the retailer set out to offer tailored space and assortment that reflected the needs of its local customers.
One Stop also made a commitment to increase its strength in fresh food and own label products, whilst engaging with customers through a digital strategy.
Sewn into this strategy is continued investment in people, stores and technology. Giving stores the skills and tools to build links with the local community was amongst one of the most important tasks, to deliver this, One Stop put priority on great managers in every store.
In order to fulfill its focus, the retailer identified a need to be able to deliver a group merchandising strategy to store whilst maintaining a customer centric approach and enhancing its general operations.
“Using the project as a consultancy exercise gave us targeted space planning recommendations for every category within the innovation stores.”
Mervin Nugent, Senior Range Planner, One Stop
The Conclusion
In a drive to combat increased competition, expand market share and satisfy its own thirst for improvement, One Stop set about implementing the next stage of its customer centric strategy in order to earn the lifetime loyalty of its customers.
Finding efficiencies which could be reinvested into the customer proposition supported One Stop’s aim to be the convenience store of choice for customers based upon a detailed understanding of what they needed and wanted.
Identifying that a localized approach was the most efficient way to execute on their strategy, the retailer set about to explore options for improvement. It began to question if planograms based on top down cluster averages were still good enough to win in a market as fierce as today’s environment. It theorized that not all stores of the same size, in the same location or under the same banner would be shopped in the same way. As a result, One Stop recognized the need to convert to a highly customer centric, store specific merchandising approach.
“We needed to gain control over the space and inventory at every store and create targeted space and assortment recommendations in every category within each store in line with our customers’ expectations” said Mervin Nugent, Senior Range Planner at One Stop.
In order to achieve this, the retailer looked to adopt a system driven approach which would enable it to further analyze clusters of stores. This approach would enable One Stop to tailor assortments more specifically to customers’ needs and such analysis could prove valuable information to the buying teams. In addition to this, it acknowledged that assortment decisions should account for waste by store whilst also being able to maintain the correct days of supply on fixture.
It was imperative that the retailer selected a solution partner who was a respected specialist in its area, providing One Stop with both stability and support, whilst providing flexibility for change. Ultimately, One Stop wanted an agile partner who understood the customer centric journey, someone it could collaborate with and trust. One Stop was looking for a collaborative relationship with a solution partner that would take the time to understand its business to help it achieve short, medium and long term objectives.
With a rapport spanning over a decade, leading category optimization experts, RELEX, already had a proven relationship with One Stop. It is through RELEX’s space planning solution that the retailer achieved the ability to create automatically tailored planograms which fit its individual store requirements whilst respecting its group strategy.
Being able to anticipate differences between stores or locations on any scale is a challenge, but when faced with a store estate as large and varied as that of One Stop, it seemed impossible. With a generic approach all stores are treated the same, resulting in a generic plan being issued across the board to all stores on the estate, regardless of their individual space allowances or assortment requirements.
“Providing quick analysis of large amounts of data, the solution transformed the productivity of our project.”
Mervin Nugent, Senior Range Planner, One Stop
This approach often results in wide variations of interpretation, which can extend to low levels of execution and compliance.
The traditional methodology applied by One Stop involved the merchandising team generating planograms manually, a method greatly hindered by the ever increasing store count. Additionally, this approach failed to mirror the retailer’s localized and customer centric strategy and values.
Following a detailed customer consultation program, One Stop identified that the generic approach was not the best solution for them, and that it would not sufficiently satisfy the local and convenient retailer’s growing customer base.
One Stop was able to determine that much of its offering could be better tailored to meet the needs of its customers. With this opportunity in mind, the retailer looked to explore the potential of optimizing its offering, a gargantuan task for a retailer the size of One Stop. In order to get a greater insight into the best approach for its business they implemented a series of innovation stores.
Having identified three potential areas where improvements in customer centricity could be made, One Stop set about the conversion of their concept stores. Three of the retailers’ missions were to be affected: ‘Grocery Eat Later’, ‘Impulse Food to Go’ and ‘Tobacco News’. In addition, it was able to pinpoint a variance in the levels of affluence, which it determined could account for the fluctuations in shopper behavior across stores of an otherwise similar format.
Accommodating the planned adjustments required more than just merchandising, and One Stop saw a further opportunity to review store space. RELEX was used to determine accurate macro space allocations and enable One Stop to truly reflect the variances in space requirements from one mission to the next – whilst also taking into account additional locally driven variables such as affluence or ethnicity.
“Using the project as a consultancy exercise gave us targeted space planning recommendations for every category within the innovation stores. Providing quick analysis of large amounts of data, the solution transformed the productivity of our project” said Mervin Nugent, Senior Range Planner with One Stop.
In a drive to enhance loyalty, One Stop set about to determine how best to give its customers what they wanted, where they expected to find it. Innovation stores were zoned as part of the initiative; segmenting specific items as indicated by consumer groups. This meant that items which might normally be purchased together would be stocked together, for example food consumed on a night in with friends such as crisps and snacks might be located close to alcohol. Due to the local nature of One Stop stores, they are often positioned within close proximity to schools, as such the potential for child relevant products increases, such as sweets, magazines, toys etc. items which could be easily zoned together.
As a result of the consultation, the retailer was able to gain an understanding of the rate of sale by products in each mission, providing enhanced intelligence for the buying team and validating customer/ product fit, facilitating the inclusion of new products to the assortment where appropriate.
Additional functionality which the retailer found could be beneficial to its requirement was the ability to individually alter assortment offerings to reflect true localization options as defined by the store manager. RELEX completed extensive collaboration with the retailer in order to deliver an interactive web deployment platform for planograms which could enable store managers the ability to select specific products outside of the core assortment which could be added or removed depending on demand. The development of this functionality enabled RELEX to incorporate the retailer’s ‘local choice initiative’, providing the ability to build credible assortments with the additional assistance of local managers, those who know their individual customer base best. The retailer reported an increase in planogram compliance since the implementation of a customer centric approach that saw them consider customers by location.
In order to increase the productivity of each store, One Stop chose to amend the offering within each mission to specifically suit the level of area affluence accordingly. Creating the custom offering that its consumers were crying out for was no mean feat and given the cost implications consideration had to be given to the kind of redevelopment the store required.
Having gathered the insights available – the retailer began increasing and decreasing range and space accordingly, based on purchasing priorities for the missions identified. RELEX enabled great changes to be made across the three missions.
Improvements to the ‘Grocery Eat Later’ mission included increased space for fresh food, dovetailed with a decrease in both range and space for magazines and cards, amongst which an increase in like for like sales of chilled foods could be seen.
“Some stores are seeing a double digit sales lift, and feedback from customers has been profoundly positive.”
Mervin Nugent, Senior Range Planner, One Stop
“The initial investigations into the ‘Food to Go’ mission revealed that our customers would benefit from more chilled and fresh food, as a result we increased our offering of sandwiches, snacks and ready meals.” comments Mervin Nugent.
Had the retailer applied manual methodology to the generation of planograms it would undoubtedly have encountered the numerous difficulties associated with such large scale variance, problems which could not be rectified by staff training. Since each store has unique footprint it inevitably has different fixture layouts to accommodate the unique physical characteristics – meaning a generic plan will never be a perfect match for a unique store; this in turn puts the decision at the hands of the in-store staff and often results in such plans being disregarded entirely due to their inadequacy.
The only way to amalgamate such aggravations associated with manual planning on this scale would be to multiply operational resources tenfold, however, the automation of store specific plans achieved through the use of RELEX has reduced the requirement for an increase in resources, ensuring the retailer was able to retain a core operational team of experts. Revolutionizing its operations, RELEX enables the retailer to automate in excess of 30,000 store specific plans per annum, a growing figure based on the success of the innovation stores, the results of which could see even wider variations across space and range between formats. One Stop also recognized an additional like-for-like produce sales increase.
Results
“We’ve already seen great results from this latest project with RELEX” says Nugent, “Some stores are seeing a double digit sales lift, and feedback from customers has been profoundly positive.”
Cleverly constructed convenience is by its nature convenient and therefore will continue to reinforce local customer loyalty through great value.
In future years there may be an excess of grocery retail supply at a national level but One Stop continue to retain a strong position in the market and as such should be protected against potential price pressures from other convenience retailers, whilst gaining and retaining customer loyalty.