Managing The Shelf - September 2005

Even though Unilever UK Foods is the one of the biggest food companies in the United Kingdom -- in addition to being a category captain with a majority of its retail partners -- the company still faces the same, nagging problems when it comes to managing the shelf as any other company that plays in the food business. Without fail, the success of any category management initiative for Unilever boils down to opening the lines of collaboration with retailers and proper allocation of resources, according to Nick Widdowson, merchandising manager, Unilever UK Foods.

"Being able to work with the retailers is the first challenge," says Widdowson. "Some are more receptive than others and obviously, it also depends on what other suppliers they are working with. In our business as well as the retail business, there are finite resources with time, money and staff. We are in a number of categories so we have to make a conscious effort to prioritize where to aim our resources and the retailers have to equally do the same."

Synching Up Systems

Beyond question, many different aspects comprise a sound collaborative relationship with retailers but constraints around compatibility of data systems and how each side divides responsibilities remains a constant. To surmount this challenge, Widdowson says Unilever UK Foods deploys a handful of approaches that range from the "full blown" category management process that might take six months to accomplish or even a streamlined approach that can be realized in just a few, short weeks, an approach that worked particularly well for the pot snacks category. "Essentially, our streamlined approach is a one day set-up meeting with two days of workshops," says Widdowson. "Once you've got the category plan strapped down then it becomes an issue as to whether or not it gets executed at the store level. One of the biggest constraints, to anything you do in this time-consuming space, is you go through an entire category management programme, only to not see it launched in-store."

Widdowson says he's seen compliance fail for a number of reasons. In-store resource or management issues, attitude and overall belief in category management are a few of the root causes. But more often than not, it comes down to communication. "Sometimes plans are produced and they don't fit," says Widdowson. "In prior positions with other CG firms, I've seen examples where a plan goes out and if it doesn't fit for one particular store, then it pretty much ends the plan for the entire chain. So then you find it harder to influence the store manager to participate if they don't believe that the plan is going to work or be suitable for their store."

Technology to the Rescue

For Widdowson and his team, JDA Software helps manage a majority of these "middle issues" of category management. The software is especially helpful when communicating with a retailer that is on the same system. "It's much easier to transfer files, work on the plan and send it back," says Widdowson. "It also helps in terms of being able to incorporate other forms of data." Unilever UK Foods will get a plan from a retailer, for instance, that contains store-specific movement data but the company might also want to incorporate market data to include market share, growth, distribution, or any other metric that holds a particular SKU in a category. "We can then input that data into the JDA system and then we can analyze it and understand, for example what the optimum case size ought to be for products," says Widdowson. "Once you've got the data in there, you can build a compelling story for that particular product in that category."

Unilever UK Foods has achieved a significant category sales increase as a result of using JDA's integrated Space Planning by Intactix and Planogram Converter by Intactix software JDA Portfolio Planning and Forecasting aimed at the popular pot snacks category. The company recently reported that sales of the pot snacks category, including its market leading Pot Noodle brand, doubled by utilizing JDA's Space Planning by Intactix software, in one retail partner. "In the past, we've witnessed products like Pot Noodles being placed adjacent to such products as nappies and baby products, or best-sellers hidden away at the back of the store," says Widdowson. "In our recent trial with the pot snacks category, we've proven that by using JDA's category management applications, we can help our retail partners to eliminate some of these problems. Now we can collaborate in order to ensure that space is granted to those products that merit it, and that product is placed in locations where it is easy for our customers to find."

Delving Into Data

In conjunction with the JDA software applications, Unilever UK Food uses its own market research data along with its retail partners' sales data to advise approximately 40,000 stores on which best sellers should be stocked and where they should be positioned for maximum value.

"Retailers are increasingly looking to their manufacturing partners for quick answers regarding how to stock shelves for maximum profitability, while improving the shopping experience for their customers," says Widdowson. "With JDA's space management tools, we are able to use advanced category management technology to create a bridge between supplier and retailer, allowing valuable insight into each other's business, so that shelves are carefully planned in-line with a particular retailer's sales goals or customer profile."

ACNielsen and IRI are the core syndicated data providers that Unilever UK Foods uses in terms of planogram analysis, however, most of the company's retailers provide their own planograms, clustered by store. Widdowson says the store-specific data -- the actual sales figures for a specific SKU in a particular store -- is often different compared to ACNielsen or IRI. "Syndicated data is right down to store level," says Widdowson. "Sometimes we have to rely entirely on syndicated data, which isn't necessarily a bad thing but it does mean that you are essentially working from an average of an average. There is absolute value in doing that but the more accurate and store or cluster-specific data you have the better."

Streamlined Approach

Many companies have adopted category management as a best practice approach to working with retail partners and managing categories. Equally, there has been a recognition that if you stick to an additional approach to time scales, it can be difficult to manage within that time. "It can be quite slow and painful, although a lot of retailers just want to know what is happening in the category," says Widdowson. "There is definitely value in a more streamlined approach where it may be that you are doing is dipping into a toolbox that is already there so that you don't have to start from scratch. You pick out relevant data that applies to different retailers."

With Unilever UK Foods' convenience retailers, whether individual outlets or crops of five to 10 chains, they typically do not have the time to work with a supplier and likewise the supplier doesn't have the resources to work with them. In response to this dilemma, Unilever UK Foods has seen great success by communicating with the convenience sector via the trade press. "Essentially it's one page that provides everything you need to know about the category," says Widdowson. "It suffices very well as we have seen gains of 17 percent in Pot Snacks. It's a very tactical approach to category management without having to go through the entire process but it still gives the retailers all they need to know to manage the category effectively."

Emulating Success

Unilever UK Foods will continue to emulate the Pot Noodle success with other brands and categories within the company having seen similar uplift on butter, margarine and recipe sauces and tea. "Pot Snacks is one example from a number of categories we've worked on where we demonstrated that by working in collaboration with the retailer has led to not only category uplift but brand uplift for ourselves," says Widdowson. "If you can help grow the category the brand will grow as a result of that by working with retailers in a fairly open and objective partnership. We've seen similar uplift across the retail trade where we have worked with them to develop the best possible approach to category and planogramming that we can."