Micro Merchandising

The art of managing stores in 4-foot building blocks

Merchandising every four feet is a term coined by Sam Walton, the master of discount retailing, referring to the four-foot shelving increments that display general merchandise, and the significance of appeal, cleanliness, signage, in-stocks and other factors that build a successful store right down to 48-inch segments. Today, that phrase still rings true at Wal-Mart.

"Every day Wal-Mart store managers tour the stores with their assistant managers, each of which is responsible for certain sections," explains Sharon Weber, communications manager for Wal-Mart. "During the tour, store managers look at each four-foot section of the side counters for merchandising clarity and customer appeal."

Each 48-inch section is a micro-managed building block of the complete store experience that must attract consumers in terms of space planning, category management, promotional signage and other on-shelf merchandising elements that today's technology helps address.

Follow the Leader
Many retailers now follow or have expanded this example. At Staples, optimizing selling space also entails segmenting merchandise into four-foot segments, with convenience of location the primary driver of category placement.

"We take a two-prong approach to optimizing space, which includes inline merchandising, where everything is segmented into four-foot increments then integrated systematically with three discrete systems: planogramming, store layout and signage," says Bob Madill, Staples' vice president of visual merchandising. Planogramming at Staples is driven by a SpaceMan application, which differs from most other retail executions in that it is fully integrated with a replenishment system to control and activate the replenishment of all SKUs in each store.

"These space planning efforts also link into a fairly new Web-based vehicle that delivers to each store — and that store only — a graphical representation of every four-foot section, complete with signage," says Madill. "So there is no question about how the merchandise is to appear on shelf in each location."

Space and Category Management
Staples uses Store Designer from A.C. Nielsen to allow each of its 1,200 stores to pull down specific layouts that reflect how the shelves should be merchandised as well as replenished. The retailer is now in the process of integrating live picture images of merchandise and signage. This will allow a store to pull a schematic specific to its location that represents the SKUs active for that particular store and all permanent signage active in that set.

"Every retailer struggles with leveraging technology tools with the entire merchandising set from end to end — from the item and category levels to store layout," says David Hubbard, director of systems and processes for Staples. "The key is to first clearly understand exactly what customers expect, then satisfy those expectations through the optimization of the merchandising space."

Madill underscores Staples' customer-centric approach to inline presentations, which are founded on knowing who its customers are, what they are looking for, and the in-store experience they expect to have. He says behavior tells Staples what is important to its consumers. The company has used customer behavior observations, focus groups, Web-based associate interviews, store experts, discussion groups and other ethnographic approaches — but no video mining yet — to understand how its customers navigate and shop each category.

"We've had some surprising results that directly effected how we merchandise our four-foot sections," reports Madill. For example, the company assumed that the more challenging shopping experiences — thus, the ones requiring more merchandising support in their four-foot sections — were with its technical products, like phones and fax machines. "In reality, the more complicated purchasing decisions were in basic categories, like paper, where customer shopping behaviors and decision trees were more much complex than we thought," admits Madill.

The effect of this new understanding on the merchandising space allocated to paper was "dramatic," he says. "We totally changed the space. We increased footage by almost 30 percent and presented a layout more intuitive to how customers shop the category. It also led us to new products, such as paper that works with both inkjet and laser printers."

Rebuilding Customer Experience Supervalu is among the retail grocers now rebuilding stores around the customer shopping experience — addressing competition by enhancing existing merchandising practices with increased customer insight.

Specifically, Supervalu's category management programs help its stores determine the "whys" behind purchasing behaviors, enabling stores to enhance their ability to retain core shoppers and capture new ones. The company is executing more consumer-friendly item mixes as well as shelf layouts that look more like aisle management than category management, based on consumer purchasing behavior, to increase the effectiveness of every four-foot space.

These programs and the market's many other space planning and category management technologies would astonish Sam Walton today, who would be pleased
to see that Wal-Mart store managers are still walking each four-foot section every single day to best assure merchandising clarity and appeal.