Digitalrep Provides Method to Supermarket Product Placement Madness
Have you ever walked down the soup aisle at your local supermarket and wondered how much thought goes into where each brand and type of soup is placed? If so, you may be surprised to learn that it ventures well beyond mere thought: it involves science, numbers and an extensive data analytics software package. Optimizing product placement can have a significant impact on sales revenue, and Digitalrep is one of the most significant players responsible for making this possible.
Supermarket chains and large retailers use Digitalrep to analyze each shelf, how much space each item has, what’s selling and what’s not. Manufacturers use Digitalrep to analyze sales within a specific retail chain and determine what kind of impact product placement has on that company’s metrics.
“It’s really quite amazing how much effort is put into managing shelf space,” said Terry Wolvert, Digitalrep’s founder. “It’s a never-ending challenge, because there’s constant change.”
As random as supermarket shelves may appear, there’s method to the madness. Every shelf is represented by complex diagrams, where manufacturers compete for prime “real estate,” and retailers pursue the holy grail of “optimal assortment” — a perfect mix of products, best placed and stocked to their customers’ needs so that they fly out the door (via the checkout).
“We’re analyzing the data that identifies where things are physically on the shelf, how much of each product is on the shelf, the number of facings, days of supply, and other factors for each item, and how that changes over time,” Wolvert said.
Retailers are eager to use analytics to optimize merchandising techniques and to determine how best to serve their customers. Digitalrep has competition, but the field is still in its infancy and has plenty of room for growth. Big retailers have their own IT departments and most of them use industry standard software from JDA to build diagrams and later modify them. However, it is challenging to implement their own analysis capabilities without the very capable software from Digitalrep, and Digitalrep’s expertise.
According to Wolvert, there is a chasm that exists between technology and category management know-how — and the science behind shelf management.
“Opportunity exists for us because of that chasm,” says Wolvert. “Digitalrep wins new clients when the opportunity arises to engage and demonstrate what’s possible. Actionable information derived from analytics drives bottom-line business results.”
Digitalrep’s agility is reflected in its lean organization. That doesn’t mean its computing requirements are trivial — the company invested nearly a million dollars in its data center last year — and requirements continue to grow. Zero downtime and high performance are the results.
Customer computing requirements are formidable. Each product on the supermarket shelf has more than 3,000 data fields associated with it, including product measurements, place of origin, caloric content, nutritional value and so on. One large supermarket chain generates nearly two billion new records every day — for just a single category — so if a manufacturer needs two years of data analyzed, the amount of data contained in such a query can be astronomical.
To keep up with rapidly growing client needs, the 15-year-old company realized it needed to modernize its IT. It hired VMware specialists to add horsepower when needed, spinning up a new server in less than an hour, rather than a day. “Our ability to react quickly to the growing needs of our business is quite significant,” thanks to VMware’s cloud technologies, says Wolvert.
Regardless of what kind of impact it has on your own shopping habits and brand preferences, there’s one thing that can’t be argued: you’ll never look at the supermarket shelves the same way again.