Walgreens triples planograms, cuts errors 97% as it customizes assortments

Walgreens Boots Alliance (NASDAQ:WBA) has transformed its regional customer data into tailored assortments so as to more accurately meet the needs of local shoppers. The retailer dramatically increased efficiencies by replacing labor intensive customization tasks and significantly reducing resource needs.

The retailer has tripled its planogram library, increased its merchandisers' bandwidth by 300 percent, eliminated 97 percent of planogram-to-store errors. Walgreens also automated the creation of custom assortments by implementing a category management solution from JDA Software. The program has helped Walgreens support more accurate workforce scheduling at the store level.

"We've remodeled a large number of our stores to make them more relevant for the customers," said Louis Dorado, Walgreens' director of space management and visual merchandising. "To accomplish this, we had to support a significant increase in planograms in order to run the business, while changing the business."

"Automation greatly reduces not only the amount of manual work, but most of the errors associated with manual work," Cary Thelen, JDA's director of product marketing, told FierceRetailIT.

"Using JDA Category Knowledge Base and the actionable insights produced from sales goals, syndicated data, sales history, and consumer profiles, Walgreens improved their ability to ensure locations had a selection of merchandise that catered to local communities," he said. The power and scalability of the Category Knowledge Base and the ability to automate repetitive tasks within the JDA Category Management suite was key to achieving these key performance indicators.

"We pride ourselves in having an efficient planogramming process that affords us the time to leverage the data behind all of our planograms to help optimize downstream systems by enabling better, faster and smarter decisions across the organization," Dorado said.

"When you have over 8,000 stores (in the U.S.) and a minute means everything, again, that data just enables us to unlock other capabilities within the company. That's been a huge win for store operations to be able to give them store specific labor estimates, and all of that's associated with the data in the planogram.

"We can make sure we have enough employees to help customers, while still maintaining all the shelves," he said.

Three key enhancements are part of the JDA solution implemented by Walgreens.

First, store clustering allows the retailer to optimize customer satisfaction and profits by identifying groups of stores with similar consumer behavior and demand patterns. Then, an optimal shopping environment can be created in terms of product selection, quantities and other factors.

Second, customized local planograms catered to local communities in order to satisfy shoppers while minimizing inventory costs and making the best use of physical space.

Lastly, a flexible scalable code base provides faster performance. "The JDA Category Management suite provides an open architecture that allows our customers to customize the applications to their specific needs while supporting the scale required to plan down to store-level," Thelen said.

All this supported more accurate workforce scheduling at the store level for Walgreens. "By maintaining store level floor plans and planograms, Walgreens has knowledge of the scope of merchandising changes required at each store," he said.

Walgreens built a labor modeler against this planogram data, which looks at the planograms in a specific store to understand how much time it takes to move every product in the set. "They are also able to calculate the distance that employees have to walk, as well as all of the tasks associated with doing a planogram change in the store," Thelen said.

He explains further, "The retailer is now able to give its stores an accurate store specific labor estimate based on their actual footage, fixture, item count and location of the specific categories, which helps to ensure they have enough employees to help customers, while still maintaining all the shelves."

"Where you would typically get reports created in an Excel spreadsheet with over 5,000 rows of information, we can convert that into a visual 'heat map' on a planogram or even on a floor plan that will tell the story a lot faster," Dorado said. "We can look at the planogram 52 weeks out of the year and understand what's going on—and see what we want to do differently moving forward."

For more:
-See this JDA press release
-See this JDA case study

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