The Category Management Association recently surveyed 66 CPG companies about the efforts made to assure investments in Category Management generate an ROI.  Only 27% of the companies surveyed attempt to measure the ROI associated with Category Management efforts.

Of the 18 companies that indicated they did try to measure, 13 had no specific formula for evaluating their investment.

The implications of these findings are no less daunting than the implications of Wanamaker's quip, "Half the money I spend on advertising is wasted; the trouble is, I don't know which half."  In his case there was no way to measure the impact of advertising, or even the delivery of that advertising except in broad terms.

In the case of Category Management and Shelf and Promotion Planning there is a very precise method of measuring if the plan has been implemented.  However, the responsibility to both measure and react is unclear; and often unassigned at the corporate level.

Based on a two year history of information gathered by ShelfSnap, it appears that store planograms are rarely updated to reflect changes made over time.

The lack of measurement and failure to maintain planograms and plans means:

1. The yearly planning process based on last year's planogram starts off from the wrong base.  This increases store labor and adds further deviations from the plan as the crew attempts the new implementation.
2. Operations which are dependent on planograms such as Scan Based Trading, DSR models, Shelf Strips and price tags placements are negatively impacted by this out of date information.
3. Consumer facing applications such as Aisle 411; and in store product locator kiosks frustrate the consumer by taking them to the wrong shelf or guiding them to a shelf with a product that is no longer handled.
4. Consumers in general are frustrated by the chaos that is the shelf, affecting their ability to find  products at all or find them consistently from trip to trip.

From the standpoint of foregone revenue, a Cannondale Partnering Group Study indicated that Category Management, correctly implemented at the shelf is worth an additional sales average of 8% for manufacturers and 14% for retailers.  This benefit is significantly decremented when plan implementation routinely achieves only fifty percent accuracy rates.

A recent study by a large Ice Cream manufacturer indicated that modifying the in store plan to meet needs of the consumer versus a strictly manufacturer driven plan yields 67% more volume in C-Stores.  Now that is a plan worth getting right!

Translating the plan to the store yields a great deal.  It creates and maintains better customer relationships which clearly translate into impressive sales gains.