The Importance of Localization
By J. Kent Smith, Galleria RTS
The long established buzzword, “localization” is more important today than it has ever been. The approach of ever broadening assortments has clogged shelves, exaggerated mark-down costs and compromised returns; with slotting fees no longer sufficient to bridge the gap. Put simply, retailers are out of space, capital and resources; urgent action is required.
It’s about getting the localization right end to end, joining the dots from planning and execution to align product and promotional decisions with channel and store specific consumer demand signals.
The solution starts with understanding the role of localization by category; consider developing assortments such as:
• National Core: Items sold in all stores regardless of cluster or size.
• Cluster Core: Items sold in all stores in the cluster, in addition to the national core.
• Cluster Optional: The SKU base that is optional – sold where possible, but may be dropped based on set size or other factors.
• Local: The items that for one or a group of stores, are required. Some will be locally sourced while others are designed simply to give an ordinary store extra punch.
The cluster definition is key, not only in how to group the stores, but in understanding concisely how the product mix varies today across each, and the opportunities to further enhance these shifts through shopper, neighborhood, and competitive insights.
A cluster specific approach provides retailers with a tool to achieve a limited localized space plan, with good representation of the average consumer at an average location within that cluster. While this approach is better than some, it still lacks specific location, space or SKU variances that are required in order to build an offering that is fully cognizant of localized demand.
With an ever growing diversity in ethnicity and consumer lifestyle choices, it is important that retailers make the effort to understand the variations in demand through demographic, geographic and sociographic intelligence where possible.
Here is where the power of chain and cluster level substitution guidance comes in; it is not just about deciding whether to carry an item or line, but can also help to determine if the item should be chain wide or only in certain clusters; if protected as unique or optional in smaller stores.
The remaining question is how does corporate become of aware of the truly local items? Clearly neither dedicated field force, nor suppliers are options. Rather, regional managers and store leaders need to be empowered to notice and recommend these. Getting granular on individual items and locations can be time consuming but the results can prove to be gargantuan; it’s all a part of being an integral part of the neighborhood.
At the same time as retailers pursue the optimal channel strategies, war on the oversized case pack needs to be declared; such are major consumers of space and inventory and as such have the potential to drive mark-down risks. If cases can’t be made smaller, serious consideration has to be given to breaking the case as source.
We’re all familiar with the mantra “right product, right time, right place and right price” but all too often a vital piece of this message is missing; getting products to store in the “right quantity” can also be a cause for concern and should certainly be a consideration in the localized approach. Building an awesome assortment without an understanding of space constraints can lead to average results, with the delivery of consumer specific presentations that are not based on the true realities of execution.
It is worth considering the differences between facing sizes, backroom size or variance in the daily forecast rate of sales dependent on location. It is fair to say that consumers buy products at different rates from one store to the next and facings should account for and reflect these differences where possible.
The caution in assortment optimization or giving the accountant too firm a hold on the reigns is that the flash role of assortment and presentation can be lost – the stores can be a little too productive, a little too routine. Recognizing the need to cater to both shoppers’ rational and emotional conditions, you have to recognize the transcendental role of the cool and hip, the new and improved, and the theatre these create. Productivity must be measured, but the success of a retailer depends on the ability to selectively step beyond this and make every effort to engage with the local market’s culture and understand how it affects consumer attitudes to the entire shopping experience.
The road to localization can quickly become rutted if you do not have systems in place to support it; these systems require localization not just to be a feature, but in the very DNA of the company and its solutions; localization is not an add-on, it must be core.
Fundamentally you must have a system that enables regional and local planning with capability to communicate guidance directly into a planogramming system, which can automatically accommodate all these substitutions along with store specific variances in demand and fixtures.
Collaborative planning is crucial to localized success and as such it is imperative that the system should integrate with the supply chain so that authorizations are tightly managed. Anything less and the reality will be a long-drawn-out process of key punching and drawing planograms which cannot be delivered upon; or worse still, simply letting the assortment flood gates open – over exposing shoppers with a saturated offering.
The hallmark of such a system is an assortment tool, which allows for synchronized chain/cluster planning, and set size planning with space awareness; the ability to step beyond linear analytics to include cannibalization at the cluster level; the articulation of the local items by store; and, the ability to pass this guidance seamlessly to the merchandising function who can maintain a portfolio of cluster, set size, and store specific localized planograms without having to let their capacity constrain strategy – and without having to employ an army of staff and vendors just to draw them.
J. Kent Smith is VP of business development & consulting for Galleria RTS. He can be reached at [email protected].
2014 state of the union for data breach policy
As if having to deal with the rising threat of data breaches weren’t already enough for retailers, many continue to struggle to make sense of today’s rough patchwork of federal and state data breach laws.
Fortunately, while legislation that would establish a national data breach standard has yet to gain significant traction, the Obama Administration and Congress are ramping up joint efforts to establish a uniform, national law that would replace the current fabric of state requirements.
For retailers across the country who sit in the direct line of fire for cyber intruders, this is welcome news.
The current regulatory jigsaw puzzle has simply fallen short of creating a cohesive data breach notification standard that can be applied to all personally sensitive information. Instead, when retailers experience a data breach, they’re forced to navigate a labyrinth of state laws — 47 of them — each with unique requirements for items ranging from how consumers are notified to the types of breached information that would trigger the notification. In other words, maintaining compliance and minimizing confusion amongst customers has become a steep challenge for businesses across the retail sector.
Change is on the Horizon
To-date, the Obama administration has pushed for the adoption of a national uniform breach notification standard through multiple venues, including its April 2013 policy statement on H.R. 624 — the Cyber Intelligence Sharing and Protection Act — which aims to improve cyber security standards.
What’s more, by way of a cyber-security draft proposal in May 2011, the White House offered a data breach provision that gave the Federal Trade Commission (FTC) authority to determine the types of personal information that would trigger a breach, require consumers to be notified within a certain timeframe and empower state attorneys general to bring civil actions to recover certain penalties.
Meanwhile, state legislatures continue to craft proposals to modify their existing data breach notification policy. State attorneys general have also joined the fray to handle oversight of breach notices. As a result, a number of states have proposed a new requirement to report breaches to the attorney general’s office. Proposals have ranged from notification in the event of any breach, no matter the size, to setting thresholds, such as the information of 500 individuals breached.
In addition to meeting the breach notification requirements outlined by current state breach laws, policymakers now expect organizations that experience a breach to take deliberate and immediate steps to protect consumers from identity theft following the breach.
In a 2012 report on data breaches , the office of California Attorney General noted that providing identity theft protection services, such as credit monitoring, could help to protect consumers who have had their sensitive information breached. The report states “Protective measures that can limit the victim’s risk in this type of breach include credit monitoring services and a security freeze.”
California seems to be at the forefront of addressing data breaches as recently the state introduced the Consumer Data Breach Protection Act, AB 1710, which would make retailers responsible for notifying customers of any data breach incident, as well as hold them liable for reimbursing customers’ financial damages.
At the federal level, a 2008 report by the President’s Identity Theft Task Force found “any comprehensive information security program — whether in the public or private sector — must include policies for responding to a data breach…. Such policies should address whether, how, and when to inform affected individuals of the loss of their data, and whether to offer services such as free credit monitoring to those individuals.”
The key message for retailers is that data breaches cannot be managed solely as a compliance issue. Companies must consider their customers and take the necessary steps to make them feel taken care of after an incident.
What’s In Store for 2014?
When it comes to data breach policy, things are definitely looking up. It appears Congress is poised to seriously consider legislation that would enact a national data breach notification requirement to replace the current segmented system of state laws. At the same time, state legislators will continue to look for ways to refine their existing statutes.
Still, as Congress works to form a national data breach standard, organizations must ensure compliance with existing breach notification laws. First and foremost, retailers should implement pre-breach plans, which are often viewed as a good defense, and demonstrate they have established reasonable procedures for addressing a data breach.
Regardless of the legislative outlook, data breaches present a significant business risk for retailers. Preparation is vital. Creating a security incident response plan and identifying the proper outside legal counsel, forensics experts and data breach resolution specialists ahead of time can do wonders to help mitigate the fallout from a breach.
Tony Hadley is SVP of government affairs and public policy for Experian. He leads the corporation’s legislative, regulatory and policy programs relating to consumer reporting, consumer finance, direct and digital marketing, e-commerce, financial education and data protection. Hadley leads Experian’s legislative and regulatory efforts with a number of trade groups and alliances, including the American Financial Services Association, the Direct Marketing Association, the Consumer Data Industry Association, the U.S. Chamber of Commerce and the Interactive Advertising Bureau. Hadley is chairman of the National Business Coalition on E-commerce and Privacy.
Michael Bruemmer, CHC, CIPP/US, is VP with the Experian Data Breach Resolution group. With more than 25 years in the industry, Bruemmer brings a wealth of knowledge related to business operations and development in the identity theft and fraud resolution space where he has educated businesses of all sizes and sectors through pre-breach and breach response planning and delivery, including notification, call center and identity protection services. Bruemmer currently resides on the Ponemon Responsible Information Management (RIM) Board, the International Security Management Group (ISMG) Editorial Advisory Board and the International Association of Privacy Professionals (IAPP) Certification Advisory Board.
Retail Solutions, Gigwalk offer improved on-shelf availability
Retail Solutions, a global provider of cloud-based, Big Data analytics and real-time intelligence for the consumer products industry, has selected Gigwalk, a local visibility software platform, to power its new RSi Intelligent Crowdsourcing solution.
According to the company, its new offering provides clients with end-to-end business intelligence that drives sales by delivering real-time, actionable intelligence to field operations for improved in-store retail execution and on-shelf availability.
Under the terms of the agreement, RSi Intelligent Crowdsourcing will combine RSi’s daily downstream data and alerting capabilities with Gigwalk’s enterprise platform for on-demand access to Gigwalk’s public network of 550,000 mobile-enabled independent contractors. The integration will enable retailers and brands to gather and share in-store intelligence, identify gaps in the supply chain and trigger actions at the store level to correct errors in near real-time.
"This is a truly new and innovative approach to solving many store-related problems," said Peter Rieman, COO of RSi. "By combining hyper-local, crowdsourced intelligence with real-time alerting and mobile technology, we are – in many cases – providing the most cost-effective and timely way to understand, audit and solve in-store activation issues. We believe this solution is a game changer for the industry and we expect to expand this capability to address multiple in-store challenges including on-shelf availability, display compliance, new product introduction, seasonality and more."
"You can’t manage, what you can’t see," said Bob Bahramipour, CEO of Gigwalk. "Gigwalk eliminates blind spots to increase in-store sales. By bringing together RSi’s sophisticated algorithm-based, on-shelf alerting and scorecard reporting with Gigwalk’s local insights and on-the-ground resources, we are transforming traditional models of visibility, collaboration and action — enabling brands and retailers to achieve new levels of retail execution and compliance."