SAS® helps Shopko reduce inventory, improve margins
Wisconsin-based retailer Shopko is more than holding its own against its well-known national competitors. By using SAS to streamline the process of space and assortment planning, the retailer is reducing inventory and improving its profitability.
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Getting the right mix of merchandise and maximizing productivity with assortments tailored to local preferences and each store's physical layout are challenging for any retailer. For regional chains competing with global giants, they are essential.
"We're among the last of the midsized general merchandisers that are still in business, and there's a reason why we're still going strong," says Dale Osterberg, Shopko's Director of Application Integration Services. "SAS has helped us maximize inventory and shelf-space utilization to best meet our customers' needs and improve the efficiency of our departments, allowing us to do more with less space than our competition."
Shopko strives to provide customers with a consistent shopping experience while also accurately reflecting regional shopping preference differences and adjusting for the varying sizes of its 142 stores. In addition, Shopko sells a lot of seasonal merchandise. It can be tricky to predict when it's the right time to stock outdoor furniture or grills. Salem, OR, shoppers are more likely to want to fire up a grill earlier in the spring than residents of Green Bay, WI.
An end-to-end solution
Shopko had successfully deployed a SAS space planning application several years ago and decided to choose SAS again when it wanted an entire solution suite that could handle everything from the highest levels of financial and assortment planning to store-specific plan-o-gramming.
"We needed to streamline and standardize the process,'' Hermann says. Now, Shopko can take all the merchandising plans and roll them up into a single financial plan with a single view for the entire organization. Shopko can be proactive across its 142 stores and plan its merchandise, vendors and stock according to what is most profitable. It no longer has too much out-of-season inventory in the wrong location at the wrong time, resulting in large markdowns and hidden carrying costs.
"SAS has also helped us achieve continuity in our planning, and that's an enormous benefit," Hermann says. "We now have the ability to plan across categories, across subcategories down to the store level, and we have the ability to manage the plan in season as sales happen."
"Sales and margins have improved and we've reduced inventories,'' says Jack Ingersoll, Senior Vice President of Merchandise Planning. "It is all related to using SAS."
"As a regional general merchandiser, Shopko is in a very tough environment," says Ingersoll. "We have to deliver an assortment that's more focused and tailored to our customers than some of the national mass merchants.
"SAS gives us a laser focus, helping us analyze what worked, what didn't and then being able to deliver it a year down the road. We rely on the assortment planning toolset to keep all of those moving parts coordinated," says Ingersoll. "That's why SAS is mission critical for us."
Historical data and statistical forecasts "seed" the assortment plan. Shopko sorts stores into clusters based on characteristics like space, sales volume and demographics, and all of the cluster information rolls into the space and financial plans. "Same-store sales" takes on a new meaning as the company can compare how each store is doing against others in its clusters.
Automated space planning makes seasonal merchandise easier to incorporate into stores. "The Green Bay Packers are a good example of that,'' says Osterberg. What happens when they make it to the playoffs, and now you've got 600 t-shirts you want to put in the stores, and your window of opportunity is a week? SAS helps us select the best space in the store to stock those shirts.''
The planning suite also gives Shopko executives options they couldn't have considered with their former processes. For instance, merchandisers are evaluating whether to plan individual store assortments in certain categories, like seasonal store merchandise where sales and preferences vary so widely from store to store that clusters don't necessarily deliver the optimal bottom-line results.
"It's important to get the right sell-through and not be left with so much merchandise at the end of the season,'' Hermann says. "SAS helps us do that.''
Hermann said SAS has been particularly responsive throughout the implementation stage and as the company added more functions. "SAS has learned to anticipate our business needs.''
Surviving tough economic times
"We've had some pretty challenging times over the past year, but the good news is that with SAS we've become very precise with our inventory management, understanding what our margins are going to be and taking corrective action when needed," says Ingersoll.
When the downturn first appeared on the horizon, Shopko began running scenarios and building alternatives to understand the potential impact on the business - and used that vital information to shore up their position.
"When a crisis is on top of you, it's difficult to react. But using SAS, we've been able to build our financial plan out over the course of the next year and take the corrective actions needed to weather the storm," says Ingersoll.
The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.
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Senior Vice President and Chief Information Officer
Maximize sales, margins and shelf-space productivity.
SAS® Integrated Merchandise and Space Planning Suite helps create the optimal assortment plan, making sure the right products are in the right locations at the right time.
Improved assortment productivity with stronger margins, lower inventory and customers who can better find what they're looking for when they stop at Shopko.
“It's important to get the right sell-through and not be left with so much merchandise at the end of the season. SAS is helping us do that.”
Senior Vice President and Chief Information Officer