Overwaitea and Retail Express Breakout Session Report: - 20th April, 2008
Breakout Speakers:
Don Gamble: Director of IT Architecture and Development, Overwaitea Food Group
Barry Grange: CEO, Retail Express
The Breakout session with Overwaitea Foods and Retail Express was conducted at the IRI Retail Summit, March 2008. The session gave the opportunity for Don Gamble and Barry Grange to discuss and share the success of the AMP2 product implementation into Overwaitea stores.
Don Gamble has been with Overwaitea for over seven years and was intimately involved in the selection, implementation and on-going support of the Retail Express AMP2 product.
Barry Grange is the Chief Executive Officer of Retail Express. He has previously served as the Chief Information Officer at Tesco, Executive Vice President for World Wide Chain Store Systems and founded the British American Consulting Group (later known as Armature), which specialised in ERP and Supply Chain Systems.
Overwaitea: The initial business challenges:
1. Overwaitea operate six very diverse banners with 110 retail stores. In flyer production, they were printing flyers for multiple banners where the only difference was the title on the top, as that was all they could manage. This resulted in an inability to engage with their customers in the different regions, and demographics areas.
2. It took a considerably amount of manpower to ensure the prices were correct. They had to check, then recheck. The process was unstructured and prices had to be transferred from merchandising to pricing systems to marketing, resulting in huge inefficiencies and overheads, but with errors and discrepancies.
3. Overwaitea systems forced them to have fixed price zones. Trying to apply local prices meant taking pricing groups from demographic areas such as urban locations and applying them to small country towns. Changing and creating store zones for more profitable pricing required the involvement of IT staff. This was an inefficient and lengthy process.
4. There was a lack of management and visibility of pricing decisions across the organization
5. Pricing issue:Overwaitea did competitor price checks in an unstructured manner, and often too late for a suitable reaction. Overwaitea needed timely and accurate access to the competitor prices so that the right decisions could be made at the right time.
6. It seemed everyone within the company was doing manual forecasts – all differently. The promotion model within Overwaitea is complicated, with an extensive loyalty card program offering points, redemptions, point programs mixed with price programs. The organization needed a central forecast for sales on an item under the promotion model.
7. The inability to price at store level by exception. Overwaitea needed the ability to price at higher levels of the location hierarchy and have the lower levels inherit them automatically.
8. Merchandising and Promotion planning – Overwaitea needed the ability to plan for multiple weeks, as opposed to only being able to see one week at a tima.
9. Producing six different flyers effectively with multiple versions, Overwaitea needed the capabilities to move quickly and react swiftly to any changes. Control was needed, but at the same time they wanted the resources and flexibility to make last minute changes if required.
10. Forecasting and Simulation
What did they do?
To resolve the business challenges, Overwaitea looked at packages on the market. Knowing that implementing software products from different companies would cause huge integration problems for the company, the prospect was daunting, and they considered developing their own in-house system. Then they spoke with Retail Express.
Retail Express was founded with a focus of bringing together promotions planning, media planning, advertising, marketing and pricing into one single solution. To develop the software, a working prototype of
AMP2 was presented and discussed with many retailers within Europe and North America. 12 months into the build, Retail Express approached Overwaitea and in 2005 they made the decision to use AMP2, integrating the their merchandising, pricing, marketing, advertising and operations processes.
The AMP2 Product Solution
AMP2 does not force you to take a certain path through the different processes; it provides the user with courses and flows, one of which is pricing. There is clearly a need to establish key metrics, key rules and infrastructure to be able to run price rules, run automated pricing; to be able to track properly and effectively what competitors and suppliers are doing, and to get that information in a timely way..
Advanced scientific formulas using regression analysis and non linear optimization enables Overwaitea to forecast the results of price changes before they are introduced.
One of the key points of agreement when Barry Grange and Don Gamble first discussed the solution was the concept of bringing together regular price, promotional prices, promotional offers, events and advertising, in one solution and one set of elasticity models.
Promotion planning gives the ability to establish centralised calendars for campaigns, events, media and then the ability to build from that calendar the offers and events which are going to be active across the business. ”What ifs” allow promotions to be modeled first; advertising brings together calendars with media templates and media vehicles, and integration with InDesign, allows Merchandizers to see flyers before they get to the art department. This lets the category managers see how flyer pages will look in early planning, and see changes and different versions of the flyer minutes after making a decision instead of days.
Implementation and Timelines
Implementation at Overwaitea began in December 2005, and they piloted in July 2006 in ten stores. The pilot was a great success and over the following three months they replaced the legacy systems with no issues. The implementation was seamless and Don Gamble stated that his business users keenly awaiting further enhancements to the system
