The space management and planogram pages of Minneapolis-based Best Buy Co., Inc.'s Intranet site draw approximately 135,000 hits per week, making them the most frequently visited sections of the retailer's Intranet site. Best Buy is the nation's largest volume specialty retailer of consumer electronics, personal computers, entertainment software, and appliances through 354 stores in 37 states. It offers CDs and DVD movies online at http://www.bestbuy.com.
However, Best Buy's space management team is already seeing the benefits of tying space management solutions, from software maker Intactix, into Best Buy's central datamart. With its customized Intactix interface in place, Best Buy is now linking its Intactix software, space management data, and planograms with other systems in the company, including internal supply chain systems, inventory allocation systems, and point-of-sale sign systems, among others.
"Before we implemented the database with Intactix, Space Management had a stand-alone system that was a series of flat files on a shared network folder," said Best Buy Director of Space Process Flora Delaney. "Now, we have a robust system application that interfaces with other systems in the company, such as inventory allocation and point-of-sale sign production. In addition, because we've created automated links from InterCept to other systems, decisions made in one area of the company are now automatically communicated to the departments and systems they affect." Phasing out the flat-file approach to space management, Best Buy is also bringing in a new Web-based approach to planogram distribution, which allows its stores to view planograms as Adobe PDF files.
"This has proven to be an extremely valuable tool for those occasions when there have been last-minute changes to the planogram that would have caused us to miss our past, 'paper-based' distribution deadlines," said Delaney. "Now, we can change planograms and direct the stores to locate the final versions of the planograms on the Web."
After approximately 10 months up and running with the integrated system, the electronics retailer is reporting more complete data for analysis, enhanced internal communications, seamless connectivity between systems, enhanced automation, and heightened accuracy for shelf tag distribution. "Before integrating these systems, we would produce and send planograms and signs [shelf tags] to stores with some extra signs showing up here and there," said Delaney. "Now that we have this system in place, we can quickly verify which stores are using which planograms and send exactly the signs they need."
This database approach consolidates storage of all merchandising information into one location on a Sybase server, and the custom, in-house database application - designed jointly by Intactix and Best Buy - allows for multi-dimensional analysis. This involves looking at historical sales data, inventory stock control, and other information side-by-side with merchandising data. Ultimately, according to Delaney, this connectivity allows users to report across the entire company, rather than across individual planograms or projects.
"In the past," she said, "we could ask buyers questions about planograms. If they had a hard copy of the planogram, they could answer our questions. Now that we have space management tied into the database system, we do the multi-dimensional analysis, create customized, highly specific reports on the planograms, and regularly send our buyers information about them."
Thanks to the integrated system, Best Buy is also reporting much greater consistency in the output of the space management department, regularly sending its merchant teams reports that compare in-stock rate(s) to planogrammed displays. According to Delaney, this means that these teams can manage their promotional in-stock levels far more accurately than in the past. And, creating links with other systems has allowed the space management team to create more complete merchandising plans and planograms than in the past.
"We deal with a very high percentage of transitional SKUs," she said. "By connecting with other systems, we use a more realistic view of predicted sales forecasts than we ever had in the past to create planograms. We're not just dealing with flat files coming out of InterCept anymore. With our relational database, we pull queries that allow other parts of our organization to understand the outcome of space management decisions. Now that we have our inventory and space management systems talking to each other, I think we're more closely aligning our capacity to our projected inventory requirements."
Looking to the future, Best Buy is planning for continued and further integration of its space management system with other systems and other functional areas of the company to improve automation and communication. "Additionally," said Delaney, "this becomes the base data that will help us evolve and create a custom store-level space planning process. InterCept has helped us optimize shelf-level space, and we're ready to take the next step to store-level space."