The Alfavit retail chain started working with Ralf Ringer in 2003. During this time, deliveries increased almost 40 times, from 564 pairs to 22. In the fall of last year, the dynamics of sales began to lame, and then both companies sat down at the negotiating table to deal with the situation together. As a result, a technology has been developed that can be replicated to the rest of the retail. Tatiana Mikhailova, head of the assortment policy department of Ralf Ringer, tells about the details.
Both companies agree on the main thing: the purpose of the business is to sell and make money.
Alphabet became one of the first chains to agree to put on the shelf exactly the assortment offered by Ralf Ringer.
“Unfortunately, until recently, most of our clients treated our recommendations“ what to put on the shelf ”without proper attention,” says Tatiana. - Apparently, the clients proceeded from the fact that they have been working on the market for a long time and are able to independently select the most liquid goods. But our statistics say strictly the opposite. Only 2% of our clients are able to guess 80% of the top sellers (for example, in Moscow we have a dealer who almost unmistakably determines the bestsellers of the next season). But there are only a few of them. Usually, clients, when working independently, recognize no more than half of the tops. The result of "self-activity" is undersales, underrevenue, and growth in stock. And in the end, all this translates into a grudge against the product and the company. "
But the truth is, it's impossible to guess. Need to know. And the one who has successful and many years of experience in the market knows, who knows the assortment and the buyer better. RALF RINGER has been working with footwear for 14 years, directing enormous resources to studying demand, analyzing the needs of different groups of buyers in different regions. “When the crisis began and we decided to 'cut' the collection, it was not just a 30% reduction in the assortment, and we did not abandon quality for the sake of lower prices,” explains Tatiana the approach to assortment policy in the company. “We analyzed which footwear would become more in demand in a situation of lower incomes of the population, and it was with this in mind that we made a decision for each style: keep, reduce the number of models or exclude from the collection”.
When developing the assortment matrix for Alphabet, RALF RINGER took into account the specifics of the region, the experience of sales in Alphabet in previous years and the audience of the chain.
“We coincide with the Alphabet ideologically,” explains Tatiana. - Their task is the maximum sale per square meter, and everything in the company serves to achieve this goal. And Ralf Ringer communicates the same to his clients. It is possible to ensure the planned profitability per square meter using assortment planning technology, which is based on sales statistics, both our own and the supplier's ”.
It would seem that the obvious idea that it is the profitability per square meter that needs to be counted is not yet obvious for most retailers. The RALF RINGER experience shows that most sellers assess the liquidity of a product by the amount of the margin. That is, if the product gives 100% of the retail margin or more, then it is a good product, if less than 100%, then it is bad. But this leaves out a lot of factors, such as how many pairs of one model are sold per season. After all, each model takes up shelf space. But in one case, you will sell 20 pairs, in the other - 50 pairs. And the revenue per square meter when selling 50 pairs of one model with an 80% markup will be higher than when selling 20 pairs with a 100% markup. But it's not just the number of pairs sold. One model costs 3000 rubles, another - 2000 rubles. The number of shoppers who pass through your store will not change because you put on a particular shoe or raise or lower the retail price. As the latest market research shows, the price bracket in the sales of men's shoes is quite wide.
Both Tatyana Mikhailova and the general director of ALFAVIT-CENTER of the ALFAVIT group of companies Andrey Shirokov agree that such experience can be broadcast to other chains and independent stores. The question is that, it turns out, not all sellers need effective sales technologies. “We see that not for all trading companies the task of selling and making money is relevant,” says Tatiana, “some just need to maintain their status quo. And they still work in the old fashioned way, using many excuses in order not to change anything: “I have a regional specificity,” “I don't need any technologies, I already know everything.” Moreover, sellers come to order models without having information about the history of sales, about “knocked out” sizes, about everything in which money has already been invested.
Sellers still believe that they can take 3-5 models from 20 suppliers to offer buyers a wide range of products. Having 50 suppliers on 20 squares means that I will take a drop from each one, but at the same time I will have to communicate with 20 managers, conclude 20 contracts, and in the season 20 “debtors” will be brainwashed for 5 kopecks.
But until now, few retail players understand that this approach leads to losses. Delivery costs increase, volume discount is lost. As a result, we formally have a wide range of products in a small area. But in practice, for the buyer, this means that the size he needs may simply not be available, and for the seller - an abundance of random models, the demand for which is incomprehensible, unexplored and unpredictable.
And paradoxically, even if a supplier has an effective tool, far from every seller can be reached. Unfortunately, risks are growing, but the number of thinking market players is not. "
Fortunately, both "Alphabet" and Ralf Ringer are ready to share their experience under the name "Assortment Matrix Work".
What is its essence? The assortment matrix is a tool for ensuring turnover per square meter, seasonally balanced composition of the collection for each trade format. Ralf Ringer, for example, has two of them: for 30 articles and for 50. In both cases, these are the most liquid models, guaranteeing the maximum turnover, leaders in their styles. There are three steps to get the matrix.
Step one. Divide the assortment into groups according to several criteria: children’s, men’s, women’s. Boots, low shoes, sandals, moccasins. Calculate which of the groups generates consumer traffic.
Step two. Divide the assortment by supplier. In the structure of a small store, there must be a main supplier. With whom you can negotiate in a large-scale terms. Which will sit down later than everyone else. Alphabet has a different situation - they are gorgeous in their service. And so they build loyalty to their own retail network. But for small stores, a strategic partner is vital, because brands are the last to be abandoned by shoppers, even when family income declines.
Step Three Once you have estimated the share of each supplier, develop and build relationships with those who are the key partners. It is impossible to conduct promotional campaigns and train sellers with each supplier. Do not apply extra effort to a small lever. Therefore, you should know which of your suppliers grows when the whole market falls.
This approach was used to supply Ralf Ringer footwear to the Alphabet chain. The season has passed and both partners were satisfied with the results. The brand's turnover has tripled in one season. It is obvious that working with an assortment matrix gives a predicted profit per square meter. “We, as suppliers, see the manufacturability of Alphabet as a very powerful resource for increasing the turnover of our brand,” sums up Tatyana Mikhailova. - I am sure that the crisis is not terrible for those who unite their efforts, primarily intellectual ones. Alphabet is the leader in footwear retail in terms of development rates, implemented technologies and financial results. But this is not a miracle. This is an achievable result if everything is done together and correctly!
ALPHABET & RALF RINGER
In 2003 TM RALF RINGER was represented in the Alphabet chain by 30 models, the order volume was 564 pairs. The order for the season "Spring-Summer 2009": 80 models of TM RALF RINGER, the volume of the order - 22 pairs. That is, in 000 years, the volume of ordered shoes has grown almost 6 times!
SHARE OF RALF RINGER IN SALES OF MEN'S SHOES IN THE ALFAVIT CHAIN
Season "Spring-Summer 2007"
Only about 20 suppliers of men's shoes.
RALF RINGER accounts for about 9% of all sales of men's shoes.
The share of the rest (about 20) suppliers - 91% (i.e., on average - 4,6%).
Season "Spring-Summer 2008"
Only about 30 suppliers of men's shoes.
RALF RINGER accounts for about 6% of men's shoes sales.
The share of the rest (about 30) suppliers - 94% (i.e., on average - 3,1%).
Season "Spring-Summer 2009"
Only about 30 suppliers of men's shoes.
RALF RINGER accounts for about 19% of men's shoes sales.
The share of the rest (about 30) suppliers - 81% (i.e., on average - 2,7%).
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