Customerland

The Art and Science of Smart Planogramming

mike giambattista Season 3 Episode 21

What if your planograms could adapt to each store's unique inventory and fixtures in real-time? That's exactly what Optimum Retailing has achieved with Realgramn AI, the first AI-powered store-specific planogramming tool that's fundamentally changing how retailers approach merchandising.

Justine Melman, CMO at Optimum Retailing, joins Customerland to reveal how Realgram AI bridges the persistent gap between merchandising plans and in-store execution. "Stores obviously know what their sales data is. They know what product is selling at each store. That's not anything new. What they don't know is why," explains Melman. This crucial insight drives Realgram AI's approach to what they call "precision merchandising."

The traditional planogramming process has always been inefficient – visual merchandisers design planograms, save them as static PDFs, and distribute them to hundreds or thousands of stores with different layouts, fixtures, and inventory levels. Realgram AI transforms this model by allowing merchandisers to create a single planogram that automatically generates unique versions for each store based on their actual inventory and fixture capacities. When inventory changes, the planogram updates in real-time, ensuring store teams always have an executable plan.

Beyond improved execution, Realgram AI provides unprecedented retail intelligence by connecting sales performance with specific store zones, fixtures, and product placements. The system's automated photo compliance uses AI image recognition to verify planogram execution, dramatically reducing the manual labor of compliance checking. Integration capabilities extend to RFID technology for real-time product tracking and digital signage that can respond to customer interactions – imagine displays that automatically update to showcase the blue shoe a customer just picked up instead of the red one featured in the original planogram.

Contrary to fears about AI replacing jobs, Melman emphasizes that Realgram AI aims to enhance retail professionals' capabilities: "We're looking at what we're offering as a way to make their jobs easier, make them more efficient, make them more profitable, make them more successful."

Speaker 1:

You know stores obviously retailers. They know what their sales data is. They know what product is selling at each store. That's not anything new. What they don't know is why.

Speaker 2:

Today on Customer Land, justine Melman, who is CMO at Optimum Retailing. And before we get into what Optimum Retailing is about, in case you don't know, we've been dancing around scheduling this conversation almost since NRF, which is, at this point, almost two months ago. So glad we finally made it. Justine, thanks for joining me.

Speaker 1:

Thanks so much for having me, Mike. I'm glad we finally got this going too.

Speaker 2:

Right, right. A lot to be said for just like sticking to it, just being not letting go.

Speaker 1:

Persistence and tenacity are everything.

Speaker 2:

Yep, I think they are especially in scheduling. Well, just to kind of set up this conversation, can you tell us what Optimum Retailing is all about, and then a little bit more maybe, about your role there?

Speaker 1:

Sure.

Speaker 1:

Optimum Retailing is a retail technology company.

Speaker 1:

We've been around since 2014, and we facilitate merchandising, visual merchandising and retail intelligence through a variety of different tools, one of which is a tool called Realogram, which we actually launched at NRF.

Speaker 1:

Realogram is an AI powered store specific planogramming tool, and it's the first of its kind that integrates with real time inventory. So what this means is visual merchandisers use Realogram AI to design their planograms. They design a planogram based on business objectives maybe top margin product, maybe they want to sell everything red that season, maybe they're looking at a certain brand that they have to promote and they design their planograms based on these business rules. They save it once and every store gets a unique version of the planogram based on their actual real-time inventory and capacity levels. So it's a really efficient way of designing planograms at the store, at the headquarter level, and then the store. Each one gets a unique version of the planogram, which means it's a lot easier for their store teams to execute on the planogram, deliver higher compliance and then, most importantly, have time to focus on customer relationships and improving the customer experience at the store level.

Speaker 2:

That kind of implies that RealGram integrates with either an ERP you know as a kind of central brain and or maybe even a CDP to get that data. And yet I didn't kind of hear that. And, by the way, I've poked around the site, I've poked around the demo, tried to familiarize myself with exactly what it does and how it works, but it seems to me that it would require that. And so tell me about that. Does Realgram actually integrate with a company's ERP and how does that all work?

Speaker 1:

Sure, I will say that we are in the process of updating our website, so not all of this information is as readily available yet as it's going to be.

Speaker 1:

But yes, we do integrate with ERPs and that's a really important notion because it's also a unique differentiator for us.

Speaker 1:

Because it's also a unique differentiator for us, so, and it's what's required in order for us to be able to tap into those real-time inventory feeds from the store. So we tap into their inventory, we have their full product database, their fixture database, because one of the ways that we set this up to make it really efficient is when a retailer comes in and I should preface this by saying we work with retailers who have hundreds and thousands of stores, so, knowing that every store might have a different floor plan, might have different fixtures, we set this up so that every store has a profile, it has the store floor plan, it has the fixtures that are specific to that store, and so we keep all of that information and we then have their product database. So when they start planogramming, we make sure that every single product that's put onto a planogram is the right size. For example, let's say we're working with a telco and we've got a box with a phone in it. We know all of those dimensions.

Speaker 1:

And so when everything gets placed onto the planogram, it's actual size.

Speaker 2:

And yet another dozen questions just kind of emerged here, so that would kind of apply also that. I mean, it just seems like the pre-work that goes into making a system like this live would be a pretty serious task. Not only to understand product dimensions, but fixturing and store design for thousands of stores is no small task. How do you do that?

Speaker 1:

So we work with a variety of different teams at the headquarter level. A lot of the times they'll have this sort of information. If you can imagine, their store planning and design teams will have all of their floor plans and maybe all of their fixtures. So we work very closely with them to integrate all of that information. However, we believe first and foremost in making our customers successful, and so if they don't have their floor plans, for example, we will build them out for them. So our onboarding process is very, very high touch. We are highly, highly committed to making sure that the representation of the retailer in our system is accurate, and we will do everything we can and work with whatever it is that we've got to make sure that that is true.

Speaker 2:

So I'm thinking back to NRF and lots of the conversations I had there, and I'm sure you had similar ones. Everybody was talking about what they could now accomplish with AI, whereas I think in the past couple of years it's just been that we had AI. Nobody's really talking about the downstream effects of it, which is really interesting. But leading up to this conversation and the fact that optimum retailing has got a history in this space you understand it very well I wonder if it wasn't. I'm just kind of imagining this question here. I wonder if it wasn't just one of those things that often was waiting for the right moment, for the technology to become available, to kind of assemble the magic, as it were, because I can't imagine that real gram would have been possible a year ago or two years ago.

Speaker 1:

Yeah, I mean it's a very good point. You know, ai, machine learning, building out, predictive modeling, I mean, those are things that have always been part and parcel to how we do things and have gotten much more sophisticated over the years. For sure, you know, I think what excites me about it is that you know we introduced really great AI this year. Yes, the advent and appetite for, you know, ai supported operations and efficiencies is really important to making a product like this a success. But you know, the other thing is that I still feel like we've just scratched the surface.

Speaker 1:

I'm very, very excited personally about AI. I'm starting to see the impact it's making in my own work and how it's, you know, saving me time, making me more efficient. You know, making me better at the gaps, where you know I don't always succeed, and I think that you know it's AI is just going to continue, obviously, to evolve, and so we are always going to be looking at ways to support our clients with the tools that are going to make them better at their jobs. We're not looking at AI as something that's going to replace the workforce. We are looking at what we're offering them as a way to make their jobs easier, make them more efficient, make them more profitable, make them more successful. And again, harking back to that customer experience, it's all in vein of making sure that what they're providing for their customers from a store experience, from a customer experience, from an employee engagement standpoint, is as robust as it can be.

Speaker 2:

There are. Having seen and been a part of retail planning over the years, I know what's involved in developing planograms for multiple store footprints and even concepts, and there's an awful lot of thinking and just processing and drawing out of what the possibilities and the flow could be. For that matter, I can see where RealGram, just because of AI's ability to kind of crunch all those permutations, would be an enormous, enormous help there. But I'm also curious to think, just to hear where you think this could go in the near future. I mean, what is is it? Is it real gram plus plus, you know, are we going to have an Apple plus version of it sometime? You know, what do you see happening here?

Speaker 1:

Yeah, you know, I mean you bring up a really, really good point, mike, because there's so much sophistication in merchandise planning. You know, there's so much intention with visual merchandising and then I think it almost stumbles in being able to bring that to life in a way that honors all of that really in-depth thought and process and planning. Really in-depth thought and process and planning, because what happens is you take all of that and then it gets put into an Excel spreadsheet and then a visual merchandiser maybe they design their planograms and it gets saved as a static PDF and it gets sent to a store. Those fixtures that they might be planogramming might not exist in every store, might exist in a smaller size in one store over another, and so they're sending out these best case scenarios. But what are the chances that the store is actually able to execute it faithfully to that original production? And I think that that's I mean that's the point of RealGram is to say that you know it doesn't have to be. You know, design once for everyone or design once for most, right.

Speaker 1:

A lot of store, even merchandising and visual merchandising today works around clusters. You know, maybe those clusters are a dozen stores, maybe there are a hundred stores, hundred stores. You know, depending on how a retailer and a brand is able to design their clustering, what happens is it's not a one-to-few or a one-to-one approach, and so, you know, realogram is really stepping in to enable that move from clustering to store specificity. And so that's where we are today. You know, I think the way that that gets articulated now into these live planograms, that each store receives their version that updates in real time based on inventory changes. Maybe they open it today but they go to execute it tomorrow. It might look different if the inventory has changed, different if the inventory has changed. So that is already so far above and beyond. You know what is sort of the current state in visual planning. So where else could that go? I mean, it's an excellent question.

Speaker 1:

I think what I anticipate is that the more data we get that we can feed the models with, the more precise we're going to be in. You know, maybe making predictive recommendations about you know what should be planned. I mean, the other thing that we do is, you know I mentioned that we're also a retail intelligence platform. There's a uniqueness in what we can offer because you know stores, obviously retailers, they know what their sales data is they know what product is selling at each store. That's not, that's not anything new. What they don't know is why, right?

Speaker 1:

So maybe the reason why your red sweatshirts sold more at your main street store than they sold at your store downtown is because there was a rack right at the front of the store that had those red sweatshirts planogrammed and it was in zone one and they were in the right shelf space on the planogram and there's a level of detail there that we know because we've helped design those planograms.

Speaker 1:

So we call it precision merchandising, where you connect the sales data with the store zone and fixture performance to really understand now at a much deeper level, why and how inventory is moving. And these insights are actionable in that merchandise and planning and allocation teams have a better understanding of how to create their plans at a store specific level. So not just from understanding the sales and it sort of stops at the front door of that store, but once they're in the store, really understanding the movement of product can help them make more sophisticated planning decisions from an assortment and allocation standpoint. And again, this is only going to get more sophisticated. So you know, I think what we're seeing from a plus plus standpoint is greater levels of insight, more predictive modeling, more real time capabilities, more ability to for these teams to action on this data and, you know, connect with their other processes within the organization to, just you know, continue to improve this model.

Speaker 2:

So you bring up something really interesting. I'm dying to hear this one, which may well go deep into the weeds, but you know, one of the things that I think RealGram provides is maybe even more valuable than the planogram itself is the data, the performance data behind it. So talk to us a little bit about that feedback loop. You know what kinds of just call it data exhaust comes out of the back end of this big machine and what is optimum retailing doing with it?

Speaker 1:

Well, I mean, don't put me under a technical microscope, because I'm certainly not qualified to answer some of those questions, but what I can tell you is, you know, again, we, we ingest a tremendous amount of data from our clients because we, you know, we know their products, we know their, all of their planogramming, and so it's a layer of insight into every store. We also have capabilities and things like heat mapping to understand flow patterns through the store. We can also integrate with other sources of data that they might have around customer behavior at a macro or micro level within certain regions, within certain clusters, and so we have this ability to sort of merge all of this information and create layers of insight that they wouldn't necessarily have had without this insight into the store-specific execution of these planograms. The other type of intelligence that we have is around that execution at the store level, so we know how the store associate teams are executing their planograms.

Speaker 1:

We have something called automated photo compliance or APC, which is an AI-driven image recognition tool, and the way that works is that when a store gets a planogram again now we're talking real time inventory so we know that they've been able to execute the planogram as it's been sent to them in that moment and they then take a picture.

Speaker 1:

That picture gets scanned by image recognition, it gets validated or it gets flagged for head office. I mean, if you can imagine a team that used to have to scan thousands and thousands of images every week, we take that down to maybe 10%, maybe 30%, but even still like a massive, massive reduction. That only gets better as we continue to train the models, continue to train the store teams on how to capture the best photo, and we do this not just with product but also with marketing. So all of your point of purchase signage, digital signage, printed signage, anything that you can imagine within the store environment, we can help design the planograms and execution of and then make sure that we're capturing all of those compliance level statistics. So that's a whole other layer of insights that helps with workforce planning, making sure that teams are adequately trained, and so those store operations teams can then take that information and help optimize from all of their necessities.

Speaker 2:

Yeah, there's so many more kind of permutations of the utility for this tool that go well beyond just the planogram itself. I mean, all that feedback and all of those insights can be deployed elsewhere throughout the store. You know. It makes me think too, that you know people who are really good at store planning and and you know people who have dedicated their careers to this, the, the body of knowledge that these people have is, it's invaluable in retail. I mean, you know, you, you, you fight to have those people on your team. On the other hand, I'm thinking about, you know, connect Realgram into your operations for a year or two and you've probably replicated their body of knowledge, plus some, just because of you know, the institutional knowledge that you're ingesting, plus all the learning since then Probably a really big deal. I wanted to ask too are there any particular tech ecosystems where Realgram plays well, in other words, well, let me put it this way Are there key partners that you look to partner with on the stack, people who are already integrated and you integrate particularly well with them?

Speaker 1:

Yeah, I mean, you know we have a philosophy that we want to make our solution work for our clients, based on their needs and what their current structure is. You know, we might have a client who's already working with an internal communications team that lets store operations communicate with store associates and facilitates that. We offer that completely. It's a big part of what our solution is. We facilitate the flow of information and assets from headquarters down to store associates in a closed loop system. We facilitate the flow of information and assets from headquarters down to store associates in a closed loop system. We allow them to submit tickets if items or marketing materials or anything like that might be missing or broken. And so you know, we have a very robust communications tool.

Speaker 1:

But if our client already has one, we're not coming in to say you have to get rid of it in order to work with us, but we are able to integrate with whatever it is that they currently have.

Speaker 1:

I mean, hopefully they're going to realize that they don't necessarily need that other tool, that they can get everything from us and, you know, ideally migrate off of what they might be using to a more efficient system, because it's all sort of wrapped up within one solution. But if they don't, you know that's okay. We, you know, as we mentioned, we've worked with we work with ERP systems. Tools that offer merchandise planning are, you know, we're sort of really leaning into that because there's so much information that happens from you know setting up these financial plans and the merchandise plans that are associated with it, predictive models around sales projections and targets, and so you know. But there's a point that that ends and you need to then take that into the execution of you know what all that product is going to look like in the store, and so there's a really seamless connectivity there.

Speaker 2:

Yeah, just to switch topics a little bit. I understand that Optum Retailing works with RFID considerably. I'd love to hear more about that.

Speaker 1:

Yeah, rfid is a really exciting opportunity for us. Not every retailer has RFID, especially within the store level. Maybe they have it on the supply chain but not necessarily in the store. It on the supply chain but not necessarily in the store. But if they do, there's a really great opportunity for us to structure RFID integration in the store through the various tools that can monitor the movement of product. So if we have antennas at a shelf level or at a fixture level, we know that when a product is moved off a shelf maybe it's been put in the wrong place the store teams can get notified. Maybe a product is sold out from a shelf, a store team can get notified to restock it. You know the flow of product from back of house to front of house is a really critical one as well. So we can help with the understanding of exactly where product is in the store and facilitate the management of that inventory as it flows through the store and the replenishment of it as it gets sold through.

Speaker 2:

Are you working with any particular RFID providers or is it kind of agnostic in that way?

Speaker 1:

I think it's agnostic. I don't have necessarily the right answer for you on who we work with on that, but you know, I know it is something that we are able to offer, that we have offered that we, you know, especially last year at NRF, we really leaned into because we have some really interesting use cases around it. We're actually going to be at RFID Journal live coming up in May as well. So RFID is really. The capabilities of it match very, very well with what our solution enables, and so, you know, I think we're really looking forward to seeing how it advances over time to become more, you know, prolific across brick and mortar retail.

Speaker 2:

I'm also thinking about use cases along the lines of I mean, this was the other kind of main topic. Everybody was talking about retail media networks, and you know the way those are being deployed in-store as well as online but it occurs to me that RealGram would be an enormous asset to anybody who's deploying any kind of in-store signage anybody who's deploying any kind of in-store signage?

Speaker 1:

Yeah, we have. We call it digital signage management and you know, as I mentioned, we don't just do product, we do all of the marketing and signage. And so what we're able to do from a digital signage management standpoint is when a retailer has digital devices displaying content in their stores. We are able to monitor the status of all of those to make sure they're working. We're able to monitor the status of all of those to make sure they're working. We're able to monitor the content that's playing to make sure that it's in compliance with what's been planned for it. So, from sort of like a technical functionality standpoint, we're right there with them to make sure that everything's working. Let's say, a monitor isn't working in a store, we facilitate the store team to triage it before they flag it as an issue for head office. Maybe it just wasn't plugged in properly, maybe it needs to be restarted. They don't necessarily need somebody coming down to look at it if that's the case. So we can facilitate the triaging and the solving of solutions that way, solutions that way.

Speaker 1:

But one of the use cases that just came up for me that I really love with digital signage is when you think about personalizing the customer experience at a retail level. We have a really great opportunity because, again, we know the product that's being planogrammed. We can connect those displays with digital signage. So if you're walking in and you know there's a whole display of red shoes and you know you pick up a red shoe, you don't like it, maybe you ask them if they have a blue one and they bring you it out. If RFID is set up, for example, we can then change the content on the screen that was maybe featuring the red shoe to now feature the blue shoe, right? So it's really there's. That's pretty cool. Yeah, it is really cool. So we can like any of the data that's coming in from our clients based on their product, based on their marketing messages. We can connect those digital signage content pieces with what's actually happening at the store level from a product and planogramming standpoint, but also how the customers are interacting with it.

Speaker 2:

Wow. So where can I get one? I'm shy, a couple thousand stores right now, but at some point right. You know what?

Speaker 1:

You don't even need that. Like, we love working even with a retailer that maybe has 10 stores. Right, they're expanding, they know they've got bigger plans coming up and they're really just trying to get a handle on the art of planogramming. Right, we talk a lot about the art and science and it's really something that we help, you know, bridge and facilitate the integration of. But you know, it doesn't have to be that you have 10,000 stores. I mean, if it is, it's great, you can certainly help in a lot of ways. But if you only have five or 10 and you're just trying to get this planogramming piece under your belt, then we can facilitate that as well.

Speaker 2:

Interesting. Well, there's tons to talk about here, which brings up the point maybe we could reschedule a kind of follow-up call in another six to nine months, which means we should start planning that right about now, just according to schedules. But if you're willing to, I think it'd be great just to see you know what has the rollout of RealGram looked like. How are people using it? Let's talk about the use cases. Let's talk about the insights. I think you know it's so much more than than planogramming just because of the data, and insights are going to kind of be drawn out of the back of it. So with all that, justine, thanks for this. I really appreciate your time and the conversation and look forward to doing it again.

Speaker 1:

Thanks so much, Mike. I'm really excited to continue this conversation. There's a lot more coming up.

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