Somerfield Implementing Solutions to Improve Promotion Forecasting

U.K. supermarket chain deploying Manugistics apps to optimize promotions and achieve balance between revenue and margin

U.K. supermarket chain deploying Manugistics apps to optimize promotions and achieve balance between revenue and margin

New York — January 17, 2006 — U.K. supermarket chain Somerfield Group Plc is implementing pricing and promotion solutions from Manugistics as part of an initiative to improve promotion forecasting.

Somerfield, which has 1,224 stores nationwide and owns retailer Kwik Save, chose Manugistics' pricing and promotion solutions over several competitors to provide software, implementation and hosting services for the solution at the Manugistics Data Center.

The firm contacted Manugistics following an Efficient Consumer Response (ECR) Europe study that showed out-of-stock levels for promoted items can be as much as 75 percent higher than non-promoted items. The supermarket has a large amount of promotion-led business, and Somerfield found that this significantly affected its supply chain.

Aiming for Accuracy

The retailer began working with Manugistics in May 2004 as part of an effort to provide a higher level of forecast accuracy in the promotion side of the company. The first phase of the project is currently being implemented.

"In today's hypercompetitive retail market, retailers understand promotions are key to driving revenue," said Stephen Poplawski, Manugistics' group vice president of retail. "The Manugistics solution allows retailers to optimize their promotions to achieve that critical balance between revenue and margin."

Poplawski said that the Manugistics solutions can help improve on-shelf availability, reduce inventory investment and establish a promotional price to drive sales and maintain margin. "For retailers, we are reducing the time they spend forecasting promotions and improving their visibility into future promotion profitability and interpreting sales and customers' responses by store and product," Poplawski said.

Somerfield is looking to the solution to reduce its inventory, improve on-shelf availability and increase promotion effectiveness. The company also is counting on the solution to help reduce time spent forecasting promotions, interpreting sales and customers responses by store and product and improve visibility into future promotion profitability.

Other retailers using Manugistics solutions include Sears, IKEA, McDonalds and Limited Brands.

Additional Articles of Interest

— The focus in the retail sector has shifted from managing the movement of goods to managing information about goods. Read more in "Ramping Up the Retail Supply Chain," in the February/March 2005 issue of Supply & Demand Chain Executive.

— Bad packaging, poor handling and substandard shipping and receiving practices account for more than half the returns in the supermarket industry, and the use of folding cartonboard could significantly reduce unsaleables in the industry, one research project has found. Read about the GENCO study of frozen food manufacturers in the article "Bad Packaging, Poor Handling Seen Driving High Unsaleables."

— Diversified, growing companies frequently confront the challenge of creating a unified customer experience, particularly around how they bill their clients. Office Depot took on this challenge by taking its accounts receivable processes online. Read more in "When A/R Stands for Competitive Advantage," a Best Practices case study in the June/July 2005 issue of Supply & Demand Chain Executive.