How Wilko Is Using SaaS to Facilitate Category Management
Why Category Management Matters
Taking a strategic approach to procurement, with goods and services segmented into discrete groups depending on their functions, gives retailers a quantifiable edge, in terms of efficiency. Studies conducted by APQC’s Open Standards Benchmarking reveal that organisations which have initiated category management programmes enjoy a median supplier lead time of only six days, compared to 14 days for organisations that don’t use category management.
Successful category management requires a strategic analysis of business goals, which enables planners to tie the sourcing of essential goods and services to specific objectives. Analysis and monitoring are also required for keeping an eye on local and international markets, and prevailing trends. This enables category managers to maintain a constantly updated picture on pricing, the relationship between organisational spend and market data, and the relevant performance indicators necessary for improvement and optimisation.
An effective communications network is also important, as this enables retailers to stay up to date with the performance and status of their suppliers. It also provides a medium for continuous engagement between stakeholders, and for making sure that everyone is on the same page with regard to the organisation’s purchasing decisions.
How SaaS Comes into the Picture
With responsibility for what may be a complex and changeable supply chain coupled with the need for continuous analysis and monitoring, retail category managers may find their jobs too challenging to perform by hand. Besides the necessary human talent required, organisations may also lack the IT infrastructure needed to keep an industry standard category management system fully operational.
Cloud-based providers of Software as a Service (SaaS) and other IT solutions can offer a cost-effective and appropriate answer, for retailers facing these challenges.
For UK discount retailer Wilko, a Software as a Service platform was the key to resolving its category management issues -- and for enabling the brand to fulfil its commitment to customers at its 417 stores, nationwide.
(Image source: Insight DIY)
How SaaS Is Facilitating Category Management for Wilko
As a leading multi-category value retailer of homeware and household goods, Wilko’s category management division was faced with the prospect not only of handling supply and procurement issues, but also with strategic planning and space provision across all the properties in its store network.
Wilko has been using JDA Space Planning for more than a decade, and chose JDA as its partner to shape and drive the category management strategy that the company adopted in 2018. The solution was delivered through a Software as a Service model, in a deployment spanning six strategic areas of customer value for Wilko:
- Delivering Wilko’s top 5,000 SKUs, drawn from the range of all their stores.
- Removing slower moving products from stores.
- Creating an accurate micro space allocation, with store-specific considerations.
- Allocating macro space accurately, and reducing oversized stores.
- Driving accurate assortments of goods in the right stores, and at the right times.
- Helping the Wilko team at Head Office and in stores to be the best that they can be -- with a focus on value-added activities for shoppers.
In less than 10 months, Wilko successfully rolled out a broad range of SaaS-based JDA Category Management solutions, including JDA Space Planning, JDA Floor Planning, and JDA Category Knowledge Base. This set of integrated solutions enables the retailer to do everything from generating planograms to creating accurate macro and micro space allocations for all of its 5,000 items across more than 400 stores.
The SaaS-based category management deployment is also fully in keeping with the Wilko brand mission. As Alison Hands, Commercial Execution Director at Wilko explains: “This long-term strategy was designed to allow us to ‘grow by sorting the needs of Wilko families’ and is already delivering real benefits at Wilko, helping us drive customer satisfaction and value. We’re here to provide simple and clever solutions that help real families get their day-to-day lives sorted as quickly, easily and affordably as possible leaving them to be the best they can be. As we move into part two of our strategy with JDA, we’re confident we have a powerful category management solution to deliver continued value to our hard-working customers.”
A Turnaround in Fortunes
Despite the company's turnover falling 2.3% to £1.56 billion for its financial year which ended 2nd February 2019, Wilko achieved a profit turnover of £100 million, with pre-tax profits of £34.8 million. The company also reduced its debt, ending the financial year with a positive cash flow of £26.9 million - an increase of £52.1 million over the previous year.
Cost and cash discipline, and strategic improvements like the new SaaS-based category management system have enabled Wilko to deliver an exceptional turnaround in profitability in its latest financial year.
Category management and SaaS will be hot topics at Retail CIO Connect EU 2020, which takes place from 02 - 03 June, 2020, at Sopwell House, St. Albans, UK. Jon Beasley, Head of IT Strategy and Architecture at Wilko, will be one of the keynote speakers.
Download the agenda today for more information and insights.