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Promo planning - from Excel to automation

Promo planning - from Excel to automation

MySales implementation at Sviy Market.

Sviy Market’s CIO, Andrii Glushko

Even war is no reason to postpone the implementation of important projects. In 2022, grocery chain Sviy Market from Western Ukraine, moved away from existing provider to automate forecasting and ordering with MySales. With 99% of SKUs ordered automatically, there is much less space for human error, which particularily impacts the quality of ordering decisions for promotional sales. The war has introduced many unknown factors into the forecasting process, such as an extreme increase in demand, disruption of the rhythm of deliveries, changes in the assortment, and write-offs due to power outages. All of that is not making it easier for MySales to function optimally. However, in the long run, Andrii Glushko (CIO at Sviy Market) is convinced that automation will reduce write-offs and increase sales.

 

— Please tell us about Sviy Market. What kind of store format do you operate?

— Sviy Market is a convenience store chain. Our typical store is around 100 square meter size with around 2500 food and non-food SKUs. In some stores we are selling meat by weight, in some only packaged meat.

We have our own production - a dedicated workshop from which we deliver products to retail outlets. Most markets have also small production facilities for pizza, hot dogs, and coffee. The smallest store occupies 50 square meters. m, the largest - 400 square meters, but we do not open such large ones anymore.

— How many stores are operational today?

— As of March 2023, 49 retail outlets operate under the Sviy Market brand, 10 of which are franchised. In the past year, we have closed two stores because we decided that we will not keep unprofitable stores. We opened one new. Our chain operates in Lviv and the Lviv region, we have our own distribution center.

— What’s your target audience?

— Our stores are typically located in the vicinity of educational institutions, student dormitories. We also have markets in the residential areas. Our goal is attracting a young audience, since they have more purchasing power.

— Does the assortment range differ depending on the location?

— We have assortment clusters, but no two magazines have exactly identical assortment range.

— Why did you reach out to MySales?

— We aimed to fully automate and centralize the process of ordering goods. It’s worth mentioning how does our logistics work. There are suppliers who deliver goods directly to stores, without going through the distribution center. In most cases, these are products from fresh groups: milk, bread, sausage. The rest of the goods go through the distribution center. Prior to the MySales integration, we had about 90% of SKUs ordered centrally. Now this indicator is 99%. That is, almost the entire assortment for all stores is ordered through MySales. With some exceptions, we do not allow stores to manually adjust orders. We send those orders calculated by MySales to suppliers. We are currently in the final stages of integrating MySales for orders from third suppliers, but we are also working together on transitioning our own manufacturing to MySales.

— Why did you decide to change your automatic replenishment system?

— In Ukraine, we are in the time when software providers realize that the demand for implementation has decreased due to war, so they are ready for more concessions. Therefore, you can use the moment to automate your business processes at a lower cost. We are also currently implementing a CRM system.

 

— What’s the share of promo sales in your turnover?

— We issue a flyer with various promotional offers for a period of 2 weeks. Before the war, promotional sales generated 15-17% of turnover. Then the war started, and until sometime in August, we did not do any promo at all. The suppliers were not ready to give any promotional offers. Before the war the flyer had typically 250 items. In the summer we issued the first flyer with 50 positions. Currently, promotions account for about 10% of sales.

— Why did you decide to install MySales promo module?

— Prior to MySales, we calculated forecasts for promotional sales in Excel, and with manual work there is a high probability of errors. We needed an automated solution. We uploaded the entire history of data on promotional activities for two years to MySales. And now we see that the MySales promo module smooths out statistical fluctuations, better takes into account the elasticity of demand, possible cannibalization.

— 2022 is probably the most difficult time to integrate new systems related to automated forecasting for Ukrainian retailers, because everything is changing and there are many external factors that do not obey the standard rules of seasonality, holidays, weather changes. That is, completely different factors are superimposed, which are difficult for any IT systems to calculate. How would you rate MySales' forecasts to match actual sales?

— I am not ready to say in numbers, I will explain why. First, there were wild changes in demand. A striking example is February 2022. On February 24, our sales tripled. New Year’s holiday period sales spike was significantly lower than usual. Accordingly, we have asked MySales to exclude February sales from the calculation altogether, as it is clear that this is not relevant data for future calculations.

Starting from October, there were problems with electricity throughout the country, and we did not always have up-to-date sales data, which affected the calculations. The rhythm of deliveries has changed. Many write-offs were due to power outages, so this is not a MySales issue.

It should also be noted that MySales needs to have a longer history to forecast sales of new products. The program starts to predict well from the 3rd week. The function of assigning an analog does not always work, because sometimes it is difficult to find a counterpart. And our assortment has changed in 50% over the last year.

— What’s the reason for it?

— For a long time, some suppliers did not ship products due to the destruction of production facilities. Then the negotiating began, because they did not want to adjust the agreement conditions. So until we agreed on acceptable terms with the suppliers, this also affected the available assortment. We decided to import some goods ourselves. Changes are taking place in the market of suppliers and distribution, distributors are consolidating. A lot of the assortment has changed, which negatively affects the possibility to forecast precisely.

— What are the most important results of MySales implementation in your opinion?

— We have come close to 100% centralization of orders, which would have been difficult to achieve with the old system. The second is an effective promo module. The main advantage is that now these processes are done in an automated system, which is quite easy to manage. We do not need to spend a lot of resources on working with it. In the future, we plan to use MySales pricing module allowing for taking into account competitor prices.

— Right now, it's difficult to analyze the results of the MySales implementation because of the factors you listed above. What are your long-term expectations?

— Our long-term goals from implementing MySales are to increase turnover by 5%  and reduce write-offs by 15-20%. This can be achieved by reducing product inventories. Automated forecasting and ordering can increase sales, provided the current product turnover rate is maintained. In the long term, these are quite achievable goals.

 

Text: Yulia Belinska

Photos: Sviy Market

Originally published at: https://retailers.ua/news/tehnologii/13487-andriy-glushko-sviymarket-zaraz-mojna-skoristatisya-momentom-dlya-avtomatizatsiyi-biznes-protsesiv-menshim-koshtom

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