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Iceland Frozen Foods plc Apr 95 Feb 98

Head of Decision Support Trading Strategy Team

Background

Iceland went through a strategic review process involving Bain consultants. In order to apply the recommendations, Iceland recruited a Trading Director (the Bain partner on the account) who recruited a Trading Strategy Team. I was responsible for Decision Support within the Trading Strategy Team, which had 6 members at its peak. I was also responsible for co-ordinating and mentoring analysts within other parts of the business including property, buying and marketing.

Specific Projects & Achievements

  • Store Relay Process Commercial Analysis

Historically, the store relay process was performed at director level using local knowledge and print out data that was available at the time. I worked with these directors (MD, Retail & Property) to provide a longer term historic, and future interactive scenario analysis during the decision making process.

I consolidated historic data, store by store, category by category, and captured their key decision processes into an interactive model. Whilst there was a lot of data and analysis behind the relay model, these were articulated in four outputs 2 stating the historic position, with four statistics and one graph, and two graphs incorporating 2 statistics articulating the results of their plans. This was a decision model called ROCKET (Relays On Commercial Knowledge and Estimated Turnover) which I subsequently developed as part of the Armature space planning proposition (see Armature)

Following each decision session, the actual execution was tracked, and this was monitored to assess the incremental profit impact of the relay/refit. The process was made widely known to the regional and area retail management. Once the process had proven itself, the directors were sufficiently confident in the process to delegate it to the regional managers who were also confident enough to involve the area managers.

The result of the change in approach was to improve the acceptable level of return on investment in store relays/refits from 1 in 10 prior to the process to 3 in 4.

  • Store Trials Monitoring

Prior to my arrival store and product trials were run with poor trial disciplines often aimed at proving a case, rather than objectively drawing conclusions. I established a systematic capture of store/category data, which was overlaid with a diary of local store events. This was over a store portfolio of over 700 stores. I developed a statistical method of measuring the incremental effects of local store events allowing for abnormal seasonality (eg. seaside stores), and disruptive events (eg. competitive openings, local car park road works etc).

The model allowed 60-70% of the store base to be used as a comparative control for various purposes. Primarily this was used to measure major in store trials (including relays/refits, but also product trials). It could also estimate the impact of major promotions locally, or competitive openings. This model proved invaluable in evaluating the home delivery trial ahead of national roll out.

The model was known as INSIGHT (IN Store Initiative Gain Highlighter and Tester) and was subsequently developed as part of the Armature space planning proposition (see Armature)

  • Store/Category Space Optimisation

Iceland had up to 7 marketing periods through the year. Each period created a category level review of allocated space within the restrictions of physical fixturisation (ie. Frozen categories within freezers). The reprioritisation was made on a subjective basis.

With the available fixturisation data, and category by store data available I produced a model that produced a store by store reprioritisation of space based on estimated space elasticities of demand. Such elasticities were estimated on known relays/refits and followed a declining return on space assumption, rather than a liner assumption.

The model allowed for manual corrections in fixture data, and re-estimates of sales/margin expectations as a result of known changes so that individual stores could be re-modelled after the automated modelling of the whole store portfolio. The model was known as EQUITY (EQUIpment & Turnover Yardstick) and was subsequently developed as part of the Armature space planning proposition (see Armature).

  • DPP

Following on from my successes at Boots and in response to Board desires I implemented a full DPP solution at Iceland (see Boots). This was a multi stage approach with an initial profit analysis at category level before a product level analysis was produced.

I further honed the approach at Iceland producing variants of the profitability analysis tailored for different purposes (eg, category management, promotions, space allocation).

Iceland was the first company to have truly integrated DPP into the space allocation and planogramming processes.

  • Home Delivery Proposition Development & Evaluation

Iceland is proud of the fact that it was the first UK retailer to offer national (95% of UK households) home delivery.

I was involved in the trial appraisal and business planning/evaluation of full roll out. This included logistical questions around the number of stores to use, and appropriate catchment areas (stratified between urban and rural). It also looked at the manning requirements of the call centre based on variations in expected calls.

The modelled revisions of the roll out plan resulted in a 9M saving between the subjective plans and the modelled plans.

  • Store Segmentation

The historic approach to store merchandise assortment was "one size fits all". There was an informal store segmentation in place which was not customer friendly and certainly was not captured in any systematic decision processes.

In conjunction with the Marketing Department I engaged on a process of store segmentation, based on customer shopping mode, as per the Store Format approach taken at Boots. I scoped, project managed and facilitated the process which involved cross functional teams at head office as well as numerous seminars with store managers around the country. The segmentation was based on location, competition and actual store stastics/peformance.

The result was a four way high level segmentation (freezer centre, igloo, jack frost, grocer) and a six way second level segmentation. This achieved broad acceptance both at head office and within retail operations, which allowed its usage in various decision making processes, including range assortment, space optimisation, promotions and store relay analysis.