The Gillette Co.: Concentrating P-O-P Power

Permanent merchandising at The Gillette Co. has gone through a redesign. A year ago, the Boston-based company brought together the permanent display needs of its five core business units -- Gillette Grooming, Duracell, Oral-B, Braun and the Stationery Products Group -- into one permanent merchandising systems department. The new division, headed by Gino De Luca, director permanent merchandising systems, is composed of display managers who work with retail accounts to sell in permanent merchandising solutions for all of Gillette's brands.The goal of the reorganization was to develop closer relationships with retail accounts and to gain a better understanding of their permanent display needs. "We want to have a person who is an expert on the Wal-Mart business," says De Luca. "Because he's handling all the display needs for the five business units, he'll get to meet, and hopefully, build a rapport with the merchandising person. So whether he's working on a project for Oral-B or a project for Duracell, we hope he'll be meeting the same merchandising team and it will help us achieve what we want to achieve as a company."Gillette's reorganization, in part, comes from the desire -- and need -- to better serve its retail customers. More and more, retailers are requesting that product marketers streamline their business practices to improve efficiencies in a continual process of improvement. "Knowing that we own Duracell and Braun and so on, retailers want to know why we ship our grooming products on one truck and our Duracell stuff on another," says De Luca. "They want to know why we can't put everything on one purchase order and send it all on one truck. The retailer's desire for us to think about things like that forces us to look at different solutions and to go down different avenues."Prior to the reorganization, each business unit coordinated its own permanent display needs. Five different display reps were all working to sell in displays to the same retail, account. "Before, displays were handled by each business unit," says De Luca. "Now, we have a department called the 'permanent merchandising systems department' and brought all of the permanent display needs to one area. That gives us a lot of leverage and buying power with vendors. It also gives us better volume, which in turn gives us better pricing."Cost efficiencies aren't De Luca's only goal for the reorganized department. The hope is that its structure will lead to cross-merchandising and product synergy opportunities. "Let's say we're working on a counter unit for a pharmacy for blades and razors," De Luca says. "A display manager might suggest that we put a peg of triple-A batteries and one peg of toothbrushes. By our own set-up, we can create cross-merchandising opportunities within our own business units."De Luca's department is responsible for all P-O-P that is intended to last at retail for more than six months, including wire racks, spinner racks, endcaps, in-line display units and floorstands. Though De Luca's department is only one of three that handle P-O-P within Gillette -- the other two are the creative services department, which produces posters, banners and counter cards, and the promotional merchandising department, which produces pre-packed, corrugated displays -- it's unlikely that they will follow a similar organizational structure. "It's two different businesses because all of the stuff that we handle are empty displays with no product in them," he says. "Our temporary displays are all shipped with product. It's a whole different ball of wax because there are pre-pack costs, fulfilling costs and product costs. It becomes more of an issue when you try to organize that on an account-specific basis."The permanent display offerings that De Luca makes available to retail accounts come in two forms: standard racking and fully customized units. In terms of numbers of units shipped, approximately 70% of Gillette's displays come from the standard rack menu. However, in terms of dollars, the company spends 70% of its budget on customized merchandisers.Display projects are initiated either in response to requests from the field sales-force or to answer concerns from the retail account. "When the field does their account plans for the following year, they talk to us and let us know if they're planning to attempt to sell in an endcap or other display," says De Luca. "As part of the account plans, they go in and present it to the retailer. If the retailer agrees, they say 'Let's see some concepts.'"Once a project is initiated, De Luca works with different vendors to develop some concepts. Generally, three are contacted, based on their design and production capabilities, as well as their areas of expertise. De Luca divides his suppliers into three categories -- generalists, brokers and wire vendors. He defines generalists as production houses with some design capabilities; brokers are strict design firms without production faculties; and wire vendors are specialists in metal merchandising.When asked which type of supplier he prefers to work with, De Luca says they all have pros and cons. "We're large enough that we can go directly to manufacturers without going through brokers," he says. "However, brokers tend to have a strong creative department and they come up with ideas that are sometimes more out-of-the-box than the manufacturers. The manufacturers tend to build on what they know they can do. The broker will just build and not think so much about the manufacturing process. They're less confined to materials and certain processes."The company's current list of suppliers includes Accent Display Corp., Cranston, R.I.; CDA Industries Inc., New Canaan, Conn.; Display Creations Inc., Brooklyn, N.Y.; Display Producers Inc., Bronx, N.Y.; Eastern Wire Products Co., Providence, R.I.; IDI, Set-Anne-de-Bellevue, Quebec; Mechtronics Corp., Stamford, Conn.; New Dimensions Research Corp., Melville, N.Y.; Niven Marketing Group, Bensenville, Ill.; Racks Inc., San Diego; Santa Cruz Industries, Santa Cruz, Calif.; Spencer Products, Burlington, Mass.; and Wiresmith, Brampton, Ontario.The selected firms develop art boards based on design objectives, space restrictions and specifications. The boards are then presented to the account. Once a design is selected, a prototype is then made. The account reviews the prototype display and oftentimes elects to test it in a limited number of stores. "They might test it for two or three months," says De Luca. "Then they come back to us and say, 'Yeah, it works' or 'Yeah, it works but it needs some fine tuning' or 'No, it doesn't work.'"Production times for display projects can vary from six to 12 weeks, depending on the complexity of the program. Some programs have been executed in a two-month timeframe, from the initial planning meeting to store delivery, while other projects have taken considerably longer due to several stages of changes to the prototype display.The amount that De Luca spends on displays for accounts is based on the calculated return on investment and sales of the account. "If the account buys $1 million in product, we're not going to spend a million on refixturing," he says. "We use a formula that gives us the proper R.O.I. based on a number of factors. Some of these displays are $1,000 to $1,500 each. Some displays are cheaper, but when you calculate the cost of a display that you're putting into 4,000 stores, that's a lot of money."We're looking at a sporting goods chain that only has 11 stores," says De Luca. "As long as we feel that we're going to get mileage out of this, and as long as we feel our return on investment will be good, we'll do displays for a 10-store chain or for 4,000 stores."As retail accounts strive for true progress in category management, De Luca often has to work with his competitors to develop effective merchandising programs, particularly with the Duracell and Oral-B brands. Accounts often dictate the product assortment based on store sales, traffic and market share. Depending on who the dominant brand is in the program, Duracell will either invoice the competitor brand for its share of the program, or be billed by a competitor. "In most cases, we're the dominant brand," says De Luca. "Sometimes we get a call from a retail buyer who says, 'I've briefed Energizer and they're going to be calling you for a display.' We know the Energizer people and we regularly talk to the people responsible for displays."De Luca describes the relationship with competitor brands as "a polite, cooperative relationship," he says. "It's a relationship that is forced upon us by our account, but we know that we're both going to gain. If we get new displays in a chain of 2,000 stores and the displays are going to be 50% Duracell, 40% Energizer and 10% private label, then we know that both of us are going to win."After displays are set up in stores, De Luca works to determine the overall effectiveness of the display. "In some cases, we have specific UPC numbers that go to that display so that when we get velocity readouts from the trade, we know where the sales were picked up from -- from the display, the endcap or the section," he says.To ensure that retailers are stocking the right product with the corresponding UPC to the right display, the outside of shipping boxes and inner cards indicate the appropriate display."When we start production, we provide retailers with a completion date and a delivery date," says De Luca. "When we're almost ready to ship, we call their warehouse and get a receiving appointment and deliver based on the date that we promised."

The Gillette Co.: Concentrating P-O-P Power

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