Lowering Merchandising Costs and Increasing Competitveness

The best product does not always win in the marketplace. To capture and retain market share requires more than superior engineering and lowest-cost manufacturing. A market-led manufacturer must also employ effective merchandising to gather critical market intelligence and to generate the elusive but essential “market buzz.”

Originally, merchandising was an internal function of the retail environment. Retail chains employed highly trained design and display plan department personnel responsible for the marketing and implementation of display layouts, point of purchase materials, mannequins, window re-sets etc. This began to change in the nineteen-seventies as competition in the retail environment increased and the retailers began ridding themselves of everything that was not immediately revenue producing, including internal merchandising departments.

Many of the merchandising companies and independent rep. sales organizations of today were born in this volatile time. Former employees took their familiarity with the retail environment and their relationships with store management with them, formed their own sales and merchandising organizations, and began selling their expertise back to retailers on a contract basis.

The services these independent merchandising organizations provided began with basic “detailing “ activities (setting and replenishment of displays), but have expanded over the last 25 years to include global display planning (nation-wide capabilities), training and demo programs, and increasingly sophisticated data collection and reporting abilities. The need for assistance in fulfilling in-store merchandising requirements has steadily increased. It is not unusual for independent merchandising organizations to be working on a dozen projects for an equal number of manufacturers and vendors simultaneously. CASIO felt that it was not getting the singularity of focus its products needed, so in 1996 CASIO formed its own in-house merchandising organization.

Accessing data and reducing costs

After analyzing our primary retail store locations we decided to focus on 28 major city centers which encompassed the vast majority of our most productive retail outlets. Today, we have over 120 merchandisers servicing our Consumer Products, Core Line Timepiece and G-Shock product lines.

Prior to adopting an electronic data collection and reporting system, our merchandisers visited more than 7,000 retail stores monthly, producing more than 21,000 handwritten call reports, and generating more than 370,000 items of information each month. It took weeks to receive these reports from the field, and several additional weeks were required to manually summarize this data into meaningful management reports. As we expanded our merchandising efforts, CASIO’s administrative costs went through the roof.

We needed to find a way to reduce our costs while increasing timely access to the data. After almost two years of reviewing and testing a variety of software and hardware options, we chose CSI MobileLink merchandising software from CASIO Soft (www.casiosoft.com), and a low-cost CASIO handheld computer running Windows CE. (Actually, this software was originally developed by another software company. After we selected it as our vehicle for data collection and reporting CASIO Soft purchased the development rights to MobileLink and spent enormous time and energy redeveloping and re-engineering the current product).

The report automation effort was launched in October 1998, utilizing our Consumer Products Merchandising Division as a test group, and is now being rolled out to our entire Merchandising Organization. CSI MobileLink, however, has already paid for itself. This past fall, for example, CSI MobileLink helped us prove that a major retail chain had not kept its part of a price compliance agreement, saving $125,000 in price adjustments on the spot. In addition, the system has saved us approximately $50 per merchandiser per month in postal and fax fees, and has allowed us to function with 1 to 2 fewer administrative personnel.