Making every item contribute

Larry Gatta, general merchandise manager, Dollar General

Dollar General employs sophisticated data analytics to gauge item movement, consumer demand and customer segmentation store by store. But beyond that, said Larry Gatta, general merchandise manager, “we go through a category review of every planogram” in the store on an annual basis.

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That process is not unique to Dollar General since the company’s overhaul began in 2008, but it has been enhanced with improved analytics and oversight, said Gatta. Thus, when updating a planogram or product set, “we go through ... a strategy meeting first, followed by a business review, and then a final walk-through with the executives.”



Merchandising the store, planogram by planogram, is “a very collaborative process,” incorporating input in the planning meeting from “all functional groups,” said Gatta, including decision-makers across a broad spectrum of merchandising, supply chain and operational disciplines. “This meeting ... incorporates all functional groups,” he said. “It’s shared accountability, so you have pricing, supply chain, a shrink team, a private-label team — every cross-functional team plays a role.”



The team also incorporates Nielsen data “within our customer segmentation,” as well as “clustering opportunities” for individual items and categories based on regional consumer preferences. For instance, “you have some brands that resonate strongly on the West Coast, but not so much on the East Coast,” Gatta explained.



“Everything is based on ... the value proposition,” he added. “And in a limited-SKU environment, we get very ‘granular.’ So every SKU has to work hard for us, and we get to a micro level. We look at the trend data and build a forecast on every single SKU. So if those SKUs aren’t performing, the opportunity exists ... [for] some mid-course corrections in between the [planogram] resets.”



Based on this analytical, data-driven approach and close scrutiny of customer preferences and product movement, “we change out probably 20% of our mix every year” through planogram resets and “mid-course corrections” of both individual items and categories, said Dollar General’s GMM. That means that product categories can go up or down in linear shelf footage based on their closely tracked performance throughout the year. And given Dollar General’s adherence to its core value proposition, “We continue to leverage our $1 price point, ... which still accounts for well over 20% of our overall mix.”