27: Understanding ART, Nationwide’s New Assortment Rationalization Tool

Written by Rob Stott

June 23, 2020

Art can certainly be beautiful. But the ART that we’re referring to here is Nationwide’s new Assortment Rationalization Tool. Data visualizations, which is the simplest way to describe ART, can certainly be beautiful in their own way. And this type of ART promises to streamline an independent retailer’s business.


Rob Stott: All right, we are back on the Independent Thinking podcast. And right now, turning it internal. Talking to some of the Nationwide team, here. I’ve got Mr. Mike Collier, our Senior Director of Retail Merchandising. Did I get that right, Mike?

Mike Collier: You got it. That works for me.

Rob Stott: Sounds like a good title, we don’t need to change anything on air

Mike Collier: That’s right.

Rob Stott: Because you know, once it’s recorded on a podcast, that’s what it is.

Mike Collier: Exactly. Exactly. And, I’m good with that.

Rob Stott: If you want to change the title, now’s the time.

Mike Collier: Now’s the time? Okay. Let me ponder on that, during the podcast.

Rob Stott: See if we can come up with something new, by the end of it.

Mike Collier: Exactly, exactly.

Rob Stott: No, that’s awesome. Mike, I appreciate you taking the time to join. And correct me if I’m wrong, we’re just only a few weeks apart, I think, in terms of when we started with Nationwide. So, I was in October-

Mike Collier: Yep.

Rob Stott: … and I think you started in December. Is that right?

Mike Collier: It was in January, yeah. Early January. Yeah, just after the first of the year, this year.

Rob Stott: Well, hey. Welcome to the team from another newbie.

Mike Collier: Well, thank you. And the same to you, my friend.

Rob Stott: Thank you. So, tell us a little bit about your time prior to joining the Nationwide family.

Mike Collier: Yeah, absolutely. I’ve been in the kitchen appliance industry for somewhere around 20 years. Started and did a little bit of retail, and then worked for Maytag Appliances out of school from about ’99 to 2006 and then Electrolux Appliances, for about 11 years. And then, in 2017, I was recruited out of the industry to venture into the world of commercial office furniture.

Rob Stott: Oh, you did that?

Mike Collier: Yeah, I did that for about two and a half years, and then just really decided I missed the contacts, I missed the members, missed the kitchen appliance industry. There’s some people who could be listening and thinking, “That is a crazy notion,” but I did. So, after two and a half years, searched around to figure out what’s next, and I’m extremely pleased and happy to be with the Nationwide Marketing Group now for, gosh, almost six months.

Rob Stott: That’s awesome. Well, what is it? Explain that craziness to us about, what it is about the appliance space? What made you want to come back to it?

Mike Collier: Yeah, absolutely. It’s just, I love the action. I love the retail game, if you will, I’m putting that in air quotes, that is merchandising. And, the daily action. There are sales happening every day. There are 75,000 plus appliances breaking down, every day. So the need is there, it’s an important item. It’s in the center of the household. I’ve just always, get fun about that space. I think the industry is fun. I think it’s still an industry that, everybody works hard but you’re allowed to have a little bit of fun and play hard, in addition to that. So it’s just a much different cycle, being retail, versus that side venture that I went to for a while. More of a B2B, contractual, large sale, lots of hunting with more infrequent catches, say, than what goes on in the retail industry.

So I just really missed the retail side of it, and I think this is, of all the businesses out there. And I think this recent, scary pandemic has shown that. Right? Appliance sales have remained pretty steady. And that just goes to show that it’s a durable good that consumers need and want. And when it breaks down, they go looking for it. So I liked that action, in the particular industry.

Rob Stott: Right. And you talk about what this pandemic has done. Obviously, there’s going to be merchandising, I think everyone’s talked about the merchandising challenges at this point, on the other side of it, for appliances in particular. Because factories were shut down and all.

Mike Collier: Yes.

Rob Stott: But at the same time, the wear and tear and usage of people being at home all this time, there’s going to be such pent up demand, if… Sales were happening as they were, anyway. So, now on the outside of, looking ahead, we can only imagine what kind of boosts independent dealers could see on the other side of this thing.

Mike Collier: Yeah, absolutely. And as a person that’s largely traveled for their career in the last 20 years, spending on average two or three nights a week at a hotel, I’ve eaten more meals at home with my family these past three months, than I probably have in the past three years combined. Or, more. So, that’s a nice benefit, but you’re right. That’s wear and tear on our appliances, they’re working overtime, as is my grocery bill.

But, they have finite lifespans. So the more you use them, the slightly shorter that becomes, and I think we’ve seen that in the industry. And you’re right, right now, demand is exceeding supply, but we all look forward to that getting back in check at some point, soon.

Rob Stott: Yeah. And wear and tear on family life, let me tell you. Are they ready to see you go back on the road?

Mike Collier: At times. Yes, at times. I think so, perhaps. They’re not used to this other voice in the house, telling three kids what to do and when to get off video games, and when to pay attention, and listen to your mother. It’s new to them, as well. So we’re, actually, wouldn’t trade in the time for anything in the world. But it’s just, when you’re accustomed to traveling, that just becomes a routine and you figure out how to work around that. So for them, this is… this is new for all of us.

Rob Stott: Certainly can appreciate, and, I’m with you. It’s something. But I do know at the very least, Nationwide has been keeping you busy

Mike Collier: Yes

Rob Stott: … all this time, at home.

Mike Collier: Yeah, for sure.

Rob Stott: We’ve got a really cool tool to talk about that we’ll dive into, that is really the headline for this podcast. But, before that, when you came into the Nationwide team and ready to get rolling, what were your expectations for the role? And what do you see the main focus for you being in this role at Nationwide?

Mike Collier: Yeah. Great question, Rob. I appreciate it. That was really, this tool, was really the genesis of what brought me over. It was really about, “Hey, we’ve got a lot of awesome data at our disposal. And the data team has done an unbelievable job, over the past few years, collecting this data.” So really, the notion was, what can we do with that data to turn it back out? To make it member facing, and put it in a usable format, where the members can see this data, see this tool, and be able to make really meaningful business decisions from that data? So, that’s really the name of the game.

The term big data has been out there for decades, and there are a lot of companies that specialize in that, but it’s really about what you do with that data. So the focus for me, coming into this role in a merchandising fashion, is to figure out what to do with this data, how to get it back into members’ hands so that they can quickly, and that’s an operative word quickly, make decisions that will help their business, their top line revenue, their profitability, et cetera.

Rob Stott: That’s awesome. And an unplanned segue, too, because you mentioned all the data and everything. It’s funneling into this Assortment Rationalization Tool, ART.

Mike Collier: It’s a mouthful, right?

Rob Stott: Yeah, right. Assortment Rationalization Tool, which thankfully is just three letters, and they come together nicely to give us ART. So it’s, having gotten the run through from you, a very powerful tool and one that I look forward to diving into here, but the operative term you mentioned is data, and big data. So, what kind of data feeds into this tool, to begin with?

Mike Collier: Great question. The data that’s going into the tool going into ART, is both the sell-in data, so that’s the data that the manufacturers report to us, on a cadence, when they sell a product to a member to say, very specific, “Here’s who we sold it to. Here’s the model, here’s the item, here’s the price,” et cetera, et cetera. So that’s a really large pool of data, if you think about the collective Nationwide group and all of that, what we call sell-in data.

Then the second part to that is that point of sale, that POS, or we call it, with the Nationwide Marketing Group, retail sales. Retail Sales Analytics, RSA, that’s the other side of that. So when you combine what’s selling into our members with what those members report out to us, from a POS standpoint, so some 70 to 80 members who report in POS, which is a really large chunk of business from retailers of all sizes, small to big. Combining those two, sell-in and sell-through data, is really the crux of what developed the ART tool.

Rob Stott: That’s awesome. And I know, certainly, I think that’s a large pool of data, collectively, so… 

Mike Collier: Absolutely.

Rob Stott: … working with members and vendors to collect all this. Having more of that POS data, as an example, just to take one side of it. You mentioned, 70 to 80 members are participating. Does the tool become better, with more participation? Or, how does that work? I guess, I’ll leave it at that. How does that work?

Mike Collier: Yeah, absolutely. Obviously, always, the more data the better or more… I don’t know that it’s ever foolproof, but just, the larger that data set gets, the more accurate it is. I would say, based on all of those members that are participating and have partnered with us in the program to date, the data is absolutely statistically relevant, as far as the amount of sell-through data, when you compare that to the amount of sell-in data, it’s a really large percentage of that.

So the data is really solid, but absolutely, we’re always encouraging members to participate in the program. Obviously it’s completely anonymous. Information is only kept with us. It’s never reported out, other than a bulk manner, with the whole group’s retail sales analytics combined together, so you’re never seeing one particular member. But yeah, the more data that we have, the more solid it is, the more reliable it is, and the better information that we can ascertain from that to share out with all the members.

Rob Stott: Gotcha. So, all this data is coming together, you’re collecting it. It’s going through ART, which, I’m gladly going to keep saying ART instead of Assortment Rationalization Tool-

Mike Collier: You got it.

Rob Stott: … as I’m sure you’ve come to learn.

Mike Collier: Absolutely.

Rob Stott: What’s the output? What does the tool look like, once you plug all those numbers in? And what’s really the intended purpose, I guess, of all these numbers coming together?

Mike Collier: Great question. Really, I would say once a member visually sees the tool, there’s really four main parts to it. Number one, they’ll see, for the six major categories and then 21 subcategories under that. So when I say a major category, Rob, refrigeration is a major category and then subcategories being French-door refrigeration, top mount, side-by-side, et cetera. So, 21 different subcategories. You’ll get a print out, a plan to sell type format and a merchandising tool. And really, again, the four parts of that tool are, you’ll see for a particular subcategory all of the various price buckets that out the door retail sales occur at.

So if I use dishwashers as an example, from zero to $300, that’s a certain percentage of the outbound sales. From three to 350, 350 to four, so on and so forth. So part number one is, you’ll see in every price bucket in, 50 to $100 increments, how big is that price bucket? So, what percentage of all of the units in the industry, and what percentage of all the units sold through Nationwide members, happened in that particular price bucket? So if you see a visual picture of all the landscape of dishwashers, you can say, “Hey, this particular bucket,” whatever it might be, four to $450, “is pretty large. I maybe don’t have a single model on my floor, or only one model on my floor. Maybe I should add an additional model to that particular price bucket.” So that’s that’s point number one.

Point number two is, it shows in each of the 21 subcategories, the top 50 most productive SKUs for that particular category. So again, dishwashers, the tool will show members the top 50 most productive dishwashers. Again, using both the sell-in data and that sell-through POS data. And productivity, without going into a ton of detail, there’s really five factors. It’s about margin percentage, margin dollars. How many members carry that model on the floor? What are the sales units and dollars, of that particular model? You weigh each one of those five factors, give it a productivity score, and then force rank the productivity scores one through 50. So you can see very quickly, “Hey, this is the most productive SKU in a particular lineup,” through number 50.

Part number three, it will show the top four most productive SKUs, in each one of the price buckets. So if I think about, dishwashers is always an example I use, and it’s fresh on my mind. If I think about the top 50, maybe none of those top 50 are in an opening price point. But, that opening price point is important, right? You want that opening price point to bring people in the door, to advertise. When you compare that to retail shopping that’s going on, if they see a particular price point at a big box store, you want them to know you have that price point. Although, our Nationwide members are extremely successful at stepping off of that, hence, a much larger average selling price.

And then the fourth part would be, simply the member’s lineup on that last row. So the member can see what they’re purchasing the most of, and compare how that comparison happens to Nationwide’s top 50 most productive SKUs. So they can compare average cost, average retail, average selling price and just in general, productivity. Us, versus the group as a whole, and make decisions based on that information.

Rob Stott: Clear that a lot of numbers lead to a lot of possibilities for this.

Mike Collier: Yes. You got it.

Rob Stott: So I think, it can almost seem overwhelming, to a member. If you start to see that deer in the headlights look on a member, as you’re talking to this, what’s the followup then from you, to make them feel like this is a comfortable tool and something that is worth the time investment, in really getting and wading into these numbers?

Mike Collier: Yeah. This is definitely a scenario of a picture is worth a thousand words. I probably just rattled off, I don’t know, a thousand words. A picture would have done it justice fairly quickly, but this is a podcast, so everybody’s listening, and you can’t paint a mental picture. When you look at the tool, those four parts inherently make sense. You’ll be able to see the price buckets, how big they are and what percentage they are. What are the top 50? What are the top four, by price bucket? And then, how does that member’s line up compare?

So I think that visually, when you look at it and you even see pictures of the models, you can easily spot that this particular price bucket and, whatever, 21 subcategories, a big percentage of the dishwasher category. And, they’d see a picture of that. I only have one or two models in that. So visually, you can see, maybe that’s an opportunity to put a new piece on the floor. Or visually, they can answer the question, “I’m thinking about adding a new manufacturer,” perhaps, “to my lineup. I don’t carry these brands. One, two and three. How do those brands one, two, and three look, on the overall top 50 most productive SKUs?”

If I’m thinking about that. Or, “I am going to bring on a new vendor to my assortment. When I look at these various subcategory layouts, which model should I put on my floor?” That’s a really quick one to see. And a great example, I had one of our MSM’s call me last week who had been involved in the development of the tool, and knew it was coming along and said, “Hey, I’ve got a member that’s bringing on a new line. They’d like to use the tool, to be able to see which models they should carry, and which they should floor.” So I think, speed being an operative component of this, very quickly could go run the reports, send those reports over to say, “Okay, I’m bringing on this vendor. Here’s the best selling SKUs from that vendor in each category, for Nationwide.” So they know which models to put on their floor.

Rob Stott: That’s awesome. And, this may be another way of asking, exactly the way you just answered, but when members dive into this… Maybe this is more like a high level question, for the tool itself. And knowing data, and knowing how these kinds of reports can spit out, there’s a million ways you can slice this and use it. But if there was one answer, as far as how you would hope members use this tool or what they use it for, what would that answer look like for you.

Mike Collier: That’s a great question. I would say, we’ve ran a lot of scenarios and we’ve seen where, perhaps, moves in SKU A, to SKU B. And if you think about all of the sales that happen for an appliance retailer, and how many that could be, ultimately the end game is to make our members more profitable. So really, when they see their lineup, and they see their average costs and their average retails and what they’re selling, and comparing that. If they can make a few decisions that say, “I didn’t know about this model,” or, “I wasn’t aware of this manufacturer, just haven’t carried him in the past,” but we can very quickly and easily lay that out in factual information using the ART tool, and they can make decisions based on that. Ultimately, we’re endorsing this to help members be more profitable, and I think that’s the name of the game. There isn’t anybody out there that wouldn’t want to increase profitability one, two, three, 5%. And if this tool can offer a share of that, I think that’s the name of the game.

Rob Stott: Gotcha. And I know, anyone listening knows, that we’ve talked a lot about appliances. This is obviously a tool that has, right now, launched with appliances in mind. Is there an opportunity to expand that, beyond? Or, is it maybe even something you’re already working on, to expand this beyond just the appliance category?

Mike Collier: I think there absolutely is. You obviously start somewhere, appliances seemed like a natural start, it’s a large share of the business and again, just everything that we’ve gone through recently with the pandemic, it’s been fairly consistent and performing pretty well. So we did start there, I definitely think there’s opportunities to expand this, into other categories. There may be different formats of how we look at data, and different attributes that we get from data feeds and data out feeds, et cetera. But I definitely think that opportunity exists.

Rob Stott: That’s awesome, and certainly, having waded through it myself and seeing everything as you presented it to us, strongly powerful. Is that, double positives, I guess?

Mike Collier: Yeah… 

Rob Stott: … strongly, powerful tool. But something, I’m excited to see how members use it, and what it does to business. And, moving forward for them how they, everything from the in-store lineup to, I’m sure there’s online implications for this, as well. So, it really… 

Mike Collier: Yeah, I would say it-

Rob Stott: … Oh, go ahead.

Mike Collier: … Oh, I’m sorry. I was just going to say, it’s a testament to our data team, at Nationwide. We’re truly fortunate to have such a collection of very talented individuals, that have been doing this type of thing for quite some time and just now taking a different spin on it, to mold it into a merchandising tool. And their support, and how quickly they were able to pull this together, is really astonishing. We have a gentleman on the team named Tolga that had really come to us a while ago and said, “Hey, I think if we put in these metrics with these certain weightings we can show members, or give them options, for substitutes that could enhance their profitability.”

And just taking that notion and blowing that out into a full plan to sell, with different price buckets and showing the weighting and the size of those buckets, and pulling it together, they really were able to do that in six to eight weeks, which is astonishing based on the amount of work they had to accomplish to get there. So, great. Kudos to Scott McFarland and Amy McFarland and Clement, Tolga and that whole data team, for pulling this together. They’ve done an outstanding job.

Rob Stott: If they’re listening, they may laugh at this next question, because it’s probably something that they would rather answer. But I’m going to ask you, anyway, because you’re the guy on the phone.

Mike Collier: Uh-oh. That’s trouble.

Rob Stott: What were the challenges in developing this tool? Automatically, you’re going to think it’s on the technology side of what that was like, which is, I can hear them laughing already.

Mike Collier: Yes.

Rob Stott: But from your perspective, what were some of the biggest challenges with getting this tool up and ready, and running and working for you guys?

Mike Collier: Yeah. Boy, you nailed it on the head, they could probably give you an answer that goes on and on.

Rob Stott: Yeah… 

Mike Collier: They are the sealed, technical guru experts. I would just say from my perspective, and again, my lens being merchandising. It’s a lot of inputs, and so, how do you boil that down? And I know, via a podcast, to talk through it, again, viewing it and talking about it are two completely different things. But the challenge is, just taking all these inputs and not trying to boil the ocean but say, “These are the most important.” At some point you have to draw a line and say, “Let’s show the top 50 most productive.” That number made sense. How do you visually put that in front of folks, so they can really quickly look at it and make decisions?

There’s just, again, taking a massive amount of data and being able to boil that down and make it talk to each other and come together cohesively is a challenge. But the team, Clement, Mandy and Tolga and team, were up to the task and did a phenomenal job making it all work, and we’re really excited about the end result. And the end result isn’t the end result, either, which is the cool thing. So, I mentioned earlier, we took our entire field team through this, this week. They’ll be going out, talking to customers about it. The team is ready for feedback. “What if you tweaked this, or showed it this way?” Or, additions to make to it.

So, we’ve got the commitment that, it’s really a living document that can always evolve and bring more value to the members which is, that’s all we’re all trying to accomplish, is value to our members. So we’ll continue to update and tweak it, with member feedback. We’re ready and welcoming that feedback, coming back in.

Rob Stott: Yeah. And that’s always been, thinking about ways I’ve worked with data and used data to create reports and stuff like that, one of the most wonderful things about data is that it is living and breathing and constantly changing. Which means it can inform how you use the tool, how you develop a tool like this and, not future-proof it, but it’s something that can constantly develop and improve upon itself.

Mike Collier: Absolutely. And this is cool, because you can actually make decisions now, with data. And I’ll never forget, early on in my career, I had a sales territory. And the merchant there was a tremendous person, and had previously ran merchandising for a large box store, and now was back at an independent retailer in his hometown. And he told me early on in his career, he was actually a women’s shoe buyer for Nordstrom’s or Macy’s, or I forget who it was now at this point, but he always said that taught him, you never really know what the end consumer is going to buy. He said, whatever he thought was a good looking shoe, wouldn’t sell at all. And whatever he thought was an ugly shoe, sold off the shelves.

So really, appliances aren’t maybe quite that finicky, but I think it takes away that gut feeling for merchandising that, “I’m going to put this on my floor, because I like it. I think it’s a cool model. I think it’s going to sell.” This brings data to it. And so, you can see in black and white, the data of what is selling. At what retail price point it’s selling. What does that lend itself for profitability for our members? And how could our members use that to increase their profitability?

Rob Stott: That’s awesome. In kind of a cool way, it lends itself to what I was going to close with, and that’s, what is next for this tool? Obviously, the data’s going to dictate how it’s used, how it develops. But early on, we’re barely, I think, a week into it being active and live?

Mike Collier: Yep.

Rob Stott: But, what are you already looking to, as this tool is now out there in the public? Well, out there with our members and being used, and all that kind of stuff.

Mike Collier: Ideally, our vision is to get this, from a historical data-driven tool, where you can still make decisions today that will make more profit tomorrow. How do we get this to a front-looking tool? How do we say, “Okay, as we sit here, Rob, in June. July 4th is coming up.” Let’s go out even further. Labor Day is coming up. So how do we look ahead, to have the member put in dates of Labor Day into the tool to see what will be on PMAP, to see what promotions are out there, and make future decisions for merchandising, for promotions, for sales, for flooring, based on events coming in the future. Versus looking at historical data from the past, or data today. So I think if we can get there, which we will work towards, that would be a pretty powerful tool, as well.

Rob Stott: Well, and even spit balling off of that, thinking about it. You start talking about having this tool for years in advance. As we move, you’ll have that historical data looking forward that you can then, kind of catch-22 here but, you’re looking backwards to look ahead.

Mike Collier: Yeah.

Rob Stott: As members use this in the future, those then would become past data points, and how things performed, based on that can inform those decisions, looking ahead, as well.

Mike Collier: Absolutely.

Rob Stott: So, lots of opportunities. And taking up a half hour, I feel like I almost have to, you have to charge me for your time-

Mike Collier: No.

Rob Stott: … because of everything else you’ve got going on, with Nationwide and this tool.

Mike Collier: No, that’s, that’s perfect. For those listening, I would just encourage them to grab their MSM and say, “Hey, I’d love to take a look at this.” For those that don’t share their point of sale data today, we would love to have more data added to that pool. That, again, it just goes into a big pool to say, collectively, “How are we doing as a group?” But this is good evidence that we can help each other with building upon more data, and having those inputs, we’ll be able to put out future works. But, definitely take a look at it.

Again, it’s one thing to talk about it, and you see me, I’m a hand talker, and I’m making gestures and I’m acting like, I’m pointing at an actual plan to sell in a merchandising tool, which I’m not. So to actually, to lay eyes on it, I think it makes sense. And again, we want to provide value to the members. We want to help our members to be profitable. We’re excited about this. This is a really new one, this tool doesn’t exist out there, anywhere else. And that goes to all the data that we’ve collected for years, and continue to collect, and the data that we have that the team can build a tool like this, to help our members. So, we’re excited about it.

Rob Stott: That’s awesome. And, certainly plenty to be excited about. The opportunities with this thing are endless and, look forward to seeing how it develops, how it gets used and where it goes from here. So, Mr. Collier, I appreciate you taking so much time out of your day, and the call.

Mike Collier: No, my pleasure. Appreciate your time, and look forward to it, and look forward to the member interaction and answering questions for folks, and figuring out how we can make this useful and helpful to all of our members.

Rob Stott: Awesome. Thank you.

Mike Collier: You got it, take care, Rob. Thank you.


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