Homestore

What is a Homestore program?

A Homestore program is set up a by a retailer to help manage the volume of new products introduced into the grocery store every year. The CPG manufacturer is required to pay for or provide labor to the store each week to do what is called a catogory reset. see Category management

Also known as In-Store Execution (ISE) programs in the retail trade, are set up by top grocery retailers in the United States to help manage the volume of store level changes that a typical retailer experiences on a yearly basis. Each year there are over 50,000 new products introduced in the CPG market place. As a result a significant amount of turmoil can occur in a typical grocery store as well as in a grocery retailer. As the number of product introductions increased, the complexity of implementation increased, to the point of being unmanageable.

In response, the retailers came up with a simpler method for managing the volume of changes at store level. The Homestore or fair share program method changes the funding method for these activities. Instead of a manufacturer paying for the cost of putting the new products or product changes on the shelf, a manufacturer will allocate a labor budget for a chain based on a percent of sales of their products within the chain or a division of that chain. The manufacturer responsibility is to provide labor for all in-store activity for a specific store or group of stores in the chain. The manufacturer pays for the labor to reset all the products in a section or category for all manufactures. This arrangement is maintained for a full year.

These programs are also referred to as In Store Execution(ISE) programs.

Manufacturer's Resistance

The Manufacturer resisted initially. They had many issues incuding:

They wanted to control their own destiny.

They were paying for labor that did not have a direct impact to their own product line or brand.

Now the manufacturers are starting to see the benefits of the programs in increased efficiencies and less chaos. The question now is not if or how the program works, but how to get the maximum benefits from the programs. The costs of the programs are fixed but there are still many potential benefits yet to be accrued.

How do they calculate the fair share percent? And who pays for it?

The exact formulas and arrangements vary by retailer and manufacturer. Basically it is a percent calculation based on sales by that manufacturer in the chain or a division within that chain. This is typically about 1% of total sales.

How third party service providers interact in this process?

Typically, a manufacturer will be assigned to perform Homestore activities in a group of stores. Instead of providing the labor directly, they will contract with a third party provider to perform the Homestore activities on their behalf. A reset provider might do work for several manufacturers in a chain thereby gaining efficiencies; they maintain a well trained work force.

The role of merchandising services providers in homestore programs is discussed in a 2003 article in Progressive Grocer magazine.(Progressive Grocer)

Types of Homestore Programs

The types of implementations for Homestore programs vary significantly from the lax to the restrictive.

Dedicated reset teams - Exclusive provider - The retailer will contract the work to a single or limited number third party provider to do all the in-store work. The manufacturer does not have an option on who will do the work. Each manufacturer is then charged a fee.
Preferred Providers - the preferred provider program will designate a specific third party as a preferred provider. The manufacturer will be encouraged to use that provider, but is not mandated.
Approved Providers - The manufacturer can use a third party provider, but they have to be approved by the chain to work in their stores
Open - the Manufacturer can contract with any third party provider

Often a combination of variations are employed.

Issues with HomeStore

There are still significant issues with the Homestore programs, but they revolve around managing and maintaining the programs. However, there is new software coming on the market that begins to address these issues.

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