By Invitation
Golden Rule II
Planogram and Processes for Replenishment of Non-fast movers – Part 2
L.R.Natarajan, Partner- Strategy and Systems Consulting
LRN has worked at senior level positions in companies like Eicher Motors, Hero Motors, Greaves Cotton, Ashok Leyland, and Hindustan motors. His last employer was Titan Company limited. Eleven years in Titan Company limited (eight years in Tanishq) and retired as CEO for the new business division. LRN was also heading the innovation council at Titan and was an active member of Tata Group Innovation Forum.
LRN had successfully spearheaded the TOC implementation in Tanishq retailing.LRN had started a school for Innovation in Titan and the school had produced over 400 trained innovators.
LRN also undertakes consulting assignments from corporate companies on Strategy, Retail excellence and Innovation. He has recently authored two books, a book on Innovation titled “The 9 Nuggets of Innovation” and a book on retailing titled “Demystifying Retail” – The Four golden rules.
Prabhakar Mahadevan, Founder Director of Strategy and Systems Consulting & Focus and Flow
Technologies Pvt Ltd
Prabhakar is a certified Theory of Constraints consultant (TOC) by Goldratt Schools Israel, certified expert on TOC by TOCICO (www.tocico.org) & is associated with TOC for the last 22+ years.
Through his consulting companies,Prabhakar and his colleagues are involved in several comprehensive TOC consulting projects across several industry verticals such as fashion jewellery, fast moving consumer goods, consumer durables, automotive OEM, capital machinery, pharmaceutical, heavy engineering, fashion retail etc.
In our last article we have seen the methodology for arriving at the Ideal Planogram. In this article we will understand the processes suggested for maintaining the Ideal planogram by having the right replenishment process.
- Replenishment Process (for large retailers)
For the merchandise selling under the category of fast-mover, we had explained in the earlier article how the replenishment is to be done. I will explain here, the methodology to be followed for replenishment against sale of a non-fast-mover.
To implement the suggested process, the pre-requisite lies in creating a Design bank. Therefore, let us first try and understand everything about the Design bank.
- What is Design bank?
- What should be the size of a Design bank?
- What are the pre-selection processes for a design to appear in the design bank?
- The process of replenishment using the design bank
- The advantages of using the design bank
- How to keep the design bank Dynamic?
- Design Bank
What is a Design bank?
A design bank is a collection of pre-selected designs (with three agencies short listing) to improve the probability of sale. The design bank should cover all the line items (Category/ Sub- Category/ Weight band level = Line item) appearing in the largest show room in the retail group
What Should be the size of Design bank
To arrive at this number, for the largest store, one should refer to the sales from non-head age band, line item wise for the last one year. Having done this, the design bank should have options to cover, line item wise 6 months sale. For example, for a line item, Bangle/ Filigree/ 10-12 grams, the sale from non-head age band is 40 in a year, the design bank should have 20 varieties of design.
The computation as per the example given above must be done for all the line items appearing in the Ideal Planogram of the largest store.
If the 6 months requirement for some of the line item is less than 3, the design bank should have a minimum of 3 design variants.
What are the selection processes for a design to appear in the design bank
For a given line item if the computed number of designs to appear in the design bank is 20 (1x), then the vendor base should be asked to showcase 60 designs (3x). These 60 designs should be reviewed by the Senior store staff and the senior merchandiser in bringing it down to 40 (2x). The shortlisted 40 designs again need to be filtered through a customer meet in picking the final 20 (1x) designs to be showcased in the design bank. By repeating this process for all the line items the design bank can be made ready with a set of designs with much higher probability of selling.
The Process of replenishment using the design bank
Once the design bank is in place, all the stores should replenish their line- item wise non-head sale only from the design bank. It is important for the store to replenish the line item sold (at Category/ Sub- Category/ Weight band level) only with the similar variant belonging to the same line item from the design bank. Example: if a design variant belonging to Bangle/Filigree/10-12 grams has got sold in the non-head age band, then the store should pick an alternate design variant only from design options listed under Bangle/Filigree/10-12 grams.
Also, there should be appropriate software (or excel) for capturing each design variant wise pick and sale from the design bank (as and when designs from design banks are picked against sale of a variant from non-head age band happens). Over a period, design bank will have line item wise/ variant wise pick and sale data which will be a valuable guide for stores in selecting the variants with higher probability of sales.
The advantages of using the design bank for replenishing sale from non-head age band
How to keep the design bank dynamic
After computing the design bank size and selecting designs based on multi-tiered selection process explained above, retailer should build the design bank with first with 50% of the design variant requirement. After this, every alternate month, 17% of design bank size should be added. But doing this, the design bank requirement will be met by the end of 6th month. From the 8th month onwards, when new designs equivalent to 8% of design bank size is added, the same number of non-performing designs from the design bank should be removed. This process ensured the design bank is kept dynamic and the size would also be around (after addition and deletion) the 6-month non-head sale requirement.
Example: Design bank size for Bangle/Filigree/10-12 grams is 50 designs. In month 0, build the design bank with 25 designs and get started with doing alternate replenishment from the design bank. In months 2, 4, and 6, add 8 new designs to the design bank. So, by the end of month 6, design bank size would be 49. In month 8, when 8 new designs are added, remove 8 old non-performing designs which was added in month 0. Repeat this process every alternate month and keep the design bank fresh and dynamic.
Summing up
To achieve the best inventory effectiveness, besides the processes suggested for fast-movers, two things are to be done:
- One must arrive at the right planogram, by doing 2 X 2 analysis
- A Design Bank showcasing merchandise-wise unique designs should be made visible to showrooms ((along with sales and pick data). This will enable the individual showrooms to pick the merchandise with good sales history, when a non-fast-mover sells.
Happy Retailing
L.R. Natarajan
M. Prabhakar
By Invitation
You asked, we answered: Gold hits $3,000 – What comes next?
By Juan Carlos Artigas
Global Head of Research-World Gold Council
Key highlights
- Gold’s new milestone: Gold recently crossed US$3,000/oz intraday – a headline-worthy event, but the true significance for gold lies in the broader economic trends driving its rise
- Price momentum: Gold surged from US$2,500/oz to US$3,000 in just 210 days, pushing it three standard deviations above its 200-day moving average
- Market fundamentals: While gold may face some consolidation due to the speed of its latest move, the combination of geopolitical and geoeconomic uncertainty, rising inflation, lower rates and a weaker US dollar continue to provide powerful tailwinds to investment demand.
Gold (briefly) breaks through another psychological level
Gold crossed US$3,000/oz in intra-day trading during the early hours of Friday 14 March and then again on Monday 17 March.1 While the LBMA Gold Price PM hasn’t officially crossed the mark, setting at US$2,996.50/oz on Monday, it has nonetheless grabbed the attention of investors and media outlets around the world, triggering a myriad of questions about its significance.
So, what does this milestone really mean? Depending on who you ask: a lot or not much at all. For us, there are interesting psychological and technical aspects about this triple-zero ending price that could influence gold’s short-term behaviour. But the more meaningful – and lasting – dynamics are the ones behind gold’s performance over the past several months.
What’s meaningful about gold’s move?
Gold reached more than 40 new all-time highs in 2024 and fourteen more so far this year.2 Its upward move has been no coincidence and, in our most recent Gold Market Commentary, we talked about a potential perfect storm forming for gold. The focus isn’t just the number itself but the pace at which gold has reached it. The jump from US$2,500/oz to US$3,000/oz took just 210 days – a notably faster move that underscores the momentum gold has built over the past two years (Chart 1). Compare that to the approximate 1,700 days that gold took, on average, to achieve previous US$500/oz increments, and the move stands out (Table 1).
In fairness, gold had to double in price to go from US$500/oz to US$1,000/oz, while it only had to rise 20% to go from US$2,500/oz to US$3,000/oz. To provide additional context, gold has increased nearly sixfold since December 2005, when it first reached US$500/oz, equivalent to an annualised return of 9.7%. Over the same period, the S&P 500 spot index has increased at a rate of 8.2% per year.3
To take this relative movement into account, we look instead at how much gold has deviated from its 200-day moving average (200DMA). The recent rally has pushed gold’s price three standard deviations (3σ) above the long-term average spread of its 200DMA (Chart 2). Most recently, we saw this extreme divergence during the COVID-19 pandemic in 2020 when gold crossed US$2,000/oz and again around the time gold reached US$2,500/oz. Following these moves there was a period of consolidation before the upward trend eventually resumed.
What’s next?
As the saying goes, “even strong rallies need to catch their breath.” Gold has remained, on average, above previous multiples of US$500/oz for nine days before pulling back (Table 1). At the same time, however, gold has rebounded above the same level in just a few days four out of five times.
From a technical and positioning standpoint, if gold were to remain above US$3,000/oz over the next couple of weeks, it would likely trigger additional buying from derivatives contracts. For example, we estimate there is roughly US$8bn in net delta-adjusted notional in options contracts from US gold ETFs that expire Friday 21 March,4 and US$16bn in options on futures that expire on 26 March. While this may create a slingshot effect, it could also trigger short-term-profit taking.
In view of the speed of gold’s latest move, it would not be surprising to see some price consolidation. But despite potential short-term volatility, the most important determinant for gold’s next move is whether fundamentals can provide long-term support to its trend. As we discussed in our recent Gold Demand Trends, while price strength will likely create headwinds for gold jewellery demand, push recycling up and motivate some profit taking, there are many reasons to believe that investment demand will continue to be supported by a combination of geopolitical and geoeconomic uncertainty, rising inflation, lower rates and a weaker US dollar.
By Invitation
Diamonds: Natural, grown, and their needs for differentiation in the global jewellery market
by Ramit Kapur, Managing Director, GSI India
The debate between lab grown diamonds and naturals doesn’t seem to die down. Natural diamonds have had an unfettered rule in the global fine jewellery business for centuries until technological advancement allowed lab-grown diamonds, hitherto used in machine tools and cutting, found their way successfully into the fashion and jewellery space purely based on two reasons : perceived identical appearance and a staggeringly low price. Their entry into the market created a space for affordable jewellery, but they are not designed or are equipped to take over the natural diamond market. That’s because they are different and can be scientifically identified as such.
Far from disrupting the prominence of natural diamonds, LGDs have emerged as a complementary force, addressing distinct consumer needs while broadening the appeal of diamond jewelry. But, let’s understand the purpose and appeal of each category.
Natural diamonds continue to hold an unparalleled allure, deeply rooted in their rarity, geological history, and cultural heritage. They symbolize luxury, timelessness, and emotional significance, often marking milestone moments like engagements, weddings, and the creation of family heirlooms. Spending billions of years to be formed under the earth’s surface, natural diamonds command admiration from customers who associate lasting happiness and joy with the person they are buying it for, be it a self-purchase or a gift. Its journey of formation itself carries that value which, thanks to rising awareness, is of great value to its target audience irrespective of age barriers. Such consumers prioritize provenance, ethical sourcing, and origin determination, which reinforce the enduring appeal and exclusivity of natural diamonds.
On the other hand, lab-grown diamonds have carved out their own niche in the global jewelry market, starting with eco-conscious Millennials and Gen Z consumers in the United States. These synthetic diamonds appeal to buyers seeking sustainable and affordable alternatives. In India, a global hub for jewelry, the demand for LGDs is still at its nascent stage, because consumers are still understanding the product. Hence, there is a slow but steady growth in demand driven by their cost-effectiveness and the growing adoption of Western fashion sensibilities. Offering flexibility in design, LGDs are well-suited for trendy, everyday jewelry that embraces unconventional materials such as silver, tungsten, and titanium. They provide consumers with the freedom to explore unique styles while aligning with contemporary values of affordability and sustainability.
The distinction between natural and lab-grown diamonds is not merely academic—it is vital to maintaining consumer trust. Nomenclature is of paramount importance in this regard, as there are several ways to identify a lab-grown diamond. Since they are created in a controlled environment, their origin is different from those built by nature, and hence, must be positioned accordingly to extend confidence to customers of either segment. Thus, while both have their own value propositions, transparency in branding and communication is essential. Lab-grown diamonds should be presented as a distinct category, emphasizing their origin and purpose, rather than being combined with natural diamonds.
As the diamond industry evolves, embracing the differences between natural and lab-grown diamonds is key to unlocking their full potential. Each caters to specific consumer preferences—natural diamonds for their legacy and emotional resonance, and lab-grown diamonds for their modern, versatile appeal. Retailers and stakeholders must adopt tailored marketing strategies and far better quality in certification and grading standards to give consumers exactly what they bought their products for. While the entire supply chain needs to be strongly educated to firstly identify the differences and sell the right jewellery, retailers especially need to refine marketing messages to effectively communicate these unique value propositions. This can be done by conducting awareness workshops for end-consumers and often showcasing both varieties to them just for knowledge. All in all, by fostering transparency, differentiation, and synergy within the supply chain, the industry can ensure the sustainable growth of both segments, securing a bright future for diamond jewelry on a global scale.
By Invitation
Nehal Shah: Queen of Charms
“I want to create pieces that stand the test time, transcending trends and feeling as relevant years from now as they are today”
Nehal Shah, founder of ENESSE by NEHAL SHAH, created a unique niche for herself with her exquisite collection of charms, depicting women’s most desired accessories like shoes, bags, etc. transformed into iconic and trendy jewellery pieces.
Each charm has a theme along with a relevant message, that all women can identify with and define their own personal style, moments, aspirations, desires and more. Charms allow for endless creativity and personalization, making them adaptable to trends and individual stories.
Nehal Shah, the Queen of Charms, spoke to JewelBuzz on her journey in jewellery designing, her philosophy to create pieces that stand the test time ….and more.
Take us through your journey into jewelry designing: your inspiration, your beginnings, and your evolution into a renowned designer.
Design is an exciting and deeply creative process, with each piece telling a story. Every jewelry design begins with an inspiration. It might come from nature, architecture, emotions, or even a personal story.
It sounds like creating charms is a perfect way to bring fresh, versatile designs to the jewelry line. Charms allow for endless creativity and personalization, making them adaptable to trends and individual stories. Plus, with each charm carrying its own meaning, they’re easy for customers to connect with on a personal level. It’s a great strategy to add variety while offering pieces that can hold sentimental value!
Connecting each charm to your personal life emotions is a beautiful part of designing charms, each charm can symbolize a memory of life like a handbag, sunglasses, stilettos, gift box, champagne glass, lipstick, perfume bottles.
What is your design philosophy?
To create pieces that stand the test time, transcending trends and feeling as relevant years from now as they do today.
Charms have been in the market for several years now. Nehal Shah has reinvented and discovered the concept and more designs in 3D format. The overall range is crafted with a futuristic vision. The collection, although urban and new-age, is yet timeless and eternal. Charms can be passed on from generation to generation and it fits well to all the age groups. Charms can be used for personal consumption as well as a Gift idea.
What are your favorite metals, stones and other materials?
Gold and titanium is my favorite metal in combination with diamonds, color stone , enamel and hand painting.
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Take us through the creation process of your unique, out of the box jewelry pieces/ collections.
I have creatively imagined different hues of enamel in my heart, while designing the concept. The beautiful locks have been specifically designed for the charms and the necklace. Different locks and detachable charms offer a significant flexibility for the consumer. Varied combinations can be tried and every time a unique look having a variety of combinations can be donned. These combinations can include various color stones, diamonds, and enamel.
As an entrepreneur, what are the lessons you have learnt in establishing a business, strategy for growth, brand positioning etc. How does one balance creativity with commercial viability and changing consumer preferences?
Balancing creativity with commercial viability and changing consumer preferences is a challenging but rewarding aspect of jewelry design.
I do not hesitate to experiment and dare new and out-of-the-box designs, which is wearable and price sensitive. Balancing creativity with commercial viability and changing consumer preferences is a challenging but rewarding aspect of jewelry design.
- Understanding the Target Audience
- Following Trends Without Losing Identity
- Creating Timeless with a Twist
- Experimenting in Small Batches
- Balancing Practicality with Artistry
Your comments on the current jewelry designing segment in India? What is the standing and brand positioning of India’s jewelry designers on the global stage? After MAKE IN INDIA, are we ready for DESIGN IN INDIA?
Indian jewellery designer segment is vibrant and evolving, especially in the country, with a fascinating mix of tradition and innovation. India’s jewelry designers are making significant strides on the global stage, with a brand positioning that highlights rich heritage, skilled craftsmanship, and unique design perspective.
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What is potential for Indian designers to collaborate with global brands and top international designers?
Immense potential. If the product is great, the time is always right. India has a great blend of skills, intelligence, cost and economies of scale.
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What’s your message for aspiring, as well as practicing jewelry designers?
Don’t hesitate to experiment new ideas, go with your gut feeling and you will never fail.
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