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Neeta Nelson
Neeta Nelson Global Content Marketing Manager

Old retail merchandising models don’t work in the new normal: Here’s why

COVID-19 created a number of challenges for consumer packaged goods (CPG) brands. Shopping patterns changed almost overnight, store hours and the number of people allowed in-store were restricted, and supply chains were disrupted.

These rapid changes revealed the limitations of traditional merchandising agencies, which are not geared to respond rapidly to changed circumstances and demands. A new approach leverages image recognition to direct a merchandising field workforce, enabling it to respond rapidly and precisely while keeping shelves stocked, and customers happy. This approach combines the speed and precision of Computer Vision with a trained national, localized, on-demand field force to get products showcased in stores, and receive and execute precise instructions.

COVID-19 accelerated changes in shopper behavior

Social distancing rules imposed to curb the spread of COVID-19 meant restaurant closures and more people working from home. This resulted in an increase in people preparing and eating meals at home. Many also sought lower priced products as their work hours were reduced, or they lost work and income completely. Some stocked their pantries in anticipation of being quarantined at home.

The resulting changes in demand patterns, combined with supply problems, created product shortages. A study by Trax found out-of-stock (OOS) incidents increased 250% between December 2019 and December 2020, and were up by 1000% in some categories at the peak of the pandemic.

Shopping behavior also changed in other ways. McKinsey found 17% of shoppers tried different grocery stores because of product shortages. Half of these consumers said they intended to continue shopping at these new stores post-pandemic.

Merchandising services miss the mark

Traditional merchandising services struggled to cope with the demand created by the pandemic. They are slow to execute and scaling labor resources up or down in a timely manner can be cost-prohibitive. They also have coverage challenges and there is always a trade-off between the high cost of covering smaller or rural stores, and the cost of not covering them at all.

Such services also involve overheads for supervision, IT, hiring, training, support, and other functions. Besides, the services are not flexible; store visits are route-driven and structured toward reducing drive time versus solving priority issues for customers.

Traditional agencies also struggle to scale rapidly to meet time to market for product launches, to introduce new banners or stores, changes in the competitive environment, or new promotional initiatives.

Instant information about in-store inventory is key

What CPG stores need to meet unpredictable surges in demand is a means of knowing instantly what products are moving rapidly, and how much stock remains on shelves so they can order or ship more stock and maintain availability. And they need an on-demand field force that can take full and immediate advantage of this intelligence.

With Trax Dynamic Merchandising, shelf images are captured and uploaded to a central processing facility where artificial intelligence (AI) analyzes them, identifies products, and assesses stock levels to deliver accurate, up-to-the-minute data about on-shelf inventory.

Trax Dynamic Merchandising then uses AI to determine the most important tasks and then allocates each task to the most suitable TraxFlexforce worker, based on considerations like skills, experience, location, and workload. The Trax FlexForce is a 1.4 million strong field merchandising force that covers 99% of retail stores in the US.

Each worker receives a list of stores to attend, and a detailed list of tasks to perform at the store, such as filling a shelf with a specific SKU. These lists update in real-time, based on the latest available data.

If anything changes between the time they receive their instructions and the time they reach the store, they are sent an updated list, enabling immediate adaptation and response.

COVID-19 both accelerated and amplified changes to the demand patterns for CPGs. Its impact will diminish, but in today’s technology-driven and hyperconnected world, other forces will continue to drive these and other rapid changes.

Trax Dynamic Merchandising combines real-time data, AI, and a skilled, on-demand workforce to give brands the power to assess on-shelf stock levels and respond immediately.

To learn more about Trax Dynamic Merchandising and how it benefits brands, download our whitepaper. In it, you’ll discover how one snack food chain achieved four times its ROI by identifying and remedying in-store shortfalls of just a handful of SKUs, and more.

AUTHOR
Neeta Nelson
Neeta Nelson Global Content Marketing Manager Neeta is a storyteller and content creator at Trax. When she's not researching the latest industry trends or putting pen to paper, you might find her experimenting in the kitchen or helping out at the local animal shelter.

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