Retail execution basics: What every CPG manager should know

Every loyal shopper knows the frustration of discovering that their favorite product is out of stock (OOS) or in the wrong location. But as the battle to win at the shelf intensifies, consumer packaged goods (CPG) companies are finding it increasingly difficult to keep their products in the spotlight. Retail execution has never been more important – or challenging – as a result.

What is retail execution and why does it matter?

Retail execution is a business process designed to ensure that a consumer goods manufacturer’s overall brand strategy is executed properly in retail stores. Put simply, retail execution aims to put the right product on the right shelf at the right time – ensuring CPG companies can meet their KPI targets.

Broadly, this follows a Plan-Do-Measure process cycle:

This process runs the gamut of activities, from store audits and in-store merchandizing to relationship management.

Retail execution matters because consumers make spontaneous decisions at point of sale. Shoppers may change their mind if a product is out of stock or in an unexpected location, or if a promotion makes a competitor’s product more appealing.

Successful retail execution can lead to a three to five percent sales uplift in a single category and impressive metrics. Conversely, poor retail execution can cost a business one to five percent of sales – millions of dollars – every year. Developing a strong retail execution strategy is essential to drive sales and avoid subpar customer experiences that can negatively impact the brand.

What store conditions to measure

Shelf-savvy manufacturers establish retail audit guidelines with a shopper-centric go-to-market strategy. This clear framework defines, for each occasion, the optimal brands and appropriate packages, the right prices, and the target channels.

Broadly, a store audit task list may cover:

• Stock levels (shelf and back stock)
• In-store location of products (ambient vs. coolers, gondola vs. end caps, etc.)
• Planogram compliance (shelf location, number of facings present, number of SKUs present, missing/inaccurate shelf tags)
• Quality of in-store displays and execution of promotional materials
• Competitor adjacencies and activity
• Pricing compliance

Who should conduct your store audits?

Using your own dedicated sales teams to regularly visit retail outlets in each territory gives you greater control over your resources. It also has a high ‘ownership index’, since your teams will naturally fight harder for your brand.  But the costs of coaching and motivating these teams can be very high.

On the other hand, third-party merchandising service organizations can build and train a team. But since the team’s performance is measured differently from your internal framework, evaluating success can be challenging.

Irrespective of who oversees and carries out retail execution, at its most impactful, it’s not just about auditing: it ultimately increases revenue growth by considering consumer, shopper and customer motivations.

Fields teams can also:

• Upgrade the number of product lines in an account by nurturing retailer relationships
• Educate retailers about planogram changes
• Build displays, reset coolers and display items to increase visibility
• Measure the impact of merchandising resets on sales
• Replicate successful merchandising strategies across stores
• Ensure inventory management is up to date

What different stakeholders look for in retail execution

Field reps collect a treasure trove of in-store data that can be used by multiple teams to boost sales and support smarter decision-making across the business.

Tools for successful retail execution

Since different teams rely on in-store data, sales reps need to gather and disseminate data efficiently.

Unfortunately, 44 percent of respondents still use manual methods for retail execution activities, using dated retail execution software that returns error-riddled data. CPG teams miss out on the real-time data and granular insights that maximize salesforce productivity and drive better decision-making and revenue growth.

Forward-thinking CPGs are increasingly using digital image recognition and advanced analytics technologies, such as computer vision (CV), to optimize their field teams’ efforts and increase field sales. By capturing images of the shelf and digitizing these for data and insights, CV provides a real-time view of how products are performing on the shelf – as well as when products are out-of-stock, where they sit and how this affects purchase – allowing CPGs to swiftly correct issues.

Also, by automating monitoring, CV-enabled audits cut auditing time by as much as 60 percent. This means that sales reps can visit more stores, interact with sales associates and store managers, gain insights into in-store activities, and focus on getting their company’s products in front of shoppers.

What’s next?

CPGs depend on comprehensive, timely insights into what’s happening on the shelf to succeed at retail execution. But with thousands of SKUs to track, sales reps risk spending more time on audits and less on other valuable retail execution activities. Solutions such as Trax Retail Execution can ensure your teams are equipped to measure and perfect in-store execution.

Download our report, “Perfecting In-store Execution,” to learn more successful strategies to optimize your retail execution.