Retail execution basics: What every CPG manager should know
Even the most loyal shopper can’t buy their favorite product if it’s out of stock (OOS) or in the wrong location.
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 in retail stores. Put simply, retail execution aims to put the right product on the right shelf at the right time.
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 70 percent of purchasing decisions at the point of purchase. A shopper may change his or her mind if a product is OOS 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. Conversely, poor retail execution can cost a business one to five percent of sales – millions of dollars – every year.
What store conditions to measure
Shelf-savvy manufacturers establish retail audit guidelines with a shopper-centric go-to-market strategy. This guideline framework defines, for each occasion, the optimal brands in the appropriate packages, at the right prices in the target channels.
Broadly, a store audit task list may cover:
- Stock levels (shelf and backstock)
- 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 promotional materials execution
- 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 offer the option of building and training the team. But evaluating their success often presents a challenge as their performance is measured differently from your internal framework.
Irrespective of who does retail execution, when done well, it goes beyond just auditing to capture value 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
What different stakeholders look for in retail execution
Field reps collect a treasure trove of data that can both boost sales and support smarter decision-making across the business. We cannot stress enough the importance of in-store data, and each team uses it in different ways:
Tools for successful retail execution
With multiple teams relying on store-visit data (and often needing to move fast to respond to change), sales reps need to gather data quickly and make it available immediately.
The problem is that 44 percent of respondents still use manual methods for retail execution activities, which often return outdated and error-riddled data. CPG teams miss out on the real-time data and granular insights that play such a key role in maximizing salesforce productivity, driving better decision-making and increasing revenue growth.
Forward-thinking CPGs are thus looking to digital image recognition and advanced analytics technologies, such as computer vision (CV), to optimize their field teams’ efforts. 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 OOS, 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, add value beyond auditing 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 help better measure and perfect in-store execution.
Download our report, “Perfecting In-store Execution” to learn more about retail execution and what’s necessary for its success.
