The top five inefficiencies of traditional retail execution

Retail execution is a challenging, fast-paced, and high-performance field. Often hidden to those outside the industry, the intricacies of in-store displays and shelf organization are like an elaborate puzzle for reps to solve with products and promotions.

 

Unfortunately, most Consumer Goods (CG) organizations have not kept pace with the digital disruption that is transforming every industry. Many retail reps are still burdened by repetitive, manual administrative processes, prevented from performing at their best and doing what they really excel at—fighting for shelf space and building great customer experiences. Effective retail execution continues to be an issue for many companies, with a recent Nielsen study showing that approximately two thirds of retail promotions do not break even and spending continues to hover around 25 percent of sales. Worse, losses from overstocks and stockouts amount to approximately $1.1 trillion every year[1].

Before you can solve a problem, you must recognize and understand it. Let’s look at the top five inefficiencies of today’s typical retail execution team.Retail execution_efficiencies1

Reps get stuck planning for visits instead of maximizing time in-store

Preparation is important, but today many reps spend too much time planning and not enough time in-store. Before meeting with a customer, brand reps often craft customized agendas that cover previous discussions, past promotions, and location-specific issues. Developing these agendas is a crucial part of a successful rep’s work, but combined with building a list of scheduled visits, planning travel routes, mapping directions to each location, and reviewing past sales data, even the most efficient rep can easily get bogged down.

Slow, manual paper-based processes tie reps to their desks

Most reps are still tethered to their desks for too many tasks. While mobility and cloud technologies are available to them, the field staff of many CG companies are still tied to immobile workstations and forced to push paper. Believe it or not, 64 percent of retail execution professionals still complete physical paperwork during store visits[2]. Using physical forms require extra preparation before an onsite visit – and a forgotten form can result in a wasted trip. Worse, physical documents must be manually managed and analyzed after a visit, again eating up reps’ time and slowing down necessary steps in the retail execution process. This isn’t just inefficient—they are ineffective and more prone to error than digital methods.

Current planogram compliance assessment and other on-site efforts are inefficient and ineffective

Winning customers at the shelf is key to retail success—one-third of shoppers decide what to buy when they see products and deals at the store shelf[3]. And winning the shelf requires CG organizations to empower their reps to spend less time on planogram compliance and other menial in-store tasks, and more time fighting for shelf space and building great customer experiences. Today, planogram compliance assessments are often extremely time-consuming, as each requires meticulous, manual input to guarantee that products on the shelves precisely match the planogram. And even with all of that work, most consumer goods brands are blind to the effectiveness of promotions and planograms—they have no visibility into what consumers are looking at or how they’re interacting with displays. Plus, compliance is just one task for retail reps on-site. They typically need to process orders and manage inventory as well. If the store is running low on stock, the rep may have to manually document the need and complete a refill order after their visit, once they’re back at their desk. Finally, reps review promotion results, discuss location performance, and address issues with the customer. Unfortunately, with traditional retail execution processes, these conversations are almost always backward-looking and ineffective.

Teams are always playing catchup with backward-looking information—addressing issues reactively instead of proactively

Any issues within Retail execution teams can have a tremendous impact on the bottom line of CG brands. CG companies report a loss of revenue of 7.4 percent due to stock-outs at the retail store, and even worse, they attribute an additional 6.1 percent loss of revenue to inventory being available at the store but not actually on the shelf[4]. The manual processes currently in use prevent CG organizations from having the visibility and up-to-date data they need to proactively address problems. During crucial sales periods and events, such as Black Friday, the lack of insight can seriously hamper store performance and potentially depress sales figures for the whole year. When faced with a stockout, only 15 percent of consumers delay their purchase. The vast majority simply shift to a different brand[5]. Knowing after the fact that you lost sales while a product was in the back of the store offers little comfort and no guarantee that your inventory is on the shelf next time.

Decisions aren’t always made using the best data—or even the same data

Traditional retail execution doesn’t allow for the seamless knowledge-sharing that is crucial to success in the digital era. Many retail reps must consolidate all the information they’ve collected—from sales performance metrics to planogram compliance, customer information and more—via various physical forms. And even after all that aggregation, many CG organizations end up with separate silos of physical data dispersed across geographic locations. This creates long lag times between store visits and the availability of reporting, and introduces a greater potential for errors. With manual field reporting combined with disparate information on sales results and back-stock inventory, managers and executives may have to make decisions and act based on inaccurate, incomplete, or incoherent data—when they should be using valuable insights to drive company-wide resourcing, best practices, and campaign and investment decisions. Even at the most basic level, many companies do not use historical point-of-sale and other unstructured location-based data sources to identify products that are prone to stockouts[6].

Retail execution_efficiencies2

Today’s technology enables unprecedented retail execution efficiency and innovation

It’s possible to transform these five retail execution inefficiencies into streamlined strengths that differentiate from the competition. Let’s take a quick look at how technology is shaping lean, mean, retail execution teams:

Reduce the time spent planning store visits using real-time store data and advanced analytics. Plus, streamline retail reps’ time on-site with recommended actions that maximize ROI – while moving toward full automation of planning activities. Free reps from their desks and paper-based processes by utilizing wearable and mobile technology. Consumer goods brands are enabling reps to access mission-critical tools, applications, and data from anywhere, at any time. Streamline planogram compliance assessment and other in-store tasks with machine learning, image recognition, and modern collaboration tools. As an example, reps with modern retail execution apps can take photos from the field and automatically process whether a given promotion meets compliance standards—and smart shelves can inform CG organizations in real-time how often consumers are looking at displays or taking products off shelves, providing crucial planogram effectiveness insights. Maximize retail reps’ efficiency and improve sales (in some cases by 10 percent[7]) using real-time point-of-sale (POS) data and advanced analytics capabilities. With real-time access to data, CG companies are able to react immediately to predict and prevent issues like stockouts or products available at the store failing to make it to the shelf. One study demonstrated that real-time POS sales and on-hand inventory data can help improve on-shelf availability by 13 percent[8]. Broadly share real-time insights and best practices utilizing digital reporting and key learnings gathered from advanced analytics. With the entire, data-driven processes of planning, store visits, and post-visit activities shared with colleagues, management, and partners, modern CG organizations are achieving tremendous efficiency gains, improving communications and knowledge sharing, and propagating best practices across the entirety of their organizations. A recent survey of CG brands found that collaboration efforts can raise store-shelf stock rates by 5-8 percent and reduce general and administrative (G&A) costs by 3-10 percent[9].

Microsoft and AFS are creating a brighter future for retail execution

Fortunately, any CG organization can transform the top five inefficiencies of traditional retail execution into operational advantages with the AFS POP Retail Execution application. The app, built on Microsoft cloud technology, is a robust mobile solution designed to empower field representatives to quickly manage daily tasks—including optimizing order capture, carrying out product and promotional audits, tracking stock levels, displaying comprehensive listing and pricing to support granular scenario compositions, and much more. Companies that adopt AFS Retail Execution have seen a 25 percent increase in calls per rep per day, reduced margin leakage by up to 25 percent and increased distribution by 25-50 percent within six months[10].  Ultimately, AFS Retail Execution helps consumer goods organizations achieve their main aims: enhancing customer service, realizing revenue potential and setting their business apart from the competition.

[1] EKN Plugging Out-of-Stocks Gaps in Consumer Goods, 2016

[2] EKN Outlook, 2016

[3] EKN Outlook, 2016

[4] EKN Outlook, 2016

[5] EKN Plugging Out-of-Stocks Gaps in Consumer Goods, 2016

[6] EKN Plugging Out-of-Stocks Gaps in Consumer Goods, 2016

[7] EKN Outlook, 2016

[8] EKN Outlook, 2016

[9] Accenture Analytics: Digital collaboration between retailers and manufacturers, 2016

[10] AFS Technologies, 2016 <http://www.afsi.com/retail-execution-sfa-store-merchandisers/>

Original author: Laurie Woicik (Synaxis Corporation )


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