The industry has been flooded with surveys and studies talking about out-of-stocks and lost sales. The numbers and reports remain unchanged. Retailers and suppliers are at a loss to correct the situation. And consumers are leaving stores frustrated and searching for a better alternative. With the continuing flood of new items, the situation continues to worsen.
The lack of desired execution on store merchandising initiatives continues to be at the top of the list among retail and CPG executives as a source of frustration and the reason category plans do not deliver the planned results. Countless efforts (third party services, dedicated teams, supplier merchandisers) have been tried. But the results remain the same. Retailers need to correct this issue or sacrifice losing out to others.
The Solution
We believe that there are several reasons why the industry has struggled with store execution. One is process and the other is structural.
Dealing with the structural component we believe that there needs to be more emphasis at retail on execution. Retailers need to create a senior level executive position within their Operations department that is responsible for the execution of plans; interfacing with the Merchandising team to ensure that plans are “implementable”; communicating with the stores on all merchandising activities; acting as the feedback loop from the stores to the Merchandising team on what is working and what is not.
Another structural change in Operations needs to occur at the store level. A Manager of Merchandising needs to be in place in each store. This individual needs to be responsible for executing the merchandising plans across all departments in the store. This function ensures compliance on corporate programs AND positions the store for true local merchandising.
The two new positions in Operations can have a significant impact on performance… better alignment of merchandising programs with store capabilities,improved execution and a more effective shopping experience.
The process component is in regards to dealing with store performance. Too often plans are developed based on averages. How many units do we sell on this SKU on average? We believe that averages are a big part of the challenge in retail execution. Stores know this and deal with it every day. “I sell much more of this that they believe.” “This does not sell in my store.” “Why are they asking me to build this display?” Even at the cluster level, averages do not work.
WWA has developed a proprietary application that interfaces with existing space management tools and POS systems to address this issue. We utilize store specific movement to drive the assortment and shelf facings to ensure sufficient stock, by store, to satisfy consumer demand. Out-of-stocks become a thing of the past.
Read more about Center Store Space Optimization
However, structure and process are not the total solution. There are two other key components required to improve store execution…merchandising standards and compliance disciplines. WWA has a depth of experience in both areas.
Without specific, defined and well-communicated merchandising standards category managers and stores are left to their own to decide how to merchandise, sign and display categories. We develop detailed standards in conjunction with our clients, based on their corporate strategy and category roles.
These standards can include stocking procedures, case-packout minimums, rotation practices, display signage, shelf tag placement, private label placement and private label pricing. Once the standards are developed, they must be communicated across all impacted functions.
But simply setting standards will not deliver the desired results. Compliance disciplines must be put into place. Reinforcement practices need to be in place to ensure that category managers are adhering to the standards.
- Is private label pricing in line with the defined delta?
- Are all planograms set with minimum case packout?
- Are the proper quantities being forced out to store in support of promotions?
This same reinforcement of compliance needs to occur at the store level.
- Are new items being cut-in according to the planned timeline?
- Are schematics being maintained to the established planogram?
- Are displays being executed as planned?
- Are shelf standards being followed?
Establishing compliance disciplines is not enough. There must be consequences for failure to comply. A corporate culture needs to be in place that rewards the desired behavior and at the same time does not tolerate non-compliance. This reinforcement needs to come from the VP of Shopper Solutions and permeate the organization.
These structure, process, standards and compliance disciplines are critical in order to create the shopping experience that the customer will recognize and reward with her loyalty.
Solving Your Execution Challenges
WWA has the expertise, experience, process, structure and supporting tools to solve your store merchandising execution issues. We can definitely help you improve store execution.
