For manufacturers today, significant effort must be focused on “winning at the shelf.” Research—and retail sales numbers—prove that purchase decisions are influenced at the shelf more than ever before. Manufacturers are stepping up to take greater responsibility for the optimal presentation of their own products in retail outlets. This is seen as being vital to compete effectively with other manufacturers.
The Perfect Store
As the diagram above shows, there are many areas within a retail outlet where manufacturers can reinforce the performance of their brands. To win at the shelf successfully, a manufacturer needs to flexibly define, capture and analyze in-store standards. In fact, the term ‘Perfect Store’ is used to describe the combination of measurements and KPIs used to determine the overall success of the retail execution strategy within a store or segment.
Your sales teams are a critical part of the Perfect Store strategy because they are the ones tasked with collecting data to ensure compliance with expensive trade investments and executing corrective actions based on the direction they are given. But your sales reps already have a job and that is to sell, not to manage shelf space. How do you help them be productive and effective in building relationships with the retailer?
The key is to enable your field personnel to spend more time with the customers who offer the highest potential. The question must be asked, is it better to spend time defending the position of a customer with 100% shelf share with a large turnover and high visibility, or to visit a large shop with 10% market share where we could achieve 30% shelf share?
Retail Activity Optimization (RAO) can help you answer this question because it provides you with a process for ranking stores based on sales potential and shelf share. RAO is basically the optimization of the standard retail execution processes we do every day, from call planning to the activities performed in-store, with the objective of both optimizing the in-store operations as well as increasing overall efficiency.
Many of our customers have been managing retail execution for several years, with some manufacturers on their second and third iteration of their retail execution process. Manufacturers are now looking to optimize these processes. Enhancing the efficiencies gained through retail execution, RAO leverages advanced analytics to send the sales teams (including; retail merchandisers, broker retail sales and direct store delivery drivers) to the locations that will yield the greatest return for their time and effort.
What that returns is, of course, greatly depends on the corporate objectives. RAO can be achieved in a variety of ways. Here are five examples:
- Increase the sales team efficiency: Focus your sales teams on the activities that have the highest impact by deciding which stores to visit and how often we visit them. Likely indicators are sales potential and Share of Shelf.
- Increase the sales team effectiveness: Focus on maintaining the optimal assortment that is appropriate to the store segment to increase brand presence and sales. Key activities include measuring and maintaining shelf position, shelf share and ensuring planogram compliance.
- Reduce costs: Optimize call coverage by focusing on customers who drive growth. A potential approach is to focus on Share of Shelf and Store Potential by leveraging EPOS data to determine sales potential and spend.
- Develop the right strategy for specific stores: Identify areas where shelf share can be increased, and based on the Share of Shelf trends, develop an appropriate strategy of “defend, maintain and gain.” You should also take into account the “premium-ness” of the point of sales, and weigh it appropriately.
- Determine the Perfect Store for you: Combine measurement and KPIs to evaluate the success of the retail execution strategy within a store or segment. You might look to analyze the following:
- Suggested product assortment vs. actual ranged products
- Out of stocks
- Compliance with trade promotions terms
- Compliance of the “realogram” vs. planogram
- Price vs. recommended/agreed price
- Share of Shelf vs. competition and segment targets
Actionable Insights and Automated Decision-Making
A successful RAO process delivers actionable insights. To empower reps with these actionable insights, it is key that information captured in the call is intuitively summarized and presented back to the rep to enable prompt corrective action—highlighting any issues once the audit is completed.
There is an exciting future for further optimizing RAO processes. A recent Gartner study of digital merchandising solutions concluded that best-in-class performance now results in 95% + accuracy, with results returned within 5 minutes. Typically, a complete category within a large supermarket can be audited by simply taking 10 pictures. Information for every SKU (including competitor products) covering distribution, out-of-stock, Share of Shelf and planogram compliance is available within the same call to enable prompt and precise corrective actions.
To learn more about how RAO can help you achieve the Perfect Store, download the AFS Technologies white paper, “Helping Your Field Force Achieve the Perfect Store (RAO) Accelerating Retail Activity.”