When’s the last time you made an impulse purchase? Chances are it happened within the confines of a brick-and-mortar store, seeing as new retail statistics say 79% of impulse buys occur at physical retail.
What exactly was it that led you to pay for something you weren’t even intending to buy?
Perhaps you saw a product nearby that paired well with something you were already buying (i.e. peanut butter and jelly, or a bottle of wine and a corkscrew). Or maybe you couldn’t help being drawn to the eye-catching display at the end of an aisle that was taller than you are.
Whatever the case, the impulse buy made its way into your shopping cart. More likely than not, the unplanned purchase was a result of a brand’s carefully planned retail execution program.
What exactly does retail execution entail? And why are consumer goods brands investing so heavily in it? In this article we’ll conceptualize retail execution and discuss different ways that brands are managing it.
Retail execution describes activities performed at the store-level by consumer goods companies or third parties working on their behalf aimed at increasing brick-and-mortar sales. These activities include shelf merchandising, order replenishment, trade promotions, store audits, and more.
Research shows that brands lose 25% of sales annually to poor retail execution practices. Conversely, strong retail execution programs yield benefits such as an incremental sales lift, increased market share, out-of-stock reduction, improved promotional effectiveness, better visibility into store conditions, and many more.
With so much revenue being left off the table (and potentially in the wallets of competitors), winning brands have begun to invest in perfecting their retail execution strategies.
It’s been said that you can’t improve on what you don’t measure. Data lies at the core of any effective retail execution effort. Consumer goods brands are using data to ignite a cycle of continuous improvement in their retail go-to-market plans.
In order for data to be actionable, it has to be collected in standardized way, updated in real time, and accessible to anyone in an organization who might need it. The types of data that brands need for retail execution are activity data (metrics around how team members are working), observational data (information about the brand’s presence in-store), and sales data (revenue over a given time period).
Brand leaders who analyze these three types of data in conjunction are able to constantly iterate through a cycle of insights, planning, and actions. In other words, data analysis reveals any number of learnings that managers use to rework strategy and deploy their team accordingly.
Below are some examples of how brands are employing this cycle to augment their retail execution.
Planned promotions have the power to move the needle on sales by a whopping 193%, yet over half of them aren’t set up correctly. Brands are able to ensure promotional compliance by reporting on whether or not team members adhered to the rollout plan. They also gather specified data points relating to the promotion before, during, and after it was active. Examples include notes on shopper foot traffic, photos of any display materials, or sales results.
Brands that build strong relationships with their retail accounts are in a much better position to increase their in-store footprint and hence drive sales further. Data is used to tell a story of past success in a particular retail chain (or one of its competitors), which put brands at an advantage when it comes time to bargain for more shelf space or a secondary display.
Closely monitoring how in-store activities impact sales helps brands with forecasting as well. They’ll know when to send extra inventory and when to scale back. Presenting this intel to retailers is mutually beneficial since retailers will stock products based on consumer demand and suppliers boost their credibility with the retailer.
Stockouts are dreaded by brands and retailers alike. They discourage customer loyalty and can spur the switch to a competitor. When brands have their finger on the pulse of retail execution, they can avert out-of-stocks before they happen.
For example, brand reps can track the number of facings on the shelf more closely and place replenishment orders as needed. Brands can also keep an eye on how new product introductions are affecting sales of older products (i.e. prevent product cannibalization).
A sizable 78% of consumers rank sales associate knowledge as their top desire in a retail shopping experience. Again, data can help in making sure this element of a retail execution strategy is being upheld.
Managers can mandate that brand reps document their education process with their various retail accounts. This way, there is a record of whether or not the plan is being followed. Managers can quickly look to see how much time team members are spending at different retailers, another indicator of whether or not their education process is being thoroughly carried out.
Brand leaders can also implement a survey or questionnaire on product knowledge that brand reps themselves have to complete. The results provide another data point on how strong the team’s ability is to execute at retail.
It takes a track record of success for a brand to harbor a coveted additional placement in the store for the purpose of encouraging impulse buys. If a brand is lucky enough to secure a cross-merchandising opportunity, it would be detrimental to not assure it’s lucrative.
Management can keep tabs on sales data to see how the new placement is performing on its own, and how it’s impacting total brand sales. Moreover, team members can make a record of whether or not the product placement is present in the first place during store visits.
Retail execution is mission-critical for consumer goods brands to stay afloat in today’s competitive market. Consumers have limitless options in virtually any category they’re shopping for, so making products available and appealing is essential to winning a sale. The strategies listed above are just some of the ways that successful brands are achieving optimal retail execution, but data analysis affords many more opportunities for improvement.
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