Retail Marketing: How to Improve ROI

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Retailers spend significant time and money planning, executing and evaluating in-store activity, but actual execution is often affected by the diversity that exists within store portfolios. Failure to successfully manage product availability, seasonal promotional activity and display compliance can present retailers with the reality of postponed purchases and potentially the risk of total migration of shoppers to competitor stores. Download this paper for advice on how to manage your retail activity.

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The need for retail audits

Retailers spend significant time and money planning, executing and evaluating in-store activity. But actual execution is often affected by the diversity that exists within store portfolios. Whether it is the limitations or opportunities that exist due to store architecture, the type and variety of fixtures that exist in-store, other functional issues e.g. clearance heights to allow for the introduction of top-stocking, or even pricing compliance, head offices need insight into the realities of how physical dynamics within the store estate could impact on the strategic development of in-store activity.

What actually happens in the store, in-aisle and on the shelf itself has a big impact on product availability and display compliance. Retail audits provide the vital insight to drive performance improvements.

Failure to successfully manage product availability, seasonal promotional activity and display compliance can present retailers with the reality of postponed purchases, at best, and the risk of total migration of shoppers to competitor stores, at worst. But almost certainly, reduced shopper loyalty. Research by Symphony IRI warns that repeated out of stocks at the same store could also force some shoppers to migrate permanently from that store. But gaining accurate reporting and authoritative analysis of what’s really happening in-store through effective information gathering techniques, is a tough issue to crack.

Key Questions You May Already Be Asking

  • What new fixtures and fittings will be needed in each store to support activity?
  • How many single-sided fixtures exist within a particular store?
  • Is there enough clearance height within the category to support planned top-stocking activity?
  • Where are CCTV monitors positioned?
  • Are ticket edges correct or missing?

Audits can provide in-depth retail critiques that give clarity to many asset management related issues and help maximise effective decision-making, or even prompt you to reconsider tactical objectives. It can also help to close the gap between what is perceived to exist in-store and what really does. In many cases, significantly reducing costs, by eliminating the production of ‘one-size-fits-all’ solutions for in-store implementation, in favour of those that are accurately tailored to the specific needs of your store estate.

Retail audits are able to target specific stores or return data on a large number of stores (even the entire estate) often within a relatively short timeframe, allowing for information to be cascaded quickly throughout the various layers of management within a retail organisation. Providing management with insight and intelligence into existing store assets can help to identify operational issues and support the use of swift, corrective action.

What does a retail audit involve?

Retail audits provide critical business intelligence to eliminate inconsistency of information and empower retailers to make positive decisions. Implementing a retail audit can be a daunting process. The starting point for all business is to understand that, if employed correctly, effective auditing is a unique opportunity to gather a raft of accurate business critical information about an existing store estate

Example audit objectives:

  • Develop comprehensive data about retail estate status
  • Gain visibility into what stores actually look like – by bay, aisle, store, and entire estate
  • Improve knowledge about asset management issues (e.g. fixtures and fittings)
  • Centralise data
  • Understand issues preventing in-store compliance
  • Cascade information quickly and effectively across an organisation

If you are to gather data that will provide your business with meaningful insight you will need access to specialists with robust analytical tools. Such specialists will help you to uncover a clear picture of the current status of your store estate, which will allow you to understand and adapt future policies and behaviour.

You should consider the following questions:

  • Who will own the audit process internally?
  • What issues are you looking to identify or solve?
  • What will be the scope of the audit?
  • Who will be responsible for remediation efforts?
  • Is management willing to challenge current practices in order to drive through improvements at store level?

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How retail audits can improve in-store performance

Financial Efficiency

In today’s current economic climate, carefully controlling financial investment is crucial. All too often, a lack of in-depth analysis of the retail estate results in the over-production of in-store equipment, or the supply of inappropriate equipment in to stores. Both are an unnecessary financial cost to retailers. By conducting a detailed retail audit and compiling an accurate database of store-specific information, retailers can ensure that equipment is always supplied to stores in the correct quantities, and is fit-for-purpose.

Improving Compliance

The issue of compliance is a complex one, and the reason why more and more retailers are turning to retail audit specialists to identify failings in-store and ensure that return on investment is being maximised. Whilst in the past, many in-store activation duties (including seasonal aisle and hanging signage changes, as well as fixtures and fittings management and maintenance) would have been carried out by retail teams; the pace of development and growing demands by retailers and shoppers on promotional cycles now makes this an increasingly difficult task.

No matter how much time and effort retailers continue to put into creating policy and standards, the reality is that the focus of retail teams’ often has to be prioritised on customer service and sales. Audits can identify compliance issues, helping retailers to get the basics right

  • Refining existing merchandising solutions to better meet individual store requirements across the retailer estate e.g. accommodating extra shelving during intense retail selling period, for example during the summer and Christmas
  • Managing seasonal space (power aisle 1 and seasonal aisles) and seasonal price changes
  • Managing the asset control and maintenance of fixtures and fittings ensuring clear display of pricing

Asset Management

There is a growing need for retailers to keep track of their valuable assets in-store. Retailers are acutely aware of the negative impact that poor compliance can have on product sales. But there is another equally critical issue the retailers continue to wrestle with in their attempts to protect the investment in the retail environment. Tracking and retaining control over fixtures and fittings in-store is a continual challenge for head office when trying to plan in-store activity. Store teams will often move equipment around themselves, with the result that even similarly graded stores may sometimes not have the same fixtures within a specific category.

Channel and Category Management

In addition to monitoring trade promotion compliance, retail audits deliver a key value to retailers – providing them with the opportunity to respond to what is happening within a channel or category. Resulting insight can often reduce out-of-stocks and identify new shelf fixture and SKU opportunities in-store.

Pricing Compliance

Price changes have evolved to be a strategic tool that retailers apply to increase traffic and sales. Price changes may be required for promotional offers and markdowns, seasonal sales, regional pricing or other variable pricing strategies. Pricing is usually decided at headquarters, but where it really counts is in the store. For price changes to be effective, store operations must change to keep pace with changing strategies. Delays and errors in implementing price markdown strategies needlessly cost retailers millions in missed sales.

How technology can aid the process

The traditional approach of conducting audits manually is now recognised as having a high error rate associated with such activity. A paper-based method of collecting data entries is not only costly in terms of the human resource and time needed but also the associated financial investment required. In addition, the process of transferring paper entries to an electronic format can often lead to errors, with inconsistent or poor handwriting and misspelling being major contributing factors.

In order to successfully manage the vast quantities of data gathered during the retail audit process, embracing technology is increasingly becoming an integral part of conducting rigorous store-level audits, as well as being able to provide management with the real-time information they need to quickly identify and resolve issues. Utilising the dedicated auditing software systems that some in-store specialists now offer, retailers are able to see significant reductions in the cost of conducting retail audits. For example, CJ Services has been able to reduce the time it takes to complete a typical audit process from a previously accepted industry standard of sixteen weeks, to just seven weeks.

Key benefits of technology-based retail audits

  • Bespoke reporting (through some specialist providers)
  • Total operational visibility of your business from your desktop
  • 24/7 web-based reporting
  • Ability to accurately process vast quantities of data
  • Dedicated online reporting portal
  • Drill down reporting by region, store, category and aisle
  • Colour coded reporting (RAG) can help you focus on key items needing attention and improvement
  • Some systems incorporate capability to generate automatic SKU pick lists and P-O-P display ordering

What insight can I get from retail audits

Importantly, retail audits can help you to understand key operational constraints that may exist within specific areas of your store estate (e.g. older stores or those inherited through store acquisition) and which could hamper even your best-laid plans. Such issues can result in poor estate-wide implementation and cause planned in-store activity to fail. Being able to identify them is vital. A targeted retail audit programme is able to provide insight into the unique issues and challenges that exist throughout the entire store estate, from large format out-of-town stores to smaller format sites.

IGD Consumer Research (2009) identified another key reason for conducting regular store audits, citing that many stores receive only one or maximum two planograms. If lost, a store’s own retail team is often left with no indication of physical set up and requirements relating to agreed in-store activity. Retail audits also enable retailers to identify instances of ‘cherry picking’, where store management are taking decisions at individual store level on which in-store activity to run, independently of any direction from head office. Protecting against such interventions is critical.

Conclusion

Just as marketers challenge whether advertising is delivering the right message, it is essential that your instore activation is delivering on its objectives too. Well-executed retail audits should not be a one-size-fits-all approach. Every retailer, store format and objective is different. Professional retail audit teams use a wide range of information gathering techniques to provide qualitative and quantitative measurement data including photographic reporting, statistics recording and comment-based findings.

Without tailoring the audits to the specific needs of your retail estate, a true understanding of the nuances that exist between stores will largely be lost, making it impossible to drive activity appropriately through each store. Ultimately, having good insight puts retailers back in control of their stores, allowing you to share key data between individuals in your business that have responsibility for property management and in-store marketing activity, and giving them the power to develop more effective long-term retail marketing strategies.

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