Retail is detail – everybody knows this, nobody does it. At least not 100% of time.
What is the store-by-store compliance level of PoS promotions? How many stores in your network have completed all the tasks required by the HQs? Over the course of the last 6 months we have asked these questions to over 40 retailers operating in Poland. None except one could answer them! During our visits we were shocked by how little network managers knew about what was going on at the store level. Often, when presented with pictures of evident failure to execute at individual outlets, they wanted to know which store it was that failed, in order to firefight the singular mishap, rather than think about the systematic solutions.
In one place it went even further: “we are not interested in 100% execution. We just need to do the contracted promotions properly in few stores, so we could prepare the documentation for the brand owners. Some of them do not actually care all that much!”
After few interviews we realized that for many retail networks perfect execution is still not a priority. For which ones? Just visit a couple of outlets of popular banners and you will see for yourself. With an increasing number of stores, they simply fail to manage the basics, which make consumers loyal to the stor
es. The sad thing is that local banners tend to be worse than international competition.
So why is it, in this age, when traditional retail is losing to online, and there should be an “all hands-on-deck” attitude, that so little attention is paid to the in-store execution?
We do not have definite answers, but we can present our emerging hypothesis:
- Some are still not convinced that in-store promotions work.
For a long time, it was generally accepted that 70% of purchases decisions are made in store and heavily impacted by in-store activities. The number itself can be questioned, but new studies do confirm positive impact of in-store promotions on sales level with, for example, digital displays increasing sales by 3 – 17%[1]. - Many retail managers we have talked to do realize the benefits of in-store promotion, but lack the execution muscle, and limit their activities to “delegating” the execution to the sales associates or store managers. In practice, they dump enormous amounts of uncoordinated tasks, instructions, and requirements on their employees, usually via email. They have no way of controlling compliance and limit themselves to random checks and occasional retail audits (usually not synchronized with current in-store campaigns).
- To be fair, we can also state that we have observed a small number of retailers who are already thinking of, or implementing solutions enabling two-way communication and some form of control over their retail outlets, and we do think they will be winning “the traffic” from the competition.
What gets measured, gets done
Without clear reporting of in-store promotions’ compliance level, retail network and brand owners are not able to successfully measure the effectiveness of their promotions, trade marketing activities, and budgets. The ROI figures are often miscalculated, as in-store compliance levels are far from a perfect 100%. In result, retailers are suffering, as brands invest their marketing budgets into vehicles producing higher returns. Measuring the store compliance would increase the number of properly completed tasks. After all, “what gets measured gets done”. This in turn would positively impact sales and ROI, bringing more budgets to trade.
There is also a role for brand owners and manufacturers. They should demand higher transparency from retail networks. Store-by-store information will give them better analytical capability and insight than incidental and scattered data from mystery shopping on random store checks.
Retail is detail. Perhaps it is time to return to this old truth, and really execute it store by store.
Tomasz Kopeć is the CEO of ITSG Retail – provider of Retail Execution Suite “Eldorado”
[1] Anne L.Roggeveen Jens Nordfält DhruvGrewal – Do Digital Displays Enhance Sales? Role of Retail Format and Message Content, Journal of Retailing, Volume 92, Issue 1, March 2016, Pages 122-131