CPG companies are increasingly recognizing the importance of flawless execution as a key ingredient to sales growth and shopper satisfaction. As the battle to win at the shelf intensifies, mindsets are shifting from applying labor as a generalized ‘fix it’ for all things at retail to a strategic mindset leveraging technology and insights to drive better outcomes.
Trax surveyed 300 CPG executives on their current approach to retail execution and on their adoption of enabling technologies. Here are five steps winning CPGs are taking towards perfecting in-store execution:
- Spend less time auditing, more time merchandising
Although CPGs have become more sophisticated in their retail execution initiatives, many still use outdated data collection methods. In our survey, 44 percent of respondents said they use manual methods for in-store audits and measuring compliance.
There is tremendous scope for companies to save costs and time with more advanced solutions like Computer Vision (CV). CV-enabled audits can free up 60 percent of sales reps’ auditing time and allow them to focus instead on selling activities. One client was able to broaden store coverage, going from 35 cities to more than 130, and from 28,000 stores to 130,000 stores each month. Another client reduced their auditing costs from between $10 to $100 per store to just $1. The bottom line: saving time on auditing allows sales reps to focus on more value-added activities like merchandising and strengthening retailer relationships.
- Leave no SKU behind
With thousands of products distributed across an expansive store universe, maintaining brand health takes a lot of discipline. Knowing category shelf-composition and ensuring products are in the right location requires knowledge around what’s happening at the SKU and fixture level – something that manual observation methods or syndicated sales data can’t possibly provide.
Contrast this with an automated image-recognition solution that can identify and analyze every individual SKU, and we see a massive difference. One global FMCG manufacturer observed an average 18 percent variance when measuring share of shelf manually versus using image recognition (IR).
- Reward sales staff based on execution quality
Existing data collection methods tend to be vulnerable to manipulation by auditors. For example, empty spaces on the shelf or misplaced items may go undocumented. The lack of trustworthy data means there’s no meaningful way for companies to identify and reward good execution performance.
For one beverage manufacturer in Brazil, lack of timely, objective insights from the field meant that sales managers could not take quick, corrective action. As a result, their sales reps were compensated based on shipments, not execution at the store. With CV-enabled execution, field teams were able to receive clear merchandising and selling directives within minutes of capturing shelf images.
With the ability to scorecard both sales rep and store performance, managers can adjust route-to-market by focusing on the stores that require most attention.
Consider the case of a leading manufacturer in Australia. In a bid to increase share-of-shelf, they launched a promotional “buy 5, get 1 free” offer. With the help of competitor insights at store-level, they were able to pinpoint the precise regions and the exact stores that needed most attention, achieving a 5% uptick in sales in a mere two weeks.
- Have fact-based conversations with retailers
50 percent of respondents in the Trax Shelf Health Survey said that their main barrier to proper in-store execution and compliance is either the lack of real-time visibility into store conditions or the lack of reliable measurement and reporting systems.
With a single, reliable source of shelf reality that all stakeholders can access in real time, manufacturers and retailers can adopt a common language for execution. For example, the telesales team at a top global bottling company gets a real-time feed of shelf images before their calls with store owners. These remote employees use the data to offer range extensions, sell new products and increase product facings, all without setting foot in the store.
- Innovate with data to get more money from the shelf
In our survey, 62 percent of respondents said that they lack continuous visibility and intelligence on shelf conditions to make strategic business decisions.
By monitoring everything that’s happening at the shelf, brands can gain fresh perspective on factors influencing shopper decisions, such as product presence, assortment and placement, price compliance and promotion activation, and competitor adjacency. A leading coffee manufacturer in the UK, for instance, found that shelf position four (from the bottom) had a 23 per cent greater potential to increase sales compared to shelves three or five, despite all three shelves being around eye level. Using data science, CPGs can analyze these sales levers to uncover powerful insights every day and make every inch of shelf space count.
The way ahead
There is clear intent in the CPG industry to use advanced technologies to perfect in-store execution. Our study found that 79 percent of respondents either have in place or will adopt a real-time eyes-in-store solution in the next one to three years.
Are you one of those?
Download our report, “Perfecting In-store Execution” to learn the moves consumer goods manufacturers must make now to win at the shelf.