According to a survey conducted by Deloitte, this year’s holiday shoppers will spend an estimated $228 more per household than last year . To make the most of the holiday season, brick and mortar retailers need to respond to e-commerce competition and growing customer expectations of a seamless, digital-like in-store experience.Let’s look at how improving in-store merchandising execution and compliance can help physical stores to win at the shelves this Christmas.
Coal in the stocking for out-of-stocks
The global average of retail out-of-stocks (OOS) is 8%, meaning that shoppers only have a 42% chance of fulfilling a ten-item shopping list . This means that grocery shopping for the Christmas family lunch can easily turn into a cross-outlet treasure hunt. Annually, out-of-stocks result in billions worth of lost sales and are among the top reasons for customer dissatisfaction.
Interestingly, only 10-30% of stock-outs result from upstream supply chain issues such as a shortage of supply from a supplier. Most of out-of-stocks are caused by poor in-store operations. In fact, it has been found that the larger the backroom inventory, the higher the OOS rate . So, an empty shelf is often caused by poor merchandising practices rather than poor product availability. How can retailers fix this?
By establishing better monitoring and replenishment practices, retailers can resolve and pre-empt merchandising issues and reduce the associated losses. Connected devices can help to automate the process. Cameras placed over shelves, for example, can frequently capture and analyse images to identify depleting stock. Equipped with a mobile merchandising app, store associates can then receive re-stock alerts on their mobile or wearable devices. As another instance, data from EPOS and inventory systems, combined with predictive and prescriptive analytics, can help to identify peak sales times for products and prompt pre-emptive re-stocking.
The planogram naughty list
Nielsen found that last year shoppers delayed grocery purchasing to such a degree that it caused a huge surge in sales in the week ending Christmas Eve. Sales rose by 22% compared to the same week of 2015, helping to make it one of the biggest ever ‘end of year’ for supermarkets with customer spend of £5.9 billion . In the peak of Christmas shopping, with increased footfall of customers rushing to complete their last-minute purchases, the likelihood of misplaced products and messy shelves grows and so does the importance of planogram compliance.
Planograms – visual representations of a store's product layout – can help to plan, implement and monitor tactical merchandising activities. One way to increase planogram compliance is to transition from pen and paper checklists to digital measurement. With the help of image recognition technologies, merchandisers can simply take an image of the shelves with their mobile devices. The image is analysed and compared to the planogram, and in a few minutes merchandisers receive an update on the required corrective actions such as re-stocking, facing or shelf labelling.
The joy of promotional compliance
Recent consumer research conducted by coupon and voucher provider Valassis has revealed that 88% of Christmas shoppers could be tempted away from their main supermarket by promotions and deals at rival stores . So retailers need to ensure that their in-store promotions are upheld for the life of the campaign with standing display units (SDUs), shelf edge labelling, advertising materials etc. all in compliance. Tech capabilities can facilitate the preparation and implementation of promotional campaigns. Retailers can use image augmentation to visualise where the promotional displays would be, ensuring optimal store layout. As in planogram checks, image recognition can help audit promotional compliance and, with a mobile merchandising solution, prompt store associates to take pre-emptive corrective action.
These are all examples of how retail merchandising operations, enhanced by digital capabilities, can positively impact customer experience and behaviour and improve physical store performance during the Christmas season.