The Pros and Cons of Centralising Merchandising Execution and Compliance

Mila Budeva
Mila Budeva
Dec 22, 2017

Walmart recently announced that it had selected five merchandising service providers (Anderson Merchandisers, Acosta, Crossmark, Premium and SAS Retail Services) to conduct all in-store merchandising for all suppliers [1].

Starting Feb. 2, 2018, these will be the only such agencies authorized to work inside Walmart stores. The purpose of narrowing the number of merchandising service providers is to improve the effectiveness and efficiency of merchandising procedures as merchandising execution and compliance is crucial to store performance.

Walmart’s decision raises important questions about the benefits and challenges of centralising and streamlining merchandising and in-store execution activities.

 

Let’s look at some of these in more detail.

 

The benefits

As Steve Bratspies, Walmart’s Chief Merchandising Officer, notes, a centralised approach to the planning and execution of merchandising activities will "benefit Walmart and our Suppliers by enabling better coordination with stores, improving the quality and consistency of the work being performed by representatives and enabling our store associates to more effectively complete activities and better serve the needs of our customers." [2]

 

Best practice is the only practice

Retailers and suppliers benefit from consistent implementation of best practices across retail outlets and more centralised control of merchandising activities. Any representative, from any agency, in any retail outlet will perform the merchandising tasks such as shelf placement, inventory correction, modular integrity, execution of special promotions etc. – to the same protocol, or in Walmart’s instance, following the “One Best Way”. This way, retailers can ensure that all their stores are doing as well as the best performing store. Suppliers can benefit from consistent product availability, promotional and planogram compliance across the retailer’s network.

 

Improved operational visibility

No longer having a haphazard flow of numerous third-party agencies, in-house teams and members of the organised crowd – each implementing varying procedures and using different reporting tools in-store – can help to improve operational visibility, increase merchandisers’ accountability and measure the ROI on merchandising activities. Narrowing the number of service providers enables retailers to better track the time spent at each location and the effectiveness and efficiency of in-store execution activities.

 

Consolidating the number of merchandising teams coming in and out of Walmart stores makes it easier to also centralise and standardise the tools they use in-store. This enables far greater visibility and control over the effectiveness and ROI of merchandising activities for Walmart, suppliers and brokers alike. There is an opportunity to replace multiple siloed systems and field applications with one unified platform for a more collaborative approach to perfect store execution.

 

More time to dedicate to customers

What is more, with the approved brokers taking care of merchandising and in-store execution tasks such as modular resets and display installation, seasonal program execution, POS placements, stocking and availability – store associates can dedicate more time to customer-facing, value adding activities.

 

What about the challenges?

In the instance of Walmart, manufactures who have in-house merchandising teams can continue deploying them but will have to know and follow the retailer’s best practices guidelines and obtain certification and validation of the retailer's digital platform. This means that during the certification period, manufacturers might need to use the paid services of the approved providers. However, there is a long-term benefit of obtaining certification as it helps suppliers to ensure consistent product availability anddisplay compliance across all outlets.

 

What about the smaller, up and coming brands?

The centralisation of merchandising activities might also pose a challenge to smaller manufacturers who do not have an in-house team and have been using the services of smaller agencies. Would their presence on the retailer’s shelves still be profitable if they need to pay more to the approved service providers? One possible solution can be the chosen agencies to provide on-demand services to smaller suppliers.

 

These are some of the benefits and challenges of centralised merchandising operations. We are looking forward to observing the impact of Walmart’s new merchandising programme on the performance of its stores and suppliers and the response of other retailers.

 

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