Where Retail meets Tech

July 19, 2019

How to build a perfect store in retail: 5 steps to drive sales growth

Written by Cécile Garrett

Shoppers either walk into a store with the intention of buying something specific or just stroll around to pass the time and maybe find a nice opportunity -whether it’s food, games, furniture, etc. If they end up purchasing their childhood's all-time favorite chocolate tablet for example, they walk out with a smile on their face. As if fate had reunited them or something!

If you are a retailer or an FMCG company, you know that it has very little to do with fate. Rather, it is the result of meticulous and complex analyses of consumer insights, shopper behaviors, shelf merchandising, and retail sales data, which enabled you to create the perfect in-store conditions for that type of shopper to find and buy this chocolate.

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Manufacturers play a crucial role in making the proper suggestions to retailers to achieve the perfect store arrangements.

How do they manage to figure out the best shopper experiences for their brands and translate them into feasible win-win recommendations to their clients? By designing and implementing effective perfect store strategies.

 

What is a perfect store?

A perfect store is a store with the best-in-class shopper experience, a store which shoppers can easily navigate to find the products they want at the right place at competitive prices, and where those products are displayed in the most convenient and attractive way. The ultimate goal of a perfect store is to create an enhanced shopping experience that:

  • helps shoppers find what they were looking for right away,
  • and triggers impulse purchases where shoppers leave the store with something they had not necessarily planned to buy.

How do CG manufacturers manage to build the best perfect store strategy for retailers? By turning the shopper insights that they collect into clear in-store execution guidelines to implement at the shelf level.

When putting together the strategy behind those guidelines, they may consider the following: 

  • The 6 P's of Marketing: product, price, pack, promotion, place, and proposition can be used as strategic anchors to build the perfect in-store conditions to the right channels and markets.
  • Shelf visibility: ensuring proper visibility on the shelf is a must. A product that a shopper cannot see is one that cannot be purchased; it can result in shoppers choosing competing products or giving up on the entire category, thereby impacting sellout.
  • Actionable and measurable channel plans: being able to easily implement the right planograms in the right locations is essential for manufacturers to maximize their opportunity to become retailers' preferred partners and drive sales growth. So is measuring their perfect stores’ impact on business activities to optimize their strategy and reach sales targets.

Getting those elements right necessitates the full attention of several departments. In most cases, the trade/customer marketing and sales operations teams oversee the design and implementation of the most efficient perfect store strategy.

PlanoCheck : Collect shelf data in real time and realize the Perfect Store

                                                                                                                  

How do you build the best perfect store strategy?

·       Step #1: Know your shoppers from the inside-out

A purchasing act is rarely based on a mindless decision. It might seem like it is –especially when you get home and realize you already have 4 chocolate tablets lined up in your cupboard - but it’s not. FMCG companies and retailers invest a substantial amount of time and money in getting to understand shoppers and influence their decisions throughout the path to purchase - the journey that leads a shopper to buy a specific product. What triggered that decision? Why did he/she decide to go for this chocolate tablet rather than that one? How did he/she end up purchasing a chocolate tablet when he/she originally walked into the store looking for pasta? 

An extensive understanding of the path to purchase allows shopper marketers to best impact each decision in favor of the brands they support. Even more, it helps them identify their most valuable shopper targets and the most effective ways to reach out to them.

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Quantitative and qualitative research leveraging a variety of data sources, from shelf or e-POS data to data drawn from shopper panels and third parties, will provide FMCG brands with powerful insights into shoppers behaviors inside the store, their traffic flow, basket size and composition, adjacencies, as well as why and how they are attracted to specific products in specific channels.

That is what will help CG firms design the best recommendations to their clients and implement the perfect store in strategic outlets. Most FMCG companies have access to these data; many collect in-store product performance metrics from third-party auditors, and nearly 90 percent get data directly from retailers, according to an IDC Manufacturing Insights report (CGT, 2013). But it is through the combination and consistent collection of various data sources that manufacturers will develop a deep understanding of shoppers and recommend perfect in-store experiences for retailers to implement. Crossing and analyzing these data will help them determine which prices are expected, where products should be located in the store and at the shelf, how they should be displayed, what type/amount of communication they should receive, etc.

 

·       Step #2: UsE the 6 P’s as strategic anchors

marketing-how-to-build-a-perfect-store-in-retail-1Why are brands more successful than others? It takes understanding all the aspects of the retail value chain, but winners realize that ultimately, shelf is the most important “battlefield”. Think of it like a funnel: from their extensive research, FMCG manufacturers know how to win shoppers' hearts and minds and can therefore grasp the rules of their product category. Thanks to that knowledge, they can easily identify their sales drivers and design their picture of success - their ideal shelf - to optimize in-store performance. Some industry majors do so by drawing upon their analyses to slightly adapt the 6 P’s of Marketing according to shoppers’ needs and behaviors in-stores to increase sellout.

 

  • Product:

Assortment must be adequate, but not just so. FMCG firms must consider performance versus competition to measure how well products are doing in-store and how appealing they are to the main shopper targets. Selecting the right product for the right channel is also important. Not every retail channel sees the same types of shoppers coming through their front door. Knowing which persona visits which type of store is essential for CG brands to select the right products to display on the shelves in order to optimize consumer satisfaction and increase basket size.

  • Place:

Consumers are used to see certain items in certain markets, placed in certain locations in the store. They usually know where their favorite deodorant or their favorite cherry-flavored yogurts are. These areas in the store are called Destination Zones. When shoppers visit such a zone, they know that this is where deodorants are usually displayed. FMCG companies also want to create opportunities for shoppers to add some unplanned items to their basket or discover newcomers -let’s say the same deodorant but for sensitive skin or the new strawberry-flavored yogurts. These areas in the store are called Impulse Zones.

In-store placement is key for visualization and purchase consideration. Floor plan, aisle placement, primary shelves, or secondary placements such as gondolas or specific displays are all meticulously taken into consideration by retailers and CG firms to ensure that all products effectively attract the right consumers at the right time. Answers to questions such as “Shall this new laundry detergent be displayed at the entrance of the store on top of being in its usual section? Shall it be displayed in the aisle dedicated to items on promotion -with a discount coupon?” must be fact-based and determined to enhance the shopping experience and maximize sales.   

The same goes for shelf placement. Knowing whether a product should be placed at eye-level or not, next to a specific segment, close to competing products, or next to new assortments and why are all aspects that manufacturers should be able to explain to retailers in their merchandising recommendation. Addressing these questions is also part of the rationale behind the best perfect store strategies. That means merchandising teams should have in mind both the broad picture of the product performance AND a more narrowed and segmented one specific to stores and locations. This is how FMCG firms will successfully attract and convert the right shoppers.

  • Price:

Because it all comes down to how much a shopper is willing to pay for a specific product, pricing dynamics are essential to achieve and implement the perfect store. On top of that, certain products are also subject to pricing restrictions in some markets, and some retailers may not be willing to go above a certain price for a product.

So, what makes one product worth more than another? How sensitive is the market to price? Is the brand gaining or losing share at the current price level? Is the brand profitable versus internal objectives and external benchmarks?

Choosing the right price to meet CG firms’ overall company objectives is a difficult task, but it enables them to handle the value perceptions of their brand to attract and win over more shoppers while maximizing sales margins. There are multiple research methodologies that quantify the impact of price changes on volume and revenue. A perfect store strategy is one that leverages the depth of the portfolio to offer multiple price points that are catering to all key shopper targets.

  • Packaging:

Even the greatest products in the world won't sell if their packaging is not optimized to help shoppers navigate the shelf more easily. In Perfect Store, leading FMCG companies select packaging according to shoppers’ purchase intentions and agree on the right size of SKUs by considering specific retail environments and channels. Packaging designs should be clearly visible on the shelf and use color combinations and fonts that make products stand out from the clutter.

  • Promotion:

How can promotion incrementally induce or accelerate sales? Any discount, value added promotion, coupon, special offer (such as 50% on second identical product purchased) can strongly support sellout, if well targeted. Effective promotions can encourage new users to try a product for the first time, reward existing users, increase pantry stocking or trigger impulse purchases, boosting the sales of a whole category. The ones that drive total category growth are usually the ones retailers prefer.

  • Proposition:

A new product that does not come up with a strong proposition might just end up confusing shoppers. As they build perfect stores, FMCG companies must communicate the value of their products to shoppers as effectively as possible. Ensuring a strong proposition by appealing to shoppers’ emotions or by educating them on the intrinsic benefits of a product can make the difference between a top and a delisted SKU. Manufacturers must make sure that their proposition efforts focus on star SKUs, as they will help build a stronger relationship with shoppers and increase consumer loyalty towards their brands. That should directly impact the way shoppers interact with CG firms’ products at the point of sale. That is why FMCG companies that win at the shelf include proposition in their overall POS execution guidelines and adapt it to certain categories or channels. A key driver in a successful perfect store strategy is to direct the communication in-store towards the shopper and not the consumer, if they happen to be different. A product targeting kids as the consumer might be purchased in-store by the mother.

 

·       Step #3: Clear picture of success to implement a perfect store

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In most cases, FMCG companies determine their picture of success by laying out a set of best practices and rules per retail channel, such as: 

  • Bestsellers or SKUs growing popular must be placed at arm or eye level.
  • Similar products of the same brands must be regrouped into blocks to visually impact shoppers at the shelf.
  • Product complementarity should be leveraged in high flow locations to build adjacencies and trigger impulse purchases to maximize sellout opportunities.
  • Promotions should be visible on the shelves or on secondary displays only.
  • Packs size should be bigger in discount stores to offer best value for money.
  • Price should remain on target in all channels with minor fluctuations in remote areas, for instance.
  • Analytics combining e-pos data with product characteristics should be used to build on category growth opportunities and optimize sales.

Once CG companies have a clear vision of their picture of success, they can share it with their teams to adapt and execute it in every strategic channel.

 

·       Step #4: SharE the perfect store strategy AND make it every collaborator’s business

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This step is crucial to the success of every perfect store strategy. To properly implement their perfect store, FMCG firms must share their vision in a clear, attractive way with easy-to-execute instructions for every department – namely, the merchandising, customer marketing, sales operations, and field sales teams.

Achieving the perfect store necessitates complete alignment among all poles of expertise. All must work towards delivering the same picture of success, from translating the perfect store vision into format- or store-specific planograms to executing and monitoring in-store performance. That is why winning CG manufacturers provide clear and detailed directions at every stage of the perfect store process, for every category, store, or channel type.

As a result, they can have close to 20 different guidelines according to the level of personalization and monitoring some perfect stores require. More and more, new job positions emerge to coordinate this activity. Perfect store or retail execution excellence manager roles are on the rise in the retail sector as CG firms track the implementation of their picture of success and aim at closing any retail execution gaps.

 

·       Step #5: Align KPIs and reporting metrics

The perfect store enables FMCG firms to reinforce their position with retailers, track in-store performance, and incentivize sales reps in a meaningful way by shifting their focus back on adding customer value rather than on sales volume. Thanks to their perfect store strategy, FMCG companies give field reps a concrete and measurable opportunity to manage and deliver best-in-class execution, as well as quickly identify and sort out any possible hiccups.

But this can only be truly valuable to CG firms if the measurement process is standardized and scalable across the entire organization. You cannot manage what you cannot measure consistently. For instance, if two markets have different ways of gauging their share of shelf, it might jeopardize central teams’ analyses. Therefore, it is essential to measure KPIs according to the same method in order to track and report the same metrics across the entire organization.

 

How do you execute and monitor your perfect store strategy?

When it comes to executing and monitoring a perfect store strategy, standardization and consistency are essential. Successful FMCG companies have a system in place to ensure a pristine execution and maximize opportunities in-store. New technologies have made this process much more practical and precise by allowing FMCG firms to instantly track and digitally measure shelf implementation and compliance. Forward thinking companies now provide their field forces with advanced retail execution tools such as sales force automation or image recognition, for example.

By empowering sales reps with best-in-class technologies, manufacturers ensure that field forces are guided in every step of the perfect store execution process - before, during, and after each store visit. Instead of using Excel spreadsheets to produce scorecards that review and measure performance, field sales teams can directly track retail execution progress on mobile and web applications.

For example, the best image recognition solutions in the market give sales reps (and their managers) instant visibility over their stores’ planogram compliance level. They highlight the outlets reps must visit before the end of the period and help them optimize their visit schedule by locating the nearest stores in their area. In store, field reps only need to take pictures of shelves with their smartphone or tablet to perform their store check and receive detailed KPI reports comparing shelf reality with perfect store requirements. Such technologies, which provide over 98 percent accuracy - 15 to 40 percentage points above manual measurements’ accuracy level, enable reps to fix planogram compliance gaps within minutes and guarantee the continuity of the perfect store.

PlanoCheck : Collect shelf data in real time and realize the Perfect Store

 

Keep on iterating in a perfect store world

As shoppers needs evolve and as new competitors enter the market, merchandising, customer marketing, and sales operations teams must constantly refine their perfect store strategy based on in-store successes and failures. Bain & Company notes that this strategy can grow FMCG sales by 5 to 15 percent annually. Knowing what works in each channel helps the best companies stay ahead of the game and determine new products’ most efficient in-store activation before they are even launched.

“Product portfolio is based on space availability, merchandising plans on placement feasibility. Promotional plans and new SKU listings are tied to top customers’ commercial calendars, with above-the-line and below-the-line investments in sync. Not only does this help a company focus on what can succeed in a particular store, but it also has the benefit of streamlining the organization to what matters most.” (Bain & Company, 2014)

By instilling a perfect store mindset and supporting teams with appropriate tools and processes, CG manufacturers can use the perfect store as a strategic weapon to win the retail war.

 

Are you ready to execute the perfect store? Contact us now by visiting www.planorama.com or by clicking below:

PlanoCheck : Collect self data in real time and realize the Perfect Store


Topics: retail execution