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Growing sales with ‘perfect instore execution’

Growing sales with ‘perfect instore execution’
Wednesday November 20 2013

Retailers can improve sales, supply chain operations and customer loyalty by investing more in PoS data technology platforms according to retail strategist Rod Street

Shoppers are still being left dissatisfied because granular retail point of sale (PoS) data is not being analysed effectively and the results integrated into retailers’ standard working practices and business intelligence systems, a recent viewpoint entitled Perfect InStore Execution from retail analysis provider IRI reveals.
 
Rod Street, strategic consultant with IRI, said this lack of granular analysis is one of the reasons why only 4% of grocery trips are executed flawlessly. That is, where a shopper can find the products they want, in the right place, the pack size they desire and with any promotions they can benefit from obvious and clear. 

“This results in less profitable customer experiences, sluggish sales growth for retailers across Europe and continued pressure on margins,” he said, adding that these are important losses when fast-moving consumer goods (FMCG) volume sales growth rate through Europe is just 0.1% according to IRI’s white paper, Pricing and Promotion in Europe.

Relying more on point-of-sale data

“Without a stronger move to PoS data-led processes suppliers and retailers will continue to face higher inventory holding costs and the expense of store staff having to spend time guiding customers around the aisles,” Street added.
  
“Leading retailers are tackling the problem. Tesco’s recent roll out of Tesco Connect and advanced analytics to better predict promotions uplifts store by store have resulted in inventory savings of over £50 million in its depots and 20% fewer lost sales in grocery,” he continued. “Elsewhere retailers as diverse as Delhaize in Belgium and Carrefour have all geared up to share retail PoS data to reduce the dependence on manual checks.”

The leading retailers and manufacturers receive daily and weekly analytical reports so they do not have to spend hours mining their own huge volumes of data. They are using PoS data technology and business insights to optimise their decision making process.

Street explained: “These reports highlight, for example, which are the stores in a chain losing the most money because of poor stock availability, or indicate where promotions are not working to their full potential so action can be taken quickly.

“Such PoS data driven insight also enables more targeted promotions because stores can be confident an offer will be visible in store and that enough stock will be available.”

These technology platforms can also help reduce food waste. Official government figures reveal that the average UK family is wasting nearly £60 a month by throwing away almost an entire meal a day.  “Tesco is already reducing its multi-buy items and other promotions after revealing that 35% of its bagged salad was being thrown out and along with the other big UK grocers has committed to further reducing household food waste by 5% by 2015 under its commitment to its Waste & Resources Action Plan,” he added.

Monitoring supply chain demand 

“PoS data is a vital aid to monitoring demand levels, highlighting where products are stuck in the supply chain and improving the flow of items to the shopper. Fresh and chilled food items with their short shelf life quickly become waste items if they stick en-route.”

One barrier to the more effective use of PoS data has been the reluctance by some retailers to release data quickly enough – or at all – according to Street, blaming competitive sensitivity within specific categories or a lack of resources. 

“Yet only when PoS data is integrated speedily with other business intelligence and big data can the findings be acted upon effectively and swiftly to improve the shopper experience and subsequently sales, margins and loyalty. Any delay makes it harder to act efficiently to replenish stocks or to boost local store compliance around a short-term brand promotion.”

He added that Proctor & Gamble, whose brands include Olay, Ariel and Pampers, works on the premise that shoppers decide what to buy within three to seven seconds – basically the length of time it takes them to notice something on the shelf: “The company calls this ‘the first moment of truth’ and it is a vital marketing opportunity that retailers and brands will miss if products are not on the shelves.”

While retailers often argue that it is impossible to eliminate out of stocks completely, Street said it is certainly possible, however, that the use of better data and analysis using PoS technology platforms will push up the woeful 4% perfect shopping execution figure. 

“This huge 96% opportunity is extremely relevant considering the fragile condition of the European grocery market, where value is too often being driven by price increases alone,” he concluded.

Tagged as: Store | sales | data | analysis | analytics | EPoS | processes | demand | supply chain | stock | availability | waste | IRI