Sep 12

5 Obstacles to Success in Retail Execution

Properly planned and implemented retail execution and marketing is crucial for a product’s success. We can probably all agree on that.

(If you are not that convinced yet, you might want to check out this article.)

Even though thoroughly planning any in-store presentation is critical, it is of course not enough. What really counts is the final execution of the plan.

Considering the fact that companies tend to spend fortunes on retail marketing and execution, it is quite surprising that about two thirds of promotional campaigns in-store do not break even for them.

How is that possible?

Certain obstacles to really being successful with one’s retail execution just come up over and over again. In this post, we want to provide an overview of the most common ones. It is supposed to raise awareness on the most important aspects and help companies prevent encountering them as well.

 1. Wrongly or Not at All Set Up Promotions/Displays

Consumer good companies spend a considerable amount of time planning promotions and in-store presentation of their products. With this in mind, it is even more shocking that 90% of companies report that their strategies are not executed as planned.

In some cases, this means that the marketing material is set up but not the way it was intended to. This might lead to messy shelves and a bad impression of the product in general, decreasing sales instead of increasing them.

The situation gets even worse if a promotional display or other marketing material is not set up at all. It is not uncommon for a company to send their material to a store with instructions and have the local staff implement their plan. However, due to the constant change of products and promotional material for them, retail stores sometimes fail to set everything up on time or, as mentioned above, do set it up but incorrectly.

As a result, a lot of money is spent on campaigns that don’t break even for companies. This, in turn, may lead managers to think that retail execution in general is a waste of time. This is, however, not the case. A company which really wants to benefit from retail execution just has to make sure that it is done properly. That includes verifying the presentation of their products in the stores and making adaptations if necessary.

2. Replenishment of Shelves Not on Time (Even If Product Is Still in Stock)

Empty shelves and unavailability of products are further major obstacles to success in retail execution. However, an empty shelf doesn’t always have to mean that the store is really out of the product in question.

It happens rather frequently that staff fails to restock shelf space once it is nearly or even completely empty, even when there would still be some supplies in the storage room. This can be particularly problematic as, in some cases, this may not only mean lost purchases at that moment. When a customer can’t find a desired product in a store it makes them lose trust in this particular store or even the brand in question and hurts their loyalty. Especially when this situation occurs more than once, chances are that they might not come back for future shopping trips or switch to another brand which manages to always have its products available.

So, since nobody wants to lose customers and with them revenues, it is important to make sure that shelves are always filled with the right products and avoid Out of Stock situations as much as possible. Retailers should, therefore, be equipped with a well-established system for planning and monitoring. Additionally, brands should try and get information on their products’ performance from retailers to make sure their products are on the shelves at any time.

3. Limited Possibilities for Verifying Compliance

As mentioned in obstacle number one, companies which really want to benefit from retail execution have to make sure that it is done properly. That is, however, often easier said than done. In many cases, companies sell their products in various stores. They might even have varying promotional campaigns or agreed on planograms in these different stores.

Keeping track of every single placement can, therefore, be a tedious process. Even a well-established field force would need a lot of time to visit every store and verify compliance. As a result, potential mistakes or shortcomings will not be recognized for a rather long period of time. This, in turn, leads to a decreasing impact of the promotional campaign and lower sales figures than the ones expected. The same is true for wrongly executed planograms.

The situation is even worse for those companies which can’t employ their own field service; for instance, because they aren’t big enough yet or don’t have a budget for it. Checking how their product is presented in stores is almost impossible for them. Potential errors thus remain undetected and no countermeasures can be taken. These companies should look out for alternatives to have their products checked and make sure their strategies are executed as planned.

4. Lack of Data Concerning Promotion Effectiveness

In business, we’ve probably all heard it before: “If you can’t measure it, you can’t manage it.” This means that you should always have sufficient, reliable data about any aspect in your company. Naturally, that also entails knowing how your products are presented in-store and how they perform with regards to sales volume. Even more so, when you spend money on special promotions or a particular space on the shelves for your product to become more visible.

However, communication between retailers and brands is often insufficient. Partly this is due to the fact that retailers usually have to deal with a rather large number of different brands. Sharing data with every single one concerning their products and keeping everyone up to date would, therefore, require a lot of time and huge effort from retailers.

As a consequence, about 60% of companies don’t have access to data they would need to properly analyze the effectiveness and performance of their promotions, planograms, product placements, etc. This, in turn, means that many companies have little to no idea whether their in-store marketing efforts really contribute to success.

Some kind of integrated system connecting retailers and the responsible employees at the brand companies would be necessary to solve this problem. Such a system would provide all available data to everyone and thus improve communication between the different parties. Yet, it is still to be developed.

5. No New Ideas/Resistance To Change

One final obstacle to success in retail execution (at least in this post) is that hardly any company nowadays comes up with new ideas.

How many promotions in-store do really catch your eye and how many are you just passing because you’ve seen them so many times that it is nothing special anymore? New and unusual displays or in-store advertisements create a lot more attention than the ones we always see. So, there should be a lot more innovative and unique ideas when it comes to retail execution. Still, they seem to be rather rare up until now.

This may be due to the fact that especially larger companies frequently face the problem of resistance to change. Employees who have worked at the same company for several decades and have followed the same processes for that long are often hard to convince of new ways.

In these cases, it often has to be fought hard for changes to retail execution, such as new designs for promotional displays or modifications to a product’s packaging to make it more visible.

This resistance to change also relates to obstacle number four: The implementation of a new system usually means having to become familiar with new technologies and sometimes also to get used to new procedures of work.

In order to stand out and be different from the mass of products available, however, trying out new ways can often be the answer.

Conclusion

A well-planned and thoroughly executed strategy for retail execution is crucial and can help companies to considerably boost their sales and thus revenues. This is pretty much common knowledge amongst consumer goods companies, which is why each of them has – at one point or another – developed strategies for product placements and promotions.

The implementation of those strategies, however, does not always work as intended leading to the exact opposite of what the companies expected – a decrease in sales. Why is that so?

There are a number of obstacles companies have to face and overcome in order to be really successful with retail execution. This article identifies the five most prominent reasons for companies to struggle in achieving their defined goals. To sum up those are: failure to set up displays or promotions (correctly), empty shelves even when the product would still be available in the storage room, limited possibility for consumer goods companies to verify compliance with as well as lacking access to data concerning the effectiveness of their set strategies, and last but not least the failure to come up with new ideas and resistance to change especially in long-established companies.

These obstacles don’t mean, however, that no company can ever be successful in retail execution. Also, one bad experience should not keep a company from trying again. There are numerous different ways for companies to conquer those obstacles; all they have to do is decide which one is the best one for them. 

Let us show you, how we can help you boost your retail execution!

Sources:

http://voloforce.com/4-major-problems-executing-retail-marketing/

https://www.repsly.com/blog/consumer-goods/why-retail-execution-is-difficult-and-how-you-can-improve

http://globalscorecard.gs1.org/gsclive/download/cprods_one_of_the_oldest_challenges_is_the_new_opportunity.pdf

http://poinstitute.com/wp-content/uploads/2017/03/POI2016-2017StateofTPxandRetailExecutionReportFinal.pdf