One of our retail clients’ main complaints concerns the incompatibility between the planograms created by their visual merchandising teams and the in-store level of execution accuracy. At Yodiwo, we know that no matter how great a category management strategy is, the lack of execution compliance and a real-time feedback loop to ensure that necessary corrective actions are taken, will invariably lead to poor merchandising practices and lost revenue.
We have seen in practice that smart retail systems can be the answer to this critical problem. However, investing in a digital merchandising solution isn’t always straightforward. To best target the gap between merchandising intent and execution, one needs to first break down this complex problem into the different pain areas it consists of. In this article, we will help you identify them and provide actionable steps to resolve each one.
Problem 1: Lack of compliance transparency
Retail chains hire skilled merchandising teams for the development of space and category management strategies that increase the sales of their stores. Interacting with those experienced professionals, we have found that although they work hard to devise the best planogram for each store, they usually have limited visibility of how their instructions are being followed. More often than not, the effectiveness of their strategies comes down to the ability of each store’s personnel to correctly translate and execute the planograms they’re given. And as the in-store employees have varying levels of training and skills, the outcome is impossible to control and thus frequently poor.
To overcome the lack of transparency, a real-time monitoring process should be established. An intelligent retail platform provides a common digital space for storing each planogram and laying out all the actions required to have it properly implemented. Both in-store personnel and merchandising leaders can see the actual progress, so everyone involved knows what needs to be executed and whether it has fallen short of the headquarters’ intent.
Problem 2: Time-consuming and inefficient communication
The most common way of communication between the merchandising chain members is through e-mail. Traditionally, category managers will send out planograms and guidelines to the stores and hope that managers and local staff will follow them through. In need of clarifications, in-store personnel will most likely respond with even more e-mails as they try to describe the problems they’re facing when implementing the guidelines. Answers will arrive a few hours or days later and may not be sufficient, timely read, or properly acted upon. In the end, all this amounts to lost manhours, confusion, mistakes and reduced productivity.
Now, imagine a visual merchandising planogram uploaded to a virtual location, where all people involved can access the same information from their computers, tablets or even smartphones. Questions and answers can be recorded directly on the dedicated digital space under each project’s name, so that no information is ever lost again. Photos from the physical stores can be directly uploaded to the communication streams, to either raise more detailed queries or seek compliance approval for the completed tasks. Planograms can be reviewed at any given instance and all team members will be immediately informed of the suggested changes. Therefore, far less time will be spent on internal communication and more on optimizing the customer’s journey, while eliminating human errors and maximizing performance.
Problem 3: Inability to localize marketing strategies
Effective localization is what retail businesses are really after. It has been repeatedly proven that unless merchandising teams know a store’s exact physical dimensions, display layout, stock movement and target consumer audience, it’s impossible to optimize space planning and take full advantage of the local sales potential. Moreover, promotional activities aren’t carried out with confidence, as there is no indication of whether they’ll bring in the expected sales.
Modern merchandising software allows retail chains to create digital twin for each store. Detailed floorplans and space drawings can be stored on a cloud-based platform to enable a realistic overview and the development of tailored planograms. Intelligence on which product codes sell better, on customer demographics or on specific preferences can also help run targeted and more effective marketing campaigns. Inventory management can also be optimized, as the SKU levels will be decided based on the locally accumulated data. Moreover, in case of any changes in decoration or space layout, the visual store files may be updated, so that the merchandisers can take this new information under consideration and change their suggestions accordingly.
Problem 4: Limited retail process insights
Retail stores don’t usually collect data in a systematic way. And even when they do, different data isn’t correlated to provide deeper insights on how disparate factors can affect consumer behavior, inventory management or the success of specific promotional activities. Failing to utilize such readily available knowledge entails missed sales opportunities.
To reverse the consequences of this short-sighted approach, smart, cloud-based retail platforms enable the collection and storage of all valuable information. By leveraging the use of smart devices, such as e-labels, the headquarters can obtain a holistic view of the merchandising process. This data can be further processed by embedded artificial intelligence tools to provide store-specific and consumer-specific analytics, and produce successful patterns for future use. The results of this analysis can be exported in different formats (i.e. sales floor heatmaps, flow charts or customized reporting spreadsheets) and fed back to the merchandising teams, to develop wiser and more effective category management strategies. Moreover, it allows for identification of individual store best practices and their roll-out to multiple locations.
Problem 5: Low level of employee engagement
No matter how strong most of the merchandising chain is, big teams are bound to have weaker links. At the end of the day, any plan is evaluated by how successful its implementation has been. The people executing the planograms, the in-store managers and employees, are therefore catalysts to their success. If not properly communicated to or understood by these employees, even the most promising marketing strategies can fail or never reach their full potential.
Another advantage of visual merchandising planograms is that they enable task allocation to specific people, real-time progress and task completion monitoring, as well as the recording of any underperforming behavior. Therefore, employees are encouraged to take ownership of their assigned tasks and are more likely to perform better. If, however, they fall short of expectations, the management will have available all the necessary compliance metrics to decide on the appropriate corrective actions, either providing more training or re-allocating the planogram execution tasks to more responsible members of staff. This higher level of accountability will also help the retail brands to individuate their over-achieving employees and reward them accordingly.
Over the years, we have verified that all our customers who implemented a smart space and category management solution have quickly reaped the benefits from their investment. By meticulously studying the existing conditions and their processes shortcomings, we helped them tackle each pain area and improve both compliance metrics and revenue related KPIs.
If you also want to find out how you can use easily deploy smart technologies to drastically improve the performance of your retail merchandising streams and increase your physical store sales, please go ahead and book your 30-minute free consultation call with one of Yodiwo’s smart retail experts.