RETAIL MERCHANDISING – THE DEFINITIVE GUIDE
WHO IS THIS GUIDE FOR?
This ultimate guide to retail merchandising is for multi-unit retailers in industries such as pharmacies, spas, clinics, telecommunications, furniture, thrift, and quick-service/fast-casual restaurants. This guide also helps manufacturers or distributors of consumer packaged goods.
In retail, “merchandising” applies to a wide range of organizational activities: product design, display design, product stocking, store design, packaging, pricing, and deciding which products to present to which. customers during a particular season. All of these activities come together to drive store sales and generate revenue.
If your merchandising program needs an upgrade, or you need to run or validate merchandising across stores/geographical locations, this ultimate guide to retail merchandising is for you!
THE IMPORTANCE OF MERCHANDISING EXECUTION
Marketing is a key revenue driver, which is why organizations allocate between10-24%of their total budgets for marketing and merchandising. When done right, merchandising is worth investing in.
Strong merchandising execution can increase same-store sales by3.7% . Properly executed promotional displays can register as much as a193%increase in sales! Still, in-store merchandising execution remains critical for retailers of all sizes.
When surveyed, only 4% 49% 60% 25 %of retailers believe that merchandising activities are implemented correctly in all stores. Ninety percent of consumer goods companies report frustration with promotion fulfillment, all planned retail displays are missing, and the displays that are erected, are executed incorrectly. This affects the bottom line: companies lose as much as their promotional revenue to one failed execution.
HOW TO IMPROVE IN-STORE MERCHANDISING EXECUTION
Success in retail comes down to execution. Execution is improved when a retailer implements a clearly communicated merchandising plan and then measures the results.
“The retailer who formulates a compliance plan, enables it with the right solutions, and relentlessly measures its outcome will always achieve better performance from in-store programs.” –James Tenser, VSN Director of Strategy
FORMULATE AND DISTRIBUTE A RETAIL MARKETING PLAN.
A solid plan helps you define the marketing project, and its scope, set goals, and stay focused. Retail training expert Bob Phillips recommends including the following in any merchandising plan:
- The overall plan for how traffic moves through the store.
- Department rotation plan for seasonal campaigns
- Budgets for accessories, lighting, signage and accessories.
- Merchandise planning system to help maximize turn and minimize markdowns
- Predictive analytics to determine the variety of products available to customers
Distribute planograms to clearly communicate where and how products should be displayed. Please make sure there is enough time to ship the product and display accessories. Analyze traffic flow and place displays where they will have maximum impact. Keep an eye out for dead spots so you can correct out-of-supply areas. Lastly, make sure stores have a contact and follow-up form to ask questions and report any problems.
Once your plan is in place, make sure stores are aware of it. Remember, poor communication results in poor execution. Lack of communication is the leading cause of retail program failures.twenty%
USE THE RIGHT TOOLS
Too many communication tools can cause confusion; Your employees need to know where to go for essential marketing resource files, planograms, tasks, and feedback. While your processes should still include email and phone communication, your communication should not be limited by them. Streamline your communication process.
Make a list of communication essentials, for example, a content management system to eliminate physical paperwork and store merchandising best practice planograms and photos, task management software to assign and track promotion completion, Instant Messaging to quick communication, merchandising on the KPI board so everyone is on the same page and focused on the same goals. There are numerous ready-to-use software solutions built for retailer communication and collaboration (most with a free trial).
Once stores know your merchandising plans, the best way to ensure compliance is to institute a merchandising audit program. Performing regular merchandising audits helps maintain company standards, improve operations, and drive sales. What Is Product Marketing?
CREATE A MARKETING AUDIT PROGRAM
Merchandise audits, also called Store Walks or Store Visits, drive greater compliance with brand standards at the store level. They increase sales and profit margins, increase customer satisfaction, and reduce business risks. Audits are a way to inspect what you expect.
The core of any successful audit program is a checklist that covers the key areas of compliance. Here are some best practices to consider when creating a marketing audit checklist and running a marketing audit program.
HOW TO CREATE A MERCHANDISING AUDIT CHECKLIST
You can use a number of available programs, such as Excel, to write your marketing checklist. However, a smart checklist can save a lot of time in setup, follow-up, and the actual walk through the store, as well as help eliminate clerical errors.
Smart Checklists are form-based and can have bullet points, best practice images, attachments, conditional items, critical items, and action plan recommendations. Smart checklists allow you to verify trading standards, and track, assign, and resolve gaps. Here are 10 steps to build a Marketing Audit Checklist:
1. THINK CHECKLIST METADATA
Metadata is data about the store visit. Clients using Excel-based forms typically expect user-entered fields such as store number, completed by, date, etc.
Metadata is largely automated/preloaded with retail audit software. The auditor information is derived from the login, and the store pick list is created specifically for each user and is based on the user’s current GPS location and the selected date.
2. GROUP ELEMENTS INTO SECTIONS AND ORDER THE SECTIONS ACCORDING TO THE NATURAL FLOW OF THE VISIT
Whenever possible, sections should be designed to match the natural flow of a visit (a merchant physically walking through the store). Start with the exterior (exterior signage and windows, if applicable) and work your way in, around the aisles and to the back of the store. While you can jump between sections during or after the visit, configuring the form according to the natural flow of a visit saves time and is more intuitive.
3. THINK OF “NOT APPLICABLE” SECTIONS/ELEMENTS
Certain sections or items (questions) may not be applicable to all locations. For example, the “Floor Displays” section may not apply to a small store format located in a city center. Similarly, certain promotional signs may not apply to all retail banners in a merchant’s territory.
Retail audit software allows you to disable sections and entire items in certain stores based on the type of store or banner. Doing this saves time and time again, it’s more intuitive. It also means that the head office can create a checklist for all locations.
For paper checklists, you may want to provide a NA option with a comments section for the most complete information.
4. ENSURE ADEQUATE COVERAGE
While the individual situation will vary, you should address some or all of the following areas, each represented as a section (for more details, see below or check out our Marketing Checklist):
- exterior store and signage
- Store layout and sales floor: aisles, products, displays, access points, fixtures, POS counters, and gondolas
- Shelves: stocked, planograms, prices, signage
- Store promotions: signage, displays, litter bins
- Personnel: training, customer service, product knowledge
5. AVOID LARGE SECTIONS
Instead of creating a small number of large sections, consider creating a larger number of small sections. This helps with data entry on smartphones and also makes reports more granular and meaningful.
For paper checklists, this allows you to easily flip from page to page to access the appropriate section and add up your final scores.
6. ASSIGN POINTS ACCORDING TO IMPORTANCE
While it’s easy to think that everything is important, some items are often more important than others, even critical to the continued success of the business. Seasonal merchandising and CPG-paid bulk floor showings to come to mind.
Assign points, and if you are using software, make use of a “Critical” flag accordingly. A “Critical” item sets the value of the entire section to zero, regardless of other items, if it is found to be in non-compliance during the visit. With software, you don’t need to worry about keeping track of your total score. Scores are automatically calculated including the visit score and a section score as the visit is made.
You can also assign labels to items within your checklist. Examples of tags might be “customer service” or “cleanliness.” At the end of the visit, you’ll also receive individual scores for these tags to help you identify other areas that might need improvement.
7. BE SPECIFIC, DESCRIPTIVE, AND VISUAL.
Marketing rules must be clear and unambiguous. Avoid vague words like “recent” or “good.” For example, instead of saying “Recently ordered item,” consider using “Ordered item less than 2 calendar days ago.” If you are referring to the number of product coatings or elapsed times, please provide the actual numbers.
Clearly explain what the standard is. If a paragraph is needed to define the standard, use a paragraph. Attach a best practice photo to an article to illustrate the standard;40% 400% !of people respond better to visual information, and visual information can increase comprehension by up toIncluding illustrations of best practices in your marketing audit is one of the best ways to boost your standards.
8. THINK ABOUT THE FREQUENCY OF AUDITS
The frequency of merchant store visits (at least visits involving the merchandising checklist) will vary from organization to organization. At one end of the spectrum, some organizations conduct up to one visit per week. Other organizations may only conduct one visit per quarter. Some organizations use a hybrid model. They use a standard form to capture their basic marketing standards (for example, twice a year) and create a series of smaller forms for visits throughout the year, sometimes tying these visits to seasonal programs.
Retail audit software allows an organization to create any number of checklists, which means stores can also self-audit. Mandatory photo capture and visit attachments can ensure that the head office has a real-time window into store merchandising initiatives without the need to travel. Amazon sellers care