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Merchandising Audits: You Can’t Fix What You Can’t See

Posted by Ryan Kelly on 5/28/15 8:23 AM
Ryan Kelly

You work hard to craft every message sent to your customers’ email inboxes, mobile phones, and social media accounts, cultivating a personal digital relationship. You design beautifully functional products that are a pleasure to use, but what happens when perfectly primed customers and artfully crafted products make their way into an aisle owned by a retail partner, with competitors jockeying for in-aisle position? Understanding and influencing the presence, condition, and environment of your products in-store should always be a goal, but how do you get there? In my time at TrendSource, many clients have come to us with just that question, and we’ve worked to design an integrated audit program to measure the effects of:

  • Product Display — dedicated display space is a key part of capturing the sale in-aisle. If competitive products are displayed next to, or even between your products, the chance of brand-switching increases.
  • Competitor Influence — advertisements for competitive products pose additional challenges for holding your customers attention to your product. Again, brand-switching is the risk.
  • Product Stock Levels — understanding stock level patterns helps establish a baseline for assessing revenue lost to stocking issues and developing a stock management strategy.

Using Merchandise Audits to Affect Change There is no one-size-fits-all research program, and merchandising audits, while simpler in design, are no different. We worked closely with our client to design a program that gave them the information needed to work with their retail partners following a three step process:

  1. Notifying of Audits – The first layer of any effective performance management system is communication of objectives and goals. The manufacturer took this step prior to beginning audits, to ensure that they could continue on with a positive working relationship with their retail partners.
  2. Sharing of Results – Unfortunately, understanding a problem isn’t enough. Once the data comes in, working closely with retail partners to affect positive change requires close collaboration and sharing of information on both sides.
  3. Goal-setting – Setting realistic goals for any performance measurement program is key. If you’re not sure how to define goals, a good starting point is the SMART Goals system, created by Peter Drucker of The Drucker Institute.

Round one of the client’s merchandising audits showed a surprising 37% of retailers intermixed client’s products with those of a direct competitor. Subsequent rounds showed this number decreasing and settling at 9%, just surpassing retail partner goals after two rounds of audits. TrendSource Auditors found competitive signage within the client’s planogram at 7% of retail outlets visited in round one. The client was able to work with their retail partners to get this number down to 1% after two rounds of audits. One year after the initial launch of the program, the majority of the client’s retail partners reached the goals outlined by the program and the client recognized the value of maintaining an on-going quarterly program to keep their finger on the pulse of their customers’ in-store perceptions. Beyond Audits: What’s Next? Managing a complex supply chain requires more than quarterly audits, and are influenced by myriad factors with variant control points. Affecting change on a scale of this magnitude requires effective management alongside excellent leadership.

 

Merchandising Audits

Topics: Market Research, Featured, Retail

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