Execution is Key to Effective Displays
Correct execution is the key to merchandising innovation, and retailers need to get on the same page with their CPG suppliers to make that happen.
That was the major takeaway from a webinar held Jan. 19 by Quri Inc. and produced by Retail Leader magazine. The webinar, “Unlocking $33.5 Billion in Promotion Planning Optimization,” featured James Lamberti, chief marketing officer of Quri, and Deepak Marsand, a former executive with PepsiCo and CVS Health.
Quri Inc. garners intelligence on in-store merchandising by paying shoppers to take pictures of displays and gather information on pricing and other metrics, using Quri’s phone app. It then analyzes this intelligence, along with sales and other data, to provide CPG suppliers with evaluations on how well displays of their products are performing in stores.
The webinar called execution “the major blind spot” for in-store merchandising, mostly because of a lack of reliable information. Retailers and their suppliers know what was planned and can easily find out what sold, but why it happened is too often unknown.
Marsand presented Nielsen statistics about retail displays: 43 percent of them lose money, and in 58 percent of them, the retailer fails to execute the display as planned. He claimed that a single percentage point of compliance improvement would increase sales across the retail industry by more than $3 billion.
Grocery is especially lagging in merchandising execution, according to Quri’s own research. Based on 1.2 million store visits over two years, Quri determined that among American CPG retail channels, grocery has the lowest display compliance rate, at 36 percent, followed by mass merchandisers (44 percent), club stores (47 percent), drugstores (50 percent) and dollar stores (59 percent). Individual stores vary widely in compliance rates, with one major grocer sporting a 72 percent rate and another major one coming in at 28 percent. Even with the latter one, compliance among its 10 banners ranged from 55 percent to 19 percent.
Lamberti also talked about the importance of measuring sales lift for in-store merchandising, noting that this metric may diverge from compliance—in other words, retailers may get good lift even if they don’t execute in-store merchandising the way suppliers want them to. Lamberti explained this as a function of complex displays getting more attention than a few pallets rolled out onto the floor of a mass merchandiser. “It makes sense that a more creative and engaging display will drive more incremental sales lift, but execution will suffer due to its complexity,” Lamberti says.
The takeaway for CPG suppliers is to concentrate most on the retailers who do an effective job of executing; work with the ones who either execute well but have poor sales lift, or get good lift but with suboptimal execution; and consider dropping the ones who execute poorly and get low sales lift. The unspoken corollary for retailers is to pay more attention to their suppliers’ plans for in-store promotions, and to be open to feedback from them.