Solving the execution riddle
Store execution is a perpetual retail challenge that has become more challenging. The traditional model for how CPG teams and third-party vendors worked with retailers to aid in store execution involved very little accountability, transparency, or communication. Showing up when they wished, these teams often moved product as they chose and shared few details of those store calls back to the retailer.
In a bid to increase cross-team communication and retake control, many of today’s leading grocery, drug and mass retailers have implemented processes and systems to promote collaboration and increase performance across the store. Those who cooperate with these initiatives stand to benefit greatly; those who fail to play nice may find themselves outside looking in.
A watershed moment in the industry occurred in 2017 when Walmart signaled its intention to increase supplier compliance and communication. It did so by introducing a single unified vendor compliance platform and limited its number of Preferred Service Providers (PSPs). Since that time, the two largest drug retailers have also unveiled PSP programs. That trend continues to major grocery. In the most extreme cases, retailers have barred outside reps from working in their stores and opted instead for fully dedicated retailer-owned merchandising forces. The impetus behind these moves is sometimes obvious and sometimes not.
Tracking and collaboration yield financial benefits related to better in-stocks, modular compliance and the opportunity to better tune store labor. Increased competition among brands gives the retailer a chance to attract more than its fair share of merchandising dollars. More supplier labor means less necessary retailer labor. For these reasons, knowing which brands keep their promises regarding store coverage can, and should, greatly influence buying decisions. Why would I not want to buy more from brands that support me best? The idea here is all stakeholders win when costs are controlled, and dollars can shift to retail price reductions and promotion.
Demanding insight and consistency from third parties should be part of an effective labor management strategy. For the best retailers it already is, others clearly have expensive blind spots. In 2019, Movista submitted a proposal to a major dollar store chain that wanted to build a multi-faceted custom scheduling platform. The frequency, duration, or focus of vendor labor in their stores appeared in none of the forty-plus data points they wanted to include in their model. Since this retailer did not track vendor work, it missed visibility to 30% of the execution of its merchandising/reset/restock activity. Any schedule that ignores the vendor labor component does so at its own risk. There is no way to solve this puzzle with such a huge missing piece.
Many third parties and brands are winning through collaboration and transparency. Another retailer Movista worked with provided a universal reporting platform for resets across its entire footprint. The program required time and GPS validation of performance and initially four vendors split coverage of the stores. Within eighteen months, the program had become single-sourced. The retailer considered only on-time and correct execution in renewing vendor contracts. The best vendor for the job won and data drove the decision. No stakeholder could ask for anything more equitable.
Retailers should be fair and collaborative when choosing or creating compliance platforms. We have seen systems whose poor design and laborious user experience eat up much of promised financial benefit. For example, any compliance tracking system or platform should offer partners the choice of manual entry or data/system integration. A lack of integration points smacks of protectionism versus inclusiveness. Labor companies, DSD suppliers and brand teams have invested millions in operating platforms, and connecting those systems should not only be allowed, but encouraged when it makes good business sense.
Moreover, the best systems should provide benefits to all in-store stakeholders. Features such as scanning and understanding on-hands, viewing schedules, communicating with teammates or vendors as needed, and on-demand access to store-specific planograms provide can be transcendent. We have seen on time task execution rates rise 50% and in-stock rates rise as much as 5% through the application of these technologies. A single source of truth among retailers, brands and service teams is the holy grail.
Understandably, brands and service companies can sometimes distrust the motives of retailers. Some suggest, in private discussions, that retailers seek the costing numbers associated with support so they can squeeze supplier funded labor out and demand those dollars be calculated out of an item’s invoice cost. While possible, we’ve never encountered this scenario. Many of us have worked our entire career in retail. While the pendulum for support of third-party labor swings cyclically, we have never seen it hang for too long on one side of the equation. Retailers need and value their partners.
In short, only teams with sub-par execution look to work in the dark and only lazy retailers happily let that happen. Neither type of company will last too long in today’s hyper-competitive retail landscape that values execution, communication, and validation. Retailers chart the course in this brave new world. Balk at your own risk.