CPGmatters: Implementation Group Aims At ‘Elephant in the Store’
By James Tenser, Principal of VSN Strategies
Through a special arrangement, what follows is an excerpt of a current article from CPGmatters, a monthly e-zine, presented here for discussion.
Sophisticated shopper insights, automated planograms, segmentation, targeting and shopper media have the potential to revolutionize the way categories are managed and products promoted. But these advances in marketing method are frequently stymied by in-store implementation breakdowns, experts say.
“The absence of in-store implementation practice is like an elephant in your stores. Nobody likes to admit it’s there, but it is absolutely stomping on your category and promotional plans,” said Warren Dawson, corporate development officer for Retail Tactics.
Mr. Dawson spoke at the recent Category Management Conference as part of a panel that included executives from Nestle Purina, Procter & Gamble, Retail Tactics and VSN Strategies. They are members of the ISI Sharegroup that is devoted to identifying and solving in-store implementation challenges.
“Our analysts work so hard to assess and analyze the right business problems and make sound decisions. Then they find only 30 percent of the work actually gets implemented,” said Brad Anderson, director of the Strategic Selling Team at Nestle Purina.
“There is just way too much complexity and too much work for the present process,” he added. “This is shameful and painful! The goal should be to reduce the workload on the analysts and know that the work will get done.”
The conference was produced by the Institute for International Research (IIR), and supported by Association for Category Development Professionals (CPG CatNet) and CPGmatters, among others.
Shelf space allocation, assortment, promotions, pricing, and in-store media activities all revolve around the effectiveness and efficiency of in-store implementation. ISI Sharegroup members advocate a “Plan-Do-Measure” approach to in-store implementation that would ensure effectiveness and confirm performance by establishing systematic, continuous processes for maintaining shelf sets and monitoring their conditions.
“If we can’t positively answer the questions: ‘Did it happen?,’ ‘When did it happen?’, ‘What did it cost to make it happen?’ and ‘What was the result when it happened?’ every day, routinely, and systematically, then our programs won’t be fully effective,” said Mr. Dawson.
JP Brackman, global presence manager for P&G, explained that by putting the right tools and practices in place, a broad in-store implementation initiative will have its first dramatic and rapid impact on planogram compliance, an area where effectiveness is poor and complexity is growing fast.
He added, “If we don’t do this, the detail will bury us. Retailers with 11,000 stores already have automated planogram software.”
With the industry facing a ramp-up in implementation challenges due to an increase in store-level planning, promotional segmentation, and shopper marketing, the ISI Sharegroup is targeting compliance as a fundamental capability. The group is preparing to release a working paper by year-end that outlines the cost to the industry of poor in-store compliance and defines areas where new best practices are needed.
“Simply throwing more labor dollars at the problem is not the answer,” Mr. Dawson said. “Our industry must adopt a ‘Plan-Do-Measure’ mentality surrounding in-store implementation – and do it soon – if we want to see real benefits from our new, sophisticated planning tools.”
Discussion Questions: What hurdles are holding back in-store implementation successes? What best practices should ISI Sharegroup’s ‘Plan-Do-Measure’ approach to in-store implementation include?
Very few retailers carefully measure how much time each in-store task takes. Very few retailers measure and reward individual performance appropriately. Given the high staff turnover (rates of 100% aren’t unusual) and these issues, many retail chains carefully reduce their expectations. They focus on a few priorities, and ignore the rest. Any greater ambitions would be unrealistic.
Some great comments above. In-store implementation and compliance is the biggest little challenge our industry has tackled in some time. Absent of a coordinated initiative, category management, promotion and shopper media efforts will not realize their true potential.
Parts of the solution are out there, thanks to brave efforts by thought leaders. The panelists quoted above are part of an industry share group that hopes to elevate the dialog and define better practices. By early next year this discussion will move to a broader forum–I hope RW readers get actively involved.
One of the major impediments to implementation of in-store solutions is the current SaaS model (Software as a Service – via hosted software). This model is an “arm’s-length” or “stand-off” practice better suited to combat military aircraft than to human interaction.
Typically, software engineers avoid customer (i.e., human) contact. (Is this a new concept for anyone?) But retail businesses–especially supermarkets–depend heavily on personal relationships. Implementation problems occur when upper management approves SaaS programs that have no plan for the SaaS suppliers to get face-to-face with anyone responsible for implementation after installation and training are complete. Additionally, what some SaaS providers believe to be follow-up and Customer Care is a practice in which they “narc” (their term) on users. This consists of contacting the user’s supervisor and reporting under-use. Sure to build collegiality, right?
SaaS providers need to re-think the business they’re in. As I attempted to help a local SaaS business understand recently, they are in the business of creating heroes. Their job is to help individual users achieve success and gain respect within their organizations by meeting and exceeding their departmental business objectives. Clearly this is at cross-purposes with the way prototypical SaaS companies prefer to support their customers, but the fact that “only 30 percent of the work actually gets implemented”–as reported in today’s topic–speaks for itself.
When I asked this local provider how the level of usage increased when installation and training were completed, the response was a shocker. Usage steadily declined. When I asked how often users requested specific test designs or help in implementing new programs, the response was “never.” And when I asked what sorts of pro-active contact they had with users suggesting additional ways to use their SaaS installation to improve retail performance and make them heroes, the response was ambivalent. I learned that there was no budget for face-to-face, despite the ample and nearly cost-free technological ways to do so. In truth, there seems to be little inclination or desire among SaaS providers to interact in a personal way with their customers.
The problem is well documented. The “solutions” always seem to focus on what the retailer must do differently. The overwhelming argument seems to be “see how much volume you are losing…it will pay for itself.” Yet, the “it” in that sentence isn’t simply adding boots on the floor, as others have pointed out. There are hiring, training, communication, monitoring and adaptation processes which must be created or changed. Where, dear CPG members, is the time and effort going to come from for all those things to happen?
If so many sales are being lost, why isn’t it economically effective for CPG firms to provide the labor and the process support?
Localized assortment planning is without doubt a best practice for large chain retailers. Squeezing out comp store gains for comparatively mature retail concepts requires that sort of behavior. Things are going to get more complex, not less.
My suggestion to CPG firms is this: organize, evaluate and determine if, as a group, it can be economically viable to provide the support required. This is not an invitation to go back to the old days of category captains. Rather, a suggestion to establish a central group, funded by industry, which provides a single point of contact for retailers who wish to participate. This organization would set, monitor and reset based on agreed upon limitations. Retailers do not want multiple people in their stores, impacting their shelves and their customer experience. However, a single organization, without specific allegiance to any one CPG firm…maybe.
Compliance of promotion material and other store-level programs are reporting to be at 60%. Promotions within 2 out of every 5 stores never see the light of day. All that thought around creative and performance metrics diluted significantly.
Digital signage that is networked so it can be monitored will ensure 100%, or close to, compliance. Plus the added advantage of delivering more targeted, up to date content–even content that switches between English and Spanish in ethnically mixed markets. Yes, it is more expensive than cardboard but when you work higher compliance and effectiveness into your ROI, it just might tip the scales.
It amazing to me that compliance is still such a problem. With all the money and resources devoted to having the best planograms created for retail, one would think that implementing the planograms would be priority 1. The “Plan-Do-Measure” sounds great, although they might want to add “What did it cost when it didn’t happen!”
We hear retailers lament these issues all the time also, but there are some progressive retailers out there who are implementing new methods of delivering price, promotion, planogram and other operational information to the shelf, along with improving shelf edge aesthetics. These pieces can be delivered with data-integrated solutions.
It is possible to marry price, planogram, and promotional data/messages, print that on full shelf edge strips, or outsourced labels combined with strips, and get it out to the stores with all of their regional or store-specific price and planogram differences. From store operations, huge time and labor savings can be realized, and accuracy and aesthetics objectives can also be reached. Such scenarios are not dreams; there are retailers doing it. Not all of them tout their successes in these areas far and wide–but prefer, I suppose, to keep advantages in the marketplace.
The elephant in the store issue is that there are too many agenda’s being addressed. Store personnel are confused, unclear, untrusting, and tired of all of it. The real issue is that there is NO ELEPHANT IN THE STORE for the customer to get excited about. So what about the darned customer? What they get excited about is an exciting store presentation of exciting product. A bigger store with more selection is not it. Complex organizations breed complex organization. Enough of it all. Simplify. And bring in a few elephants for the customer to “not-miss.”
Last night, my 6 year old nephew wanted my wife to go into Walgreens to see “something big” in their Christmas selection. We thought he had perhaps seen a giant Santa or something. Reluctantly, we cooperated with him and went into the store to find that there really was nothing big in there. He knew what kind of story it would take to get us to go in the store though. If you want more customers in the store put a few elephants in the store and get rid of so much of the irrelevant me-too agendas.
Ah yes…yet another article decrying the abysmal state of “in-store” execution.
Warren Dawson makes mention of this (absence of in-store implementation practice) as being “like an elephant in your stores. Nobody likes to admit it’s there, but it is absolutely stomping on your category and promotional plans.”
While I won’t dispute that there is a lot of room for improvement inside the 4 walls of the store(s), this article (like most of its ilk) fails to address a number of root causes that occur outside the store, the manifestation of which root causes happen to occur inside the store.
Seemingly mindless line extensions resulting in excessive SKU proliferation (and often nearly as high product failure rates), ‘push’ promotions that satisfy manufacturer need for case movement rather than satisfy real consumer demand , and poor data accuracy for the physical characteristics of items used to ‘build’ the plan-o-gram are just 3 of the other “elephants” that those pesky folks in the stores would like to see addressed with the same frequency and conviction as ‘poor in-store execution.”
Executing a standardized category plan with excellence in thousands of stores is no simple task. Customizing to meet local community needs further complicates the matter. As manufacturers jump in to help get it done at the store level, the challenge is to do so before the plan is developed. We’re just trying to do too much in too many outlets.
Store-level planning is the key to success, not just adding more executional arms & legs in store. Winning retailers let manufacturers into their stores to conduct shopper research and into their store-level data to identify productivity and profitability opportunities. Winning trading partners jointly segment stores based on these shopper and financial opportunities and are very choiceful about winning where it counts. Some stores demand strong variety and presence, innovative retail environments, and customized in-store marketing and careful pricing evaluation. Some stores do not. Both manufacturers and retailers have to learn to fish where the fish are and walk away from investing in outlets that don’t make strategic sense.
I’m in agreement with much of what’s been said already. In-store execution is a major challenge for even the best managed retailers. And it’s not just in the execution of promotional programs, it’s even in the day-to-day execution of the basics.
Merchandisers must account for the limitations that exist at store level. There’s no point in sending out instructions that are too involved, or are coming one on top of another, if the stores simply can’t get it done correctly or timely, all you get, from the customer’s perspective, is a mess.
That said, management must be committed to improving store level capabilities if all of the merchandising technology is going to pay any return. And, given the payroll limitations that are part of the equation, that requires developing much better management skills at the store, district and regional levels.
One RFID study by a major retailer found that the stores that did not have their promotion in place when the promotion hit consumers lost 68% of their sales from that promotion. So there is good reason to actually implement good in-store promotions.
However, the implementation of a project into thousands of stores that are not all configured the same way is a logistics and organizational problem of its own that has to be tackled.
Those retailers and/or manufacturers advocating a different implementation plan for different stores increase the complexity of the problem.
The devil is in the details. If the promotion is sound then the stores not implementing the plan are losing sales so the needs of implementation and providing documentation of the implementation need to be addressed.
The industry needs to quit being CHEAP. (Penny wise and pound foolish).
Hire great employees and managers, pay them well, tell them what you want, get them to buy into what you are trying to do, don’t over load them with non essential things, and hold them accountable for what is important. People want to succeed and help organizations succeed . Why do we frustrate them and make if difficult?
Well, it’s a great topic. As the old saying goes, the proof of the pudding is in the eating. Frankly, I think there is a lot of reality that is not being faced by the players in this space. One “small” point: 80% of the shopper’s time while in the store does not involve acquiring merchandise, but is simply transiting from place to place. This is not just “background noise,” as one very good researcher characterized it to me.
There is a vast sea change needed in thinking about shopping, and that’s just from the shopper’s point of view. In talking about implementation, you’re talking about the boots-on-the-ground staff, and right on up the management chain, in terms of understanding motivation at each and every level that is crucial to execution.
As each little piece comes into focus–usually through one or another metric program–mostly shock and disbelief are the result, followed by abandoned efforts. This is because someone who was examining the elephant with their own mind stuck on “ear” are totally disconcerted to find they are holding the tail, of a slightly sick beast.
Courage! “From chaos comes categorization; from categorization comes order; and from order comes understanding.” Or as Cervantes said, “Patience!…and shuffle the cards.” Some of us are in this for the long haul.
In-store implementation success is held hack by an unrealistic view of in-store personnel, training, time-management, and deployment. Go to some stores and talk to the management, and the people that work there, or simply watch and observe, and you will find the hurdles. In fact, you will crash into them. This information was free of charge, but you can send your consulting fees, if you wish, to….
Implementation of any head-office initiated campaigns or marketing directives at the store level can be dicey. Does store management understand the directive and do they understand why it is being implemented? My observations would suggest there is a genuine need for managers to understand why they are doing something for it to be implemented effectively. Many times the store manager will receive a package via courier, open it and see a list of instructions with no reasoning behind it. Why keep them in the dark? It’s better to have them on board with any plan then have a robot executing tasks. It might even address the problem of high turnover mentioned above.
People, people, and great people. These are the keys to success in retail. Look at any great retailer from the club stores to the large supermarkets and big box stores, and all of the successful models are built around great employees, great implementation and great customer service. All of this starts and ends with great employees. Implementation at store level, customer service and corporate communications all have their roots in great employees. These build upon a successful model in retail that focuses on customer service, and includes in-store implementation by well-trained, focused, and highly-motivated employees.