Why isn’t your product moving off the shelf?
There are so many reasons why you might be feeling the pain of a slow month. A dip in sales could be a result of changing consumer preferences, retail traffic, a creeping competitor – or maybe it’s you.
Your relationships with customers aren’t that different from some of your other relationships. They require a lot of hard work, time, and effort to stay healthy and thriving. In order to keep the bond strong, and consistently drive sales, you must feel confident that you’re putting your best self out there. The only way to accomplish this is through some honest reflection.
Luckily, in the CPG industry, it’s not so painful.
It’s easy to review your brand’s position in retail with a merchandising audit. Though often overlooked, an audit should be the first step of your strategic planning. If you think about it, you can’t really understand what you’re up against until you know how you measure up. By performing a merchandising audit you can feel confident that you’re holding up your end of the relationship, and positioning yourself for success.
Who’s Doing Merchandising?
Um, everyone.
The concept of merchandising is nothing new. We can confidently say that hundreds if not thousands of merchandisers are working in retail stores right now. However, just going through the motions isn’t enough. In order to make your merchandising efforts pay off, you have to do some additional legwork. This final step is a merchandising audit.
The Power of A Merchandising Audit
The power of a merchandising audit is twofold. Not only does it force you to shape-up your product display on the spot, but it also provides meaningful data that can be applied in the future. For example, a messy product display in one store may really be a recurring issue in multiple store. Small pains often give way to larger problems under the surface. Merchandising audits allow you to discover the weak points in your brands retail strategy, and then promptly fix them. These audits arm you with the tools you need to keep your relationship with customers strong in the long-term.
What Exactly Is A Merchandising Audit?
Merchandising audits are like a check-up for your product. Audits help ensure that stores are complying with agreed upon terms of product location, shelf space, product displays, pricing, and promotion. In addition, through regular merchandising audits, you can avoid out of stock instances, keep product are displays organized, check competitors’ pricing and promotions, and collect and analyze data and adjust accordingly.
Best Practices For Merchandising Audits
In order to fully maximize the benefits of your audit, you must focus on numerical analysis and work towards consistency.
- The Importance of Data Analysis
The greatest benefit of electronic forms via mobile apps is that all the data is collected and stored in the Cloud. There is a lot of insight that can be gained from analyzing this data. Here are five basic questions to provide you with a springboard for this analysis:
How and why are my products selling?
You can track product sales through these audits by seeing which ones sell faster than others. Evaluate why these products are more popular – is it aesthetic appeal, pricing, marketing, etc.? Based on your findings, you can either choose to adjust your product, marketing, or manufacturing.
How and why are my products performing differently at different locations?
Using data from audits performed at different retail locations, you can determine if some products sell better at certain stores. If you’re finding that some product sales are lagging, you should consider the customer demographics of each retail location, and adjust your products to better fit. If all your products are not performing well at a certain location, further inspection of may be needed.
How and why are my promotions effective?
Promotions help boost sales, but some promotions are more effective than others. Analyze the data from different promotions and see which ones were the most effective. Ask yourself why they did so well: was it the timing? The product? The signage? With this data, you can use the successful promotion as a model for your future promotions.
How and why are my product sales and profit trending?
It is important to also look at the overall trends of product sales and net profit. This is because trends can help you make sales forecasts, which benefit your business by increasing revenue, customer retention, and efficiency. What are my current and potential out of stock situations and how can I remedy this? What products are most often out of stock (OOS)? Is this because consumer demand for these products is greater or because the retailer is not communicating well with the distributor? Ask yourself why your current OOS instances are occurring and take steps to fix them. With the current OOS data, you can also better predict what potential out of stock situations may arise. With these predictions in mind, you can create solutions to avoid OOS before it even happens.
- The Impacts of Data Analysis
Equally important to collecting data is actually analyzing it. Analysis helps you gain valuable insight into what succeeds in retail – which is especially helpful if you are trying to launch a new product, adjust current products, or identify key performance metrics. Markets are rapidly changing, and it is vital for businesses to be able to adapt and evolve along with the market. Changes in consumer demand, economic conditions, and political landscape often create a need for management to make quick decisions. Data analysis simplifies the decision making process.
According to Chron.com, effective data analysis helps companies “identify growth opportunities, understand customer preferences and increase competitiveness.” Through storage of client history, you can monitor your brand’s growth over time.
There are financial incentives to practicing effective data analysis as well. Researchers from the University of Texas have found that by analyzing data and transforming it into useful information, the average company can increase its annual sales per employee by 14.4%, equating to a $55,900 potential increase in productivity – which is huge!
- Perform Regular Audits
Through these merchandising audits, you have a fairly accurate depiction of what is going on at your various retail locations. Aside from reducing out of stock (OOS) instances, you can also track and measure retailer compliance and in-store execution. Merchandising audits allow you to protect your brand by ensuring that your products are accurately represented in each retail location. With all of these factors in mind, it’s clear that audits will earn you more than they cost you. Make the most of your audits by using these tips to audit effectively, especially after transitioning to electronic forms and implementing the necessary tools to better analyze data.
Competitor Audits
Finally, after you’re sure your own business is in order, you can turn an eye to the competitor.
This can be done through a variation of the merchandising audit called a “competitor audit.” By checking competitors’ prices, labels, shelf location, promotions, and packaging, you can see how they measure up.
Competitor Pricing
It’s important to price your product competitively. This metric allows your business to see how your product prices compare to others. With this data, you can adjust or affirm your current pricing structure. You can also develop new pricing strategies if need be, or design future sales and promotions.
Competitor Shelf Location
Competitors’ shelf location is also important. If they have better shelf placement, then customers may be more inclined to purchase a competing product over yours. If a competing product is adjacent to yours and can be an easy substitute, you should ensure that your product is more appealing, whether that be price-wise or packaging-wise. Generally, photos are the best way to collect data on shelf location for easy analysis in the future.
Competitor Promotion
If your competitors have been running successful sales and promotions, take a page from their book and see what they’re doing right. Take note of their in-store signage, displays, and promotional pricing. If you can pinpoint exactly what makes their promotion a success, you can use that as a basis when planning your next promotion.
Competitor Packaging
One-third of customer decisions are based on packaging. With so many options flooding the market, it’s imperative for your product to stand out visually. In order to do this, product design cannot happen in the dark. Some things to consider are material, consumer associations, and current trends. For example, if your competitors are all using eco-friendly packaging, you may want to do the same in order to stay up to par. Packaging conveys a brand’s personality, so you want to package your product to best represent your brand. Think about Tiffany’s iconic blue boxes; the company outperforms many competitors because it is known for its packaging.
