A mid-February report from the In-Store Implementation Network details the state of measuring Plano-gram compliance in the U.S. According to the study, “. . . Thirty-five percent of the respondents on the survey indicated they have no process in place whatsoever to track plano-gram compliance. Ninety-five percent of those that answered that they had some system in place indicated that they relied heavily on spot checks or store manager sign-offs.” Visual random checks or POS data pull’s are also used to verify variety and authorized items.
Not surprisingly, P&G found that once Plano-grams are set, they “drift” away from plan, often at a rate of 10% per week!
And, of course, POG compliance is one of a long list of retail conditions ills we have detailed before, including Out of Stocks, promotion timing and execution, new product timing and execution, and the amount and cost of labor spent in store. According to the survey “expense may be a key reason why compliance measurement has lagged. Said one respondent: “The problem is that compliance degrades over time, requiring continuous costly surveys”.
So, in these times of financial challenge what do we as an industry do? Four retail firms in the last two weeks announced cutbacks in headquarters staff, store staff or both. I have had meetings with literally a half dozen manufacturing firms in the last ten days and all of them are doing the same. Fewer hands planning and fewer hands executing are not going to improve execution, nor allow additional in-store conditions measurements.
If new planograms, new product cut-ins, displays, point of purchase material deployments are worth doing and worth spending against, they are worth measuring. If they are not measured, they are not managed and no one is held accountable. Further, if no one measures the efforts, the results cannot be properly understood. Without the measurement, it is unknown whether remedial action should be applied to the plan or the implementation of the plan.
Billions are spent in-store each year, and those billions are managed by proxy measurement, either sales themselves or by labor costs. Neither of these proxies come close to doing an adequate job of measuring merchandising execution. If they did, we would have vastly different results. With emerging technologies such as ShelfSnap, measurement is no longer, expensive, limited by technology, inaccurate or subjective. In short there is little excuse for not measuring the merchandising efforts as part of a new managment focus on The Last Big Untamed Cost and Profit Frontier in CPG Retail.
While lots of companies are paring back or hunkering down in today’s circumstances, others, are looking hard at both priorities and opportunities and are identifying areas where they can seize competitive advantage. The Last Big, Untamed Cost and Profit Frontier, the management and mastery of the in-store merchandising environment lies within the grasp of those looking to seize the high ground.
This Frontier represents the biggest single opportunity for additional sales that exists. It represents the most significant opportunity for company efficiencies as well, both for retailers and for manufacturers. Finally, it represents the most direct and impactful opportunity for both trading partners to create a competitive edge by managing the shopper experience toward a succeessful and predictable meeting of the consumer and the product at the shelf edge.