RBM Technologies, RIS News, Research report, blog 2

Optimizing In-Store Merchandising – Part 2: The Store Compliance Challenge

RIS News recently issued a custom research report (available here) tackling the issues surrounding in-store merchandising. The study uncovered compelling evidence that it is time for retailers to tackle the problem. Over the course of this blog series, we will examine a number of issues currently preventing retailers from becoming more compliant, and the situational factors bringing about changes for the better.

In this post, we look at the challenges retailers face in their efforts to remain compliant.

RBM Technologies, RIS News, Research report, blog 2

It is important for retailers to measure how well stores do in managing merchandising execution and report their compliance back to headquarters. As we noted in Part 1 [URL] of this series, only 3.7 percent of retailers report having accurate planogram knowledge down to the fixture level.

According to RIS News, a quarter of retailers say they do not measure store execution and compliance regularly. Seven percent only measure it once or twice a year and a much larger group (18.5 percent) say they never do it at all. However, three in ten retailers report measuring store-level compliance frequently enough to catch problems and correct them.

So, what do those retailers find when they measure store compliance for merchandising campaigns?

Only one in ten say that more than 90 percent of stores are compliant across the chain for the average in-store merchandising campaign. Compliance of 90 percent or higher indicates strong store discipline and leads to increased campaign results. In short, that’s where you want to be!

With a proven model of campaign compliance leading to increased revenue and accurate execution, why are more retailers unable to attain a high-level of compliance across all stores?

Aside from budget constraints, which are always a high-wire act of balancing competing priorities, the biggest inhibitor to solving non-compliance problems is a “disconnect between merchandising, marketing and store ops,” according to nearly 54 percent of respondents. This familiar organizational challenge was by far the top obstacle cited. Other top challenges cited were increasing pace of change (34.6 percent) and labor limitations (30.8 percent).

Figure 1: Challenges preventing organizations from getting stores to be fully compliant

Of the top three challenges cited for achieving greater merchandise campaign compliance by stores, the one with the best chance of success is streamlining differences between merchandising, marketing and store operations. Like all the challenges on the list, this is a tough nut to crack, but not an impossible one.

Sadly, the king of in-store merchandise planning, communication and compliance tools today is Excel. By a landslide majority, Excel (63 percent) was named the solution most retailers use for in-store merchandise planning. Clearly, there are reasons to support this finding, chief among them is that Excel is ubiquitous in most companies and helps meet marginal expectations for campaign compliance.

However, one of the major takeaways from the RIS News report is that use of Excel in merchandising operations is a known problem in compliance efforts at the fixture level. Other culprits on this list include inaccurate planograms at the store level, weak chain-wide compliance during merchandising campaigns, infrequent measurement of campaigns at the store level and outdated planogram surveys.

The silver lining is that these problems are solvable once a comprehensive solution is adopted, and will result in significant sales and margin benefits once compliance is met.

In our next post, we will examine the situational factors that are contributing to retailers adopting more accurate campaign compliance processes and how to measure the cost of doing so.

Does your company currently implement visual merchandising solutions to ensure campaign compliance at the fixture level? We would love to hear from you in the comments section below. Please feel free to also reach out to us on @Merch_Matters.

A free copy of the full RIS News research report is available here.