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How to increase sales by monitoring in-store execution

Excellence is doing ordinary things extraordinary well

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Market Background

More than 50% of purchasing decisions

are made by consumers in-store*

Store is a real battlefield around consumer

*Source: Nielsen OmniShopper 2010, 2244 respondents

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In a number of categories less than 20% SKUs make 80% of value sales

80 % of value

sales

~ 7 %

SKUs

~ 8 %

SKUs

~ 18 %

SKUs

~ 32%

SKUs

Chocolate

Bars

Beer

Tea

Milk UHT

Market gets overcomplicated but Consumers

choose narrow range of products

So

urc

e: N

iels

en

Stu

dy 2

011

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Source: Nielsen Shopper Trends, Romania 2012

Over half of shoppers are ready to switch to another brand in case

of out-of-stock

9

7

3

5

5

11

4

7

56

40

63

52

57

36

51

50

24

43

23

33

28

44

23

32

10

9

11

9

10

9

8

12

1

2

1

1

15

Carbonate Soft Drinks

Packed Coffee

Confectionery

Dairy Products

Staple Food

Personal Care Items

Beer

Household cleaning products Wait until it was available

Buy an alternative brand

Buy the same brand at another store

Look for the same brand but choose something slightly different (eg. different pack size / flavor)

Doesn't buy

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Listing Fullfillment - All Shops/All Categories

4,2

1,6 2,0

5,3

9,7

14,1

25,8

19,1

11,2

2,2

4,6

0 - 9,9 % 10 - 19,9 % 20 - 29,9 % 30 - 39,9 % 40 - 49,9 % 50 - 59,9 % 60 - 69,9 % 70 - 79,9 % 80 - 89,9 % 90 - 99,9 % 100 %

% of Shops

Less than 5% of shops comply with agreements (must sku list)

2/3 of shops fulfill less than 70 %

Business Case

Source: Nielsen Study 2011

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The Power of higher AVL

Research* shows that if you improve

your AVL with 1%:

AVL pre-change Sales increase

~ 80% ~ 2-4%

~ 90% ~ 1-2%

~ 95% ~ 0.5-1%

above < 0.5%

*Source: A research done by Scientific Retailer at Wal-Mart in 2008

Simple ROI measurement Impact of Availability rates in actual Sales

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Collect relevant data in a relevant way

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Monitor in-store execution by auditing vital KPIs

Shelf Price and RSP compliance

1 2 3 4 5

Facings, Share of shelf

Availability, Out-of-stock

?

Promotion execution & POP communication compliance

2nd placements, expositions, coolers

Customized QNR (merchandising standards etc)

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Availability versus Presence

Am I only on the shelf?

Am I only in the cooler?

Am I only on a secondary

placement?

It is important to be present in a store but is more important to be really AVAILABLE to the shoppers

I have to be everywhere!

Where can I find MY beer?

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Availability versus Minimum Stock

In a dynamic market, during a hot summer, the rotation speed of the beer category could be high

Am I at risk to be in out-of-stock soon?

Do I have forward stock issues on the shelf?

Do I have forward stock issues in the cooler?

Available but not for long

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Visibility of Secondary & POSM

It is important to be present in a store but is more important to be really AVAILABLE to the shoppers

Are my secondary placements accessible?

Are my POSMs visible?

Do I make efficient use of secondary’s and POSM materials?

The store can be split in different areas

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Shelf Potential versus Share of Shelf

You can optimize your distribution if you use your full shelf potential

How high is my Share of Shelf?

How much of my current shelf potential do I use on the warm shelf?

How much of my current shelf potential do I use in the cooler?

Unused Potential

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Report in “real-time” and

Act Immediately

Audit available for client

via WEB

Auditors get daily plan

of shops Auditors move

according to a route

Shop banner picture

and GPS coordinates

Fill QNR predefined

for each shop

Picture of

predefined objects Upload finished QNR to

server via GPRS

3-24 h

Alerts delivery to problem owner Score carding of stores

and sales reps

Sales reps performance review

and improvement

Automatic QC in parallel

Manual QC in office

if required

Collect today – Report tomorrow – Act Immediately

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• Situations like missing Must Have Products, missing 2nd display, missing POSM, no exclusivity in the cooler are pre-defined

• When these situations are found in stores, alerts are sent by email to the problem owner on the client side

• On daily / weekly basis alerts are accumulated in the report in order to help sales managers track their people performance

• Optionally - a sales rep gets alert but does not know which stores are in the sample that month, so he takes care of all the shops to improve his scorecard / performance

• In some projects we make a follow up phone calls in which we collect the reasons for the negative situations we come across in the stores

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A tailor-made comprehensive tool for measuring compliance versus target / benchmark at store level and at sales representative level

An actionable instrument used for improving execution when completed with the alerts feature

The basis for an incentive scheme of the sales force

Continuous monitoring, alerting and rewarding will lead to improvement of execution

What we want to be….

and where we really are?

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Use on-line reporting – update on daily basis

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• Over 50% of buying decision are made by consumers in front of the shelf;

• Over 60% of the consumers will switch to another brand / product in case of Out of Stock situations;

• Less than 70% of stores have all the agreed / defined Must Have Products on shelf;

• Improving important KPIs as On Shelf Availability, Share of Shelf, POSM can lead to increase in sales;

Implementing an intelligent in-store audit system can lead to significant improvement in important KPIs and in this way

influence the actual sales

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And the truth is…

Excellence Is Doing Ordinary Things

Extraordinary Well

John V. Gardner, 1912 - 2002 American Writer and Secretary of Health,

Education and Welfare

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Thank You!