By: Mark R. Jenson, Partner, PwC
Multiple forces in recent years have made retail execution a top-three investment priority for consumer products (CP) companies (with the other priorities focusing on the enablers of effective retail execution, primarily pricing and trade management). For most CP companies, improved revenue realization — not industry growth — is expected to be the driver of economic profit in the foreseeable future. This means “winning at the shelf,” which requires a laser focus on trade spend ROI and effective in-store execution.
Effective retail execution solutions improve visibility and measurement of trade spend, pricing compliance and effectiveness, ordering and inventory (e.g. prevent out of stocks). Additionally, CP companies are increasingly holding retailers accountable for in-store execution via “pay for performance” mechanisms — and this requires better information, as enabled through a robust retail execution capability. A further trend driving investment in retail execution solutions is the evolution of technology — SaaS, mobility, real-time analytics — that is enabling field teams to capture and access better data, perform tasks in less time, and engage with end consumers, all at a cheaper all-in IT cost.
As a result, companies are finding they can generate top-line growth through increased effectiveness in stores while simultaneously reducing SG&A — having their cake and eating it too. The result is an ROI profile that quickly elevates retail execution investments to the top of consumer goods companies’ priorities.
Retail execution solutions vary tremendously across the industry in terms of strategic priorities, store visit activities, and execution pain points. The most important criterion is to maximize the effectiveness of the CP sales, merchandising, or delivery representative in the retail outlet based on those strategic priorities or pain points. The result is that an effective retail execution solution enables the rep to either touch more outlets or to spend higher-quality time in outlets to improve execution, promote better customer relationships, and introduce new product. Ideally, an effective solution will enable both (more coverage, higher quality interactions).
Effective retail execution means that time-in-store is maximized to efficiently gather data that drives powerful analytics around category execution, pricing and promotions effectiveness, and inventory. This information is then aggregated at the home office to drive programs that increase profitability, introduce new product or market penetration, improve segmentation of outlets and brands, drive more effective marketing spend, and promote better organizational alignment. To support all of this, scalability and flexibility of the technology platform is paramount, and must be enabled through an intuitive mobile solution. As each year inevitably brings new strategies and new business initiatives the technology platform must be able to be quickly modified to support the evolving priorities.