Thanks to changing customer expectations, technological advances, and supply chain disruptions, a smart retail execution (REX) strategy that leverages modern technology is more important than ever for consumer goods companies.
Used for planning, managing, and monitoring in-store activities to optimize in-store sales and increase profits, the impetus for augmenting a REX stack is multifold. CGs need to be quicker and nimbler in their decision making, while the data generated and shared through peak REX helps retailers make better decisions and simultaneously demonstrates the value of their partnerships. Brands can receive greater visibility into stores, including pricing, planogram compliance, and competitor activity, they’re able to combine multiple data sources into meaningful, actionable insights, unlocking the ability to reassign field teams on the fly when necessary.
Many are already on top of that and are including continued innovation and resiliency among their top priorities for 2022. Coconut water company Vita Coco, for one, is enhancing its tech stack to respond to a number of market changes, including accelerating volume trends amidst a shifting SKU/channel mix, while PepsiCo is partnering with retailers as part of an ambitious data-sharing initiative to improve execution. Read on to learn how CGs should evolve their REX tech stack to stay competitive.
Undertake a Complete Transformation
In today’s world, CGs can no longer measure, manage, and ensure compliance for in-store retail execution with rudimentary KPIs. Capturing data with manual entry from calls from the field and disparate software systems is also becoming a thing of the past. These methods are prone to mistakes and data gaps.
It’s time to optimize sell, general, and administrative functions (SGA) using an end-to-end approach that help CGs manage risk, seize new opportunities, and make smarter strategic and operational decisions. This requires undertaking a “holistic enterprise platform transformation to redesign SG&A processes, digitally enable them, and optimize them to support and enable the overall business strategy,’’ according to McKinsey. Further, the transformation should encompass automating back-office tasks so staff can concentrate on value-added activities.
CGs will be able to differentiate themselves and improve customer value with an end-to-end transformation, which also optimizes SG&A functions such as logistics, procurement, and finance.
Be Nimbler In Your Execution
To determine their ability to keep pace with their competitors and disruptors, CGs need to ask themselves some hard questions. These include:
- How adept are you at responding to evolving market conditions in the retail space?
- Have you evaluated the effectiveness of your current retail execution software?
- Does it include APIs and have pre-built integrations?
The system you select should have capabilities that work seamlessly together to drive performance improvements. They should include KPIs for tracking sales, brand compliance, shelf presence, trade optimization, in-store activities, post-event metrics, partner collaboration, and more.
As part of its global expansion strategy, wine and spirits company The Distell Group digitized its REX, trade promotion management, and marketing capabilities so that all of its trade-facing units operate on a single platform. This has enabled it to collect and analyze data at the point of purchase more swiftly and on a larger scale as it plans, adjusts, and optimizes promotions.
To improve retail execution efficiency, CGs must enable their teams to work together at a peak level of efficiency, including delivering end-to-end visibility and centralizing sales data and field activity. This can be done using a connected, personalized dashboard that shows field data, key business metrics, and events across the entire retail execution chain.
An end-to-end dashboard needs the ability to collect sales data, identify opportunities occurring in the field, and enable managers to make data-driven decisions that can have an immediate impact in the store.
The good news is CGs are recognizing the importance of scaling their investments in modern retail execution platforms. “There has been a significant acceleration in retail investments, and holistic commitments to cloud first, increasingly hybrid and multi-cloud approaches to running [their] IT portfolio of capabilities,’’ according to IDC’s “2021 Future Enterprise Resiliency & Spending Survey.”
Listen to Your External — and Internal — Customers
Consumers want both an immersive experience — and convenience. “It's important that consumer goods companies start listening to these consumers and look for new ways to engage them and improve that shopping experience,’’ says Cheryl Perkins, CEO of Innovationedge, whose firm spends a lot of time with companies trying to help them demystify what consumers say and want.
Coconut water company Vita Coco knew it needed to enhance its tech stack to respond to a number of market changes, including accelerating volume trends amid a shifting SKU/channel mix. The company was also experiencing “major logistical challenges stemming from global shipping disruptions and domestic transportation constraints,” Brian Kelly, director of sales operations, tells CGT, as well as increased wholesaler complexity. This included managing more SKUs with lower delivery frequency and less manpower.
As the company looks forward to progressing with its ongoing digital transformation, next steps include migrating all Microsoft Excel reports to its Power BI business intelligence platform, as well as empowering the sales team with mobile-friendly tools to make it easier for them to work.
Leveraging Advanced, Real-Time Analytics Provides Better Insights
Another key component of modern retail execution platforms is machine learning capabilities, which can enable retail managers to go beyond sales reports and use insights from data to develop more targeted consumer promotions. Analytics can provide further visibility into what’s happening in stores in real time or near real time, including pricing, planogram compliance, and competitor activity. When multiple data sources are combined and analyzed, brands gain the ability to reassign field teams on the fly when necessary.
Transparency helps CGs not only see what data they have but take the next step and bring it together with other sources of data, such as from ERP systems, and that’s where the magic starts to happen, says Andy Walter, a retired strategic advisor for Procter & Gamble.
“That's when you start thinking about advanced analytics and AI to start doing things: What SKU should I put into this store, or cluster of stores that's going to drive the greatest penetration and growth for my business?” Walter notes.
Perkins agrees, saying machine learning and analytics are part of the future-forward REX platform. This will help CGs act on their most valuable insights. “AI and machine learning help transform large amounts of data into actionable insights with the ability to prioritize and go after the things that give economic value,” she said.
PepsiCo has already heeded the call. The beverage giant has had a data practice for several years and is using data-driven predictive analytics to better respond to its retail customers. Last year, the company rolled out its Pepviz insights framework to retailers to help them assess whether they have the right data sources, while also developing more tailored solutions for their existing data.
The framework is built on two data sets aimed at the granular stores data and consumer data to understand purchasing preferences. In one instance, the company worked with a retailer that needed to optimize space to better service click-and-collect consumers. PepsiCo was able to identify the multipack items that could wait in the backroom rather than take up shelf space.
Raising the Bar on Retail Execution
Many CGs this year will update their tech investment roadmaps with a vision toward touch-free customer-centric, omnichannel retail, and a focus on automation, connected and frictionless processes to improve business outcomes.
Taking your REX stack to the next level will make it easy for field teams to make data-driven decisions at the shelf and maximize their impact on sales. Regardless of how digitally mature you are, keep thinking about the next steps and reimagine how to differentiate your products and services and make them stand out.
Transforming to a digital-first model is the new reality. Make no mistake — successful CGs will continue investing in technologies to deliver a competitive edge that includes less friction and a more integrated experience. The CGs that figure out how to better meet consumer needs and embrace the current industry disruption brought on by the pandemic will be better prepared for the future.