Strategy is Easy….
It’s the execution that is hard.
Just ask the folks at AMR who published the paper “Bridging the Merchandising and Store Operations Divide” who found that only 59% of retail promotional plans were executed as intended. This despite (or possibly because) on average of 28 people in the home office had their hands in the strategy and planning. Yet, once it translated to the store operators, the plans didn’t work. By the way, the statistics are much worse in terms of retailers actually knowing how their execution at store level actually is.
Despite years of promises of a transparent supply chain and retail data by the petabyte, retailers still cannot reliably conduct one routine task week in and week out: advertise a promotion to customers and reliably know the product will be in all stores in a location that is easy to find with an accurate sign reflecting the price and the products for sale. Kind of a basic retail competency, wouldn’t you think?
What makes it so tough:
- Communication: Store personnel still get far too many tasks sent to them via emails, faxes and attached lists that are sent blindly to stores without a reliable way to “close the loop” on the task being completed. Lack of directed communication combined with no way to hold an individual accountable for a task is a recipe for failure.
- Running before Crawling: While many retailers spike their earnings calls with sexy customer-segmentation/centricity claims, the truth is their merchandise planning, forecasting, allocation and replenishment systems cannot reliably predict the actual number of selling units of a given product in a given store at any point in time. Promotional quantities are more likely to be dictated by vendors looking to meet volume quotas or buyers trying to meet volume discount minimums than actual forecasted demand. Promotional volume is spread across high and low volume stores in an inverse sales relationship and merchandising locations are all but overlooked in the rush to ship out the product to get ready for what comes next.
- Executive Acceptance: There is a general belief among merchandising executives that “the stores are selling it somehow” so there is an inherent incentive to look the other way when it comes to the whining from store operators about exit strategies and burgeoning back rooms. Executives like to see themselves as working on the Future – the “Strategy” – the “Big Picture” – and let’s face it, when was the last time you heard of a person becoming a CEO because they balanced promotional in-stocks with sell-through? Without an executive champion, promotional sales are seen as accretive instead of the missed opportunity that they are for most retailers.
Some folks are getting much better at promotions, however, and here’s how they are doing it: Automated Store Task Management, a strong retail executive willing to spend political capital on this issue to make the company (and his labor budget) more productive and an enlightened CMO that understands that money is being left on the table when promotions are conceived, messaged and optimized but not executed at the store level.