Background
Retailers invest heavily in planning, building and operating stores which attract hundreds of thousands of shoppers every month.
Their prime objective is to entice as many customers as possible into the store, maximise their spend and satisfy them so that they will return again and again.
Category teams use their specialised skills and knowledge to create the best assortment for each store. The store teams take care of the products ensuring that the products are displayed and priced correctly, quality checked and regularly replenished.
Unsurprisingly, studies have shown that customers are most likely to return to a store regularly if they are able to find and buy the items for which they came in.
Retailers have very good data reporting precisely how much they actually sold of every item.
However,
- How many customers left the store without ALL the products they came in for?
- What OTHER products may customers have bought if they had been in the range?
- How much MORE could the store have sold of the ranged items?
- Worse still, how many disappointed customers will silently decide to go shopping elsewhere?
Of course stores are already getting and collecting feedback on availability.
Stock controllers identify gaps on shelves and increase orders, but this process is often only done once per day, and only addresses one aspect of the problem.
The product maybe selling out multiple times during the day because it doesn’t have enough space on the shelf and the store staff just cannot keep it full.
Also, maybe sales are being lost because:
- The products are poorly/untidily displayed or just in the wrong place.
- The price ticket is missing/incorrect (Customers rarely buy products if they don’t know how much they will pay).
- The promotional signage is missing (Customers don’t realise it is on offer).
Of course these issues are occurring and are (usually) being fixed on a continuous basis.
“Retail is detail”, is an old adage but it’s as true today as it’s always been. Filling the shelves, taking care of the product display, and ensuring prices are correctly displayed are basic store operational activities and when they are wrong, sales leakage will occur.
Identifying and measuring the issue is only part of the problem, we also have to solve it.
How X-Ray addresses this problem
Enter the RETAILIGENCE X-Ray Mobile Application, which can be installed and used on any smartphone, and placed in the hands of the store colleague who really needs it at the shelf edge.
X-Ray’s sophisticated machine learning algorithms are tuned in to the subtle customer buying patterns, constantly comparing the sales of all products across multiple stores.
X- Ray generates alerts whenever products are underselling and guides the store colleague to the shelf where they can inspect the item and solve the problem. The app. calculates the value of lost sales and presents them in prioritised order to the user, so that no matter how much or little time is available, the issues causing most lost sales are addressed first.
Some retailers may only consider out of stocks to be the reason for lost sales.
On many occasions products are underselling their sales potential, even though to the sharp eyes of the retail team nothing is obvious. The reasons can be very subtle and may not have been noticed unless it was really highlighted to the user.
Missing or wrong price labels are important, but they don’t cause sales to be lost. Or do they? And if so how much?
In the background, the X-Ray app tracks the recognition and resolution of the issues, and highlights where upskilling and improved compliance to retail processes is needed to fix the root causes.
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Live Example – A store was inspected for lost sales in 4 categories.
The RETAILIGENCE X-Ray app had identified a sales gap of over 5000 euros in the previous week due to under performing sales of 144 products.
A 45 minute store walkaround enabled 30 of these items to be investigated with the X-Ray app, and reasons found for 26 of them.
Out of stocks are the first thing retailers think about when losing sales. There can be multiple causes, but the customer is not interested in the reason.
Why do products undersell due to not enough space?
- The product can run out of stock between replenishment cycles.
- The customer may not notice the product on the shelf because the size of the display is small.
How to solve the problem?
- At store level:
- Check and fill the shelf more often to prevent out of stocks.
- If allowed, reduce the facings of adjacent products to give more space to the underselling ones.
- At central level
- Review the planogram, and adjust product facing according to sales.
- Review the macro space for the category, maybe the whole category is under spaced.
- Review the display rules for creating planograms – minimum number of facings, eg. 3 facings or 1 tray pack, minimum stock cover eg. 1.25 of a week’s sales.
- Review the SKU count for the particular category, perhaps the range density is too high, and some slower sellers can be delisted allowing more space to be allocated to the faster selling lines.
Why do products undersell due to price discrepancies and promotional ticket issues?
Sometimes retailers focus so much on getting stock on the shelves that they overlook other things which are also really important to their customers. Very few customers will put a product in their basket if they are not sure how much they will pay for it. Furthermore if the product is on promotion and there are multiple tickets with different prices, customers are easily confused, and lose trust in the price labelling.
How to solve the problem?
- At store level:
- Regular checks for missing labels are essential.
- Most importantly, shelf fillers have the discipline that if they find missing or incorrect labels, they should immediately rectify or report the issue.
- At central level:
- Experience has shown that the number of price errors is proportional to the number of price changes, because it is here that errors are made in stores.
- Reducing unnecessary changes will therefore reduce the errors and the arising lost sales as well as saving the stores work.
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Conclusion
Lost sales are occurring continuously, and retailers have limited resources to identify and fix the causes.