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A N A L Y S T

C O N N E C T I O N

Simon Ellis
Practice Director, Supply Chain Strategies

Enhancing Manufacturers' Execution in the


Retail Store
May 2014
With in-store retail execution, consumer products manufacturers are increasingly taking responsibility
for their in-store presence and their success in the store. From an execution perspective, this means
manufacturers can ensure their products are in stock and placed properly, whether on the shelves or
with the correct facings on end aisle displays. In-store execution gives manufacturers the opportunity
to own their brands in front of the end consumer, maximizing sales in the store, and enables
manufacturers to take a more customer servicefocused approach to their relationship with retailers.
Manufacturers also have the ability to expand their role in category management with superior
execution performance. Of course, these execution-focused efforts come at a cost to the business,
and any investment must produce tangible results. IDC research shows that the priorities of
consumer products manufacturers include reducing costs, improving business processes, and
increasing productivity. As a result, manufacturers are reevaluating the way they apply technology in
the store to achieve these goals. IDC forecasts growth in worldwide IT spending of 5.2% for this year,
and mobile devices alone are expected to account for more than half of that growth.
The following questions were posed by SAP to Simon Ellis, director of the Supply Chain Strategies
practice at IDC Manufacturing Insights, on behalf of SAP's customers.
Q.

How can consumer products manufacturers improve their performance in the store?

A.

We should consider in-store execution from the perspectives of efficiency (more efficiently
completing required tasks) and a desire for superior customer service (adding tasks or
capabilities that the retailer prioritizes). For example, the sales rep works through the
mechanics in the store supporting specific promotions, checking pricing and
merchandising compliance, settling claims, ensuring inventory availability, and even
submitting reorders. Improved performance for those tasks means they are completed
accurately and efficiently.
But from the customer service angle, the sales rep should also be working to understand the
customer's requirements, determining the root cause of any problems, facilitating easier
solutions to any recurring problems, and so on. That's the type of improved performance we all
struggle with. While improved performance may come partly from changing hiring practices and
training people, it also depends upon the use of new technologies that can increase the sales
rep's knowledge of the work tasks, ability to manage greater levels of complexity, and
knowledge of the customer and the customer's requirements on the spot in the store.

IDC 1700

Q.

What are the benefits of enhanced store-specific sales productivity? Why is it so


critical?

A.

Manufacturers that can combine in-store efficiency with greater in-store service are able to point
to outcomes such as better merchandising and promotion compliance, greater on-shelf
availability, and increased shelf presence. But even more important, the results of those
outcomes resonate with management by more consistently achieving volume, revenue, and
profitability targets.
It's hard to find anything more critical to the business than hitting financial targets. It's
important to acknowledge that some of the benefits are the result of more than just efficiency;
they are from more information-supported productivity and the ability to eliminate the types of
mistakes that often go unseen, such as lost sales due to brand switching and hidden out of
stocks or voids, when products are completely missing from the shelf. It's critical for
manufacturers to use execution both as a means of creating opportunities to lower costs and
as a way to drive sales.

Q.

What's the connection between planning and planning processes such as demand
planning and trade promotions?

A.

There's definitely a connection between planning and planning processes, and it begins with
the data or the details we're now able to collect in the store and combine with other sources
to give the manufacturer a more informed perspective of the consumer. In the store, the sales
rep is getting visibility at a very granular level and collecting information. We can use mobile
technology to make sure we increase the accuracy and timeliness of the information we
collect and then combine those inputs across sales reps and across stores to create new
insights to improve our plans.
We can also use mobile technology to more quickly identify and correct issues that may not
have been built into a plan, such as checking the performance of a promotion and ordering
the additional stock needed to maximize promotional performance. More generally, we can
see exactly how well we are executing across the business or in a specific store, whether
that's during a promotion or everyday sales. So we create a feedback loop between in-store
execution and planning that should improve demand planning and trade promotions.

Q.

How does improving in-store effectiveness also contribute to consumer products


manufacturers' collaboration efforts with retailers?

A.

Productivity in the store means that sales reps can more quickly shift their emphasis from
operational tasks to more strategic tasks in other words, from maintenance- and
compliance-type tasks to activities that focus more on supporting what the retailer is trying to
achieve, thereby developing the retailer-supplier relationship and enhancing collaboration.
Ideally, this means that sales reps have more time in the store with store management (and
store management is interested in spending more time with them). The sales reps should be
able to negotiate and capture future orders and conduct more productive inventory,
merchandising management, and even category management tasks.
There are also opportunities for supporting retailers that are tailoring their store to their region
or even neighborhood. It's only through new technologies that this level of productivity can be
attained. We also expect technology-enabled sales reps to handle new situations and custom
requests on the spot, working with store managers at an individual store level to develop the
neighborhood store, if that's what the retailer wants in order to remain competitive.

2014 IDC

Q.

Given that how consumers buy is changing with time, what's ahead for consumer
products manufacturers related to retail execution?

A.

Manufacturers will continue to seek increased access to and visibility of information that in
turn yields high-value insights and faster, more informed decision making. For manufacturers,
retail execution is one of the key links directly to the consumer (particularly in terms of the
traditional retail shopping experience) and consumer demand. Keeping that connection as
close to real time as possible will become more pervasive, with the ability to access views of
actual demand and stock availability more quickly relating promotion performance to
merchandising decisions and tweaking product facings or displays as necessary or creating
unique product mixes based on single store performance.
The power of the consumer has only increased over the past decade, and manufacturers and
retailers need to serve consumers who are less loyal and more informed than ever before.
Manufacturers need to recognize the role they play in ensuring that consumers not only return
to stores but also complete their purchases in the store. This will require flawless in-store
execution on the part of manufacturers. Execution should link to processes associated with
gathering and applying consumer sentiment, especially as it relates to demand forecasting.
Although we use the term "in-store execution," we may need to think about this more broadly
as "retail execution," with consumers buying (and returning) through multiple retail channels
what IDC calls the omni-channel. Both retailers and manufacturers will be under even
more pressure to perform in the store in terms of not only on-shelf availability but also the
entire shopping experience. Ensuring availability is no longer enough; it is just one
dimension, increasingly table stakes, in the broader shopping experience that must also
satisfy the omni-channel consumer's expectations for product placement, pricing, packaging,
and payment/ease of checkout. New ways of working, in addition to recognizing the
omni-channel experience by incorporating new technology and new approaches as well as
increasing manufacturer-retailer collaboration, will be required to keep the store an important
part of serving and selling to the consumer.
A B O U T

T H I S

A N A L Y S T

Simon Ellis currently leads the Supply Chain Strategies practice area at IDC Manufacturing Insights, one of IDC's industry
business units that address the current market gap by providing fact-based research and analysis on best practices and the
use of information technology. With over 20 years working for a major consumer packaged goods company, Mr. Ellis also
leads research on the consumer products segment and contributes to IDC Retail Insights research.

A B O U T

T H I S

P U B L I C A T I O N

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2014 IDC