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Retail Stores Audit

It is a method of quantitative feedback from the market on consumer buying habits. It is


the exclusive service provided by ORG – MARG to Indian FMCG industry. The basic
objective of retail stores audit is to observe or count the movements of the products off the
retailers shelves to the consumers. The procedure adopted is as follows:

(a) A list of retail outlets in India for a particular city is prepared by using
data from Indian retailers Association. Based on the sales turnover,
the retail outlets are classified as small, medium and large.
(b) The representative of ORG-MARG calls on all listed retailers to us
their concurrence for providing information. Only those are visited
who express willingness to cooperate.
(c) The teams are sent to different areas already planned in advance and
with the guidelines on collection of data
(d) The team visit retail outlets twice in a month, once in first week of
month (assuming retailer fills up inventory in the beginning of month)
and during last week of month. The stop position is actually counted
for all the commodities, brands stock by retailer. The month-end
inventory is subtracted from month-beginning inventory. The
difference is the movement of goods of the retailer shelves.
(e) For recording the data, special booklets are prepared in which the
team records the entries.
(f) The data from all the retail outlets is compiled and then systematically
analyzed.

The analysis provides following useful information:


(a) Total sales for product type
(ii) Total sales for different brands and thereby market share
(iii) Total sales for different pack sizes
The above information is very useful for marketing planning, packaging decisions and
promotion decisions.

The main disadvantage of this method is Brand Loyalty can not be studied, for which next
tool Consumer Panels is followed.
Audits
Audits involve the physical inspection of inventories, sales receipts, shelf facings, prices,
and other aspects of the marketing mix to determine sales, market share, relative price,
distribution, or other relevant information.

Store Audits
The simple accounting arithmetic of

opening inventory + net purchases (receipts - transfers out - returned inventory + transfers
in) - closing inventory
sales

is the basis for the audit of retail store sales.

The most -, widely-used store audit service is the Nielsen Retail Index. It is based on
audits every 30 or 60 days of a large national sample of food, drug, and mass
merchandise stores. The index provides sales data on all the major packaged goods
product lines carried by these stores-foods, pharmaceuticals, drug sundries, tobacco,
beverages, and the like (but not soft goods or durables). Nielsen contracts with the stores
to allow their auditors to conduct the audits and pays for that right by providing them with
their own data plus cash.

The clients receive reports on the sales of their own brand and of competitors' brands, the
resulting market shares, prices, shelf facings, in-store promotional activity, stock outs,
retailer inventory and stock turn, and local advertising. These data are provided for the
entire United States and by region, by size classes of stores, and by chains versus
independents. The data are available to subscribers on-line via computer as well as in
printed reports

Product Audits

Product audits, such as Audits and Surveys' National Total Market Index, are similar to
store audits but focus on products rather than store samples. Whereas product audits
provide information similar to that provided by store audits, product audits attempt to cover
all the types of retail outlets that handle a product category. Thus, a product audit for
automotive wax would include grocery stores, mass merchandisers, and drugstores (in this
way it is similar to the Nielsen store audits). In addition, it would include automotive supply
houses, filling stations, hardware stores, and other potential outlets for automotive wax.

Retail Distribution Audits

Similar to store audits are retail distribution audits or surveys. These surveys do not
measure inventory or sales; instead, they are observational studies at the retail level.
Field agents enter stores unannounced and without permission. They observe and record
the brands present, price, shelf facings, and other relevant data for selected product
categories.
Retail Audit
Retail Audit is a common term in marketing research
Audits
During the 1990s, it became increasingly important to develop a strong brand image. It’s
not just the product that needs to be
sold, but also the brand, charged with values such as ethics, quality, feelings and identity
that put over a positive message to consumers.
Today, many companies are moving their production from their home countries to nations
where manufacturing costs are
considerably lower. However, the role of the company extends beyond just financial
issues; every organisation has a social
responsibility. Consumer and pressure groups are increasingly
concerned about the social conditions in which workers from
developed and developing countries are subjected. They expect companies to accept its
responsibilities and to conduct its activities in accordance with the ethical and moral values
accepted in the country in which their product is sold. Forced labor, child labor, low pay,
poor conditions and dangerous working environments are all areas of serious concern to
the reputable retailer or brand owner.
The audit process includes an opening meeting, factory tour,
document review, interviews with employees and a closing
meeting.
The key parameters that we look at when carrying out retail audits are:
In-store availability of product/brand;
· Types of outlets (by owner, location, specialty);
· Sales volume cross-tabbed with type and location;
· Pricing of product/brand cross-tabbed with type/location
of outlet;
· Display value;
· Customer demand;
· Resulting market share and rank/position of product/
brand.
It must be noted that there are no readily available retail universe data. The design of a
retail audit is critical to the success of the project. The data obtained from the retail audit is
useful for carrying out
· Identification of market opportunities
· Trend analyses and forecasting
· Studying market structure
· Prioritisation of markets
· Conducting analyses of competitors
· Product portfolio analysis
· Understanding changes in distribution
· Pricing trend analyses
· Product Categories Covered
This Audit covers more than 100 product categories including
· Baby products (oil, powder, diapers, milk food, weaning
food.)
· Beverages (coffee, soup mix, squash and juice, syrup, tea,
concentrated drinks.)
· Contraceptives
· Cosmetics (colognes, deodorant, perfume, lipstick, nail
polish.)
· Environmental hygiene (air freshener, floor cleaner, floor
polish, etc.)
· Fabric care (fabric bleach, washing powder, liquid, whitener,
soap, detergent.)
· Food products (butter, margarine, salt, packaged food, etc.)
· General toiletries (mouthwash, talcum powder, toilet soap,
toothpaste, toothbrush, sanitary napkins.)
· Hair care (conditioner, dye, oil, shampoo.)
Today, many companies are moving their production from their home countries to nations
where manufacturing costs are
considerably lower. However, the role of the company extends beyond just financial
issues; every organisation has a social
responsibility. Consumer and pressure groups are increasingly
concerned about the social conditions in which workers from
developed and developing countries are subjected. They expect companies to accept its
responsibilities and to conduct its
activities in accordance with the ethical and moral values accepted in the country in which
their product is sold. Forced labor, child labor, low pay, poor conditions and dangerous
working
environments are all areas of serious concern to the reputable
retailer or brand owner.
The audit process includes an opening meeting, factory tour,
document review, interviews with employees and a closing
meeting.
The Key Parameters That We Look at
When Carrying Out Retail audits are
· In-store availability of product/brand;
· Types of outlets (by owner, location, specialty);
· Sales volume cross-tabbed with type and location;
· Pricing of product/brand cross-tabbed with type/location
of outlet;
· Display value;
· Customer demand;
· Resulting market share and rank/position of product/
brand.
It must be noted that there are no readily available retail
universe data. The design of a retail audit is critical to the success of the project. The data
obtained from the retail audit is useful for carrying out
· Identification of market opportunities
· Trend analyses and forecasting
· Studying market structure
· Prioritization of markets
· Conducting analyses of competitors
· Product portfolio analysis
· Understanding changes in distribution
· Pricing trend analyses.
· Health products and OTC (analgesic, digestive, medicated
dressing, etc.)
· Liquor (beer, brandy, gin, rum, vodka, whisky, wine, liquor.)
· Milk products (milk, condensed milk, milk powder, Cheese.)
· Semi-durable products (batteries, bulbs, lubricants, paint,
tube lights, etc.)
· Shaving products (after-shaves, blades, razors, etc.)
· Skin care (cream, cold cream, lotion, face-wash, etc.)
· Snack foods and soft drinks (biscuits, chocolates,
confectionery, etc.)
Measures
· Market size in terms of units sold, volume and value
· Market share by volume and value
· Numeric distribution
· Weighted distribution
· Share among handlers
· Out-of-stock retailers
· Per dealer off-take
· Purchases by retailers
· Stock levels with retailers
· Stock turnover ratio
· Trends for market, company, brand and SKU - for size and
shares
Following Steps can be Followed
We never assume that our clients will mean the same thing under
“retail audit”. We always strive to define exactly the specific
knowledge needs, and design the approach, methodology, and
sample accordingly. Our experience has taught us that there can be
no long-term representative samples. Each new project requires a
revision of the existing sample size and structure in order to
achieve credible results.
1. Draft the research plans and schedule, indicating.
· Scope and goals;
· Optimal sample size, methods of collecting
quantitative & qualitative data, etc.;
· Deadlines;
· Structure and format of reports.
3. Fine-tuning and approval of research approach.
4. Design and production of customized research tools.
5. Launch and management of field research
As a rule, we use the following field research methods:
· Observation
· Face-to-face POS interviews
· Mystery shopping
Note
Do not expect data on opening stock/deliveries/closing stock,
bar code data (scanning d-bases), audit code levels, etc. They are
mostly non-existent.
6. Data collection
7. Usually the sources can be broken down into three basic
groups:
a. “White area”: from official stats sources to fully legal retail;
b. “Grey area”: includes medium and small wholesale, and
kiosks (partial reporting) original, but locally unauthorized
product;
c. “Black area”: private entrepreneurs operating without a
license, ad-hoc open air markets, van sales, babushkas, etc.
8. Analysis and report writing

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