Even the most customer-obsessed brick-and-mortar stores suffer from execution problems that obstruct sales and damage the shopping experience. As your retail chain expands its footprint and as you add more SKUs to your assortment, it becomes harder to understand how pervasive these issues are and how much they cost you.
We’ve worked with retailers that have hundreds of locations, as well as retailers with fewer than 50 stores, and found that none are immune to store execution problems. We recently asked 65 convenience store operations executives what factor had the greatest influence on same-store growth in their chains. 37% of respondents said that focusing on in-store operational issues was the most important, over other factors including promotional strategies and hiring new staff.
Despite their universality, store operators have traditionally had no way of catching and fixing these “little” problems. In fact, the operations executives surveyed estimated that they lose 1-3% of total sales due to in-store operational problems.
Enter CB4. Our solution uses patented AI algorithms on retail POS data to shine a light on store execution problems and help retailers overcome them. Here’s what we’ve learned about the top 7 in-store operational issues and how they’re hurting the retail sector.
The Product isn’t Visible
How long will your customers look for a product before they just give up on finding it? What do they do when a store fails to meet the expectation that a product be easily accessible in a given location?
The answer is different for each customer. But if our research is any indication, making products findable is extremely important. We surveyed over 1,000 US-based grocery shoppers and learned that nearly half of the shoppers surveyed will seek out a local competitor to find what they want.
Sometimes the product they want is out-of-stock or in the stockroom. But in certain retail verticals—like specialty retail, in which there are so many SKUs to manage—the bulk of issues is related to presentation problems like a lack of product findability. As such, this is one of the most pervasive yet preventable obstacles to brick-and-mortar execution.
The Ticketed Price is Wrong
Pricing and labeling issues are among the rarest issues in brick-and-mortar stores, but the most painful nonethless. That’s because you take great care to ensure your prices are (a) competitive, (b) deliver value to your customer, and (c) protect your bottom line. There’s an art to setting margins.
Incorrect price labels mean your efforts have gone to waste. A dollar lost here and there is enough to obliterate a grocer’s already razor-thin margins. In apparel, a mis-ticketed item can mean significant profit loss.
In a best-case scenario, an item with an incorrect price tag means you sell a product for less than its MSRP and lose some profits. In a worst-case scenario, the item is priced higher than it should be, and doesn’t move from your shelves as a result. When the item is mistakenly priced lower than it should be, you could be setting up your sales associates for conflicts with shoppers—a serious blow to customer experience.
Inventory is Inaccurate
Even the most cutting-edge inventory systems don’t get it right 100% of the time. We like to call this one “phantom units”—when there’s a discrepancy between reported and actual inventory.
This common problem can trip up brick-and-mortar teams. When a system says there are units in stock, but there aren’t any, there’s no replenishment triggered and customers are left disappointed when the product they want is chronically out-of-stock. When inventory looks like zero, but there’s actually items in stock, you’re triggering a replenishment alert that will lead to excess inventory that never moves.
The Product is Out-of-Stock
Out-of-stock merchandise is the bane of every retailer’s existence. That’s why leading retailers, like Walmart, are cracking down on suppliers and enacting consequences when orders aren’t filled on time.
For some of our retail partners, store managers can resolve out-of-stocks by requesting additional units from vendors. For others, the process is much more complex and involves sending the issues up the corporate ladder. In either scenario, these problems tend to go unnoticed for far too long, and once they are noticed, there’s often a long lag until between when an order is placed and when the product is eventually replenished.
Promotional Signage is Missing or Confusing
Retailers spend a good deal of time crafting promotional strategies that help them move merchandise and satisfy shoppers. Their efforts go to waste when store teams don’t use or have access to promotional signage to get the message out.
Sometimes, the sign with the markdown is missing. Sometimes, the price tag conflicts with the sign and confuses shoppers. Sometimes, the sign is up but the full price of the item is unclear, and customers don’t know how good a deal they’re getting. There’s a lot of room for unclear markdowns to run amok, particularly in settings like supermarkets where promotions are everywhere and ever-changing.
Misalignment with Visual Directive
Planogram compliance is more or less of a problem depending on the retail vertical you’re working in. But regardless, stores that don’t adhere to their visual directives will cost you sales.
We’ve seen the issue is especially problematic in grocery settings. Grocery managers are given a good deal of latitude for knowing what’s best placed where in their stores. But, of course, opportunities can be missed. When product with time-sensitive or high local demand isn’t placed where a customer can find it, stores lose out on critical sales opportunities.
Product Still in Stockroom
No matter how vigilant your store staff are, it’s hard to keep products out on the selling floor. This is especially true in the apparel vertical, where popular sizes, colors, and styles are left in the stockroom after their counterparts in the floor are scooped up by shoppers. Not even the most eagle-eyed store managers can tell they’re not replenished, at least not efficiently.
With the e-commerce boom and the dawn of mobile shopping, customers who can’t find what they want swiftly can easily just buy your merchandise elsewhere.
An Enduring Challenge for Brick-and-Mortar
What stands out is that these problems are universal. They’re as persistent in small chains with just a handful of doors as they are in chains with hundreds of stores across the country. When these issues affect SKUs with high demand in a given store, they can hinder same-store growth, thwart sales, and negatively impact customer experience.
Up till now, brick-and-mortar retailers had no way of knowing the cost of these issues or a very effective way of fixing. CB4’s patented AI algorithms begin by by unlocking local consumer demand patterns in your chain. From there, we send recommendations to store managers to fix hard-to-detect operational issues that effect high-demand SKUs. When a store manager completes a task that CB4 sends, they can see how they’ve contributed to the bottom line and feel good that you can see it, too.
To learn how much money your chain may be losing due to in-store operational issues, check out our Lost Sales Calculator. If you want to learn more about how the tool works, then our Technology Overview is for you.