Fixing Order Mistakes at the Store Level. Introduction Cindy Sattler, President and CEO Joel Nelson,...

Fixing Order Mistakes at the Store Level

Introduction

• Cindy Sattler, President and CEO

• Joel Nelson, Vice President Business Development

• National Merchandising Service Organization (MSO) since 1962

• Reps in all 50 states are W2 employees

• Service all retail channels

• Associate member and Preferred Provider of the IHA

• Member of NARMS

What is an MSO? • 3rd party liaison between manufacturers and retailers

• Support product activity at retail to drive sales

• Extension of client’s team executing services at retail

• In-store resource to improve product performance and drive sales

Key Statistics Benefits of working with an MSO include*:• Improved retail compliance

– Resets implemented faster – Higher quality of initial planogram compliance– 7.8% category sales increase– 70% of all decisions are made at the shelf

• Only 1 in 4 displays use POP materials

• Getting new product to the shelf faster– 98% new product cut-ins vs. 60% without 3rd party support

* NARMS study

Key Statistics Impact of Out-Of-Stocks (OOS):

• Cost retailers/manufacturers $93 billion annually*

• Average OOS is 8%, studies show as high as 17.8%• Distribution voids impact additional 5-10 points • 1 in 5 consumers forego purchase due to OOS

• Retailers could increase sales 3.7% if OOS improved• OOS = leaving store with no purchase:

– Empty shelves or Locked item, no help available– Found help but could not locate item– Price/offer shelf did not match advertised price

*RIS News and IHL group published in Retailwire

Key Statistics Continued

New Item Introductions:

• Most POGs not implemented according to plan– Once set, drift from plan at rate of 10% per week

• 17% new items disappear within 8 wks of initial placement

• Less than 50% promotion execution reaches stores– OOS on promoted items averages 15%

• Compliance is largely unmonitored/unmeasured

Key Statistics Continued

Sales Lift of Endcaps

• Studies show 98% to 141% sales lift for endcap product with promotions pricing vs. items in regular shelf position at regular price.

How Is Product Supported At Retail?

• Reactive– Fixing order mistakes

• Proactive– Supporting the brand/product at retail

• Interactive– Education of retailer employees and/or consumers

Order Mistakes Consequences

• Poor product performance

• Loss of sales / designated floor space

• Mandatory RTV

• Added expense to vendor

• Negative impact on vendor/retailer relationship

How Is Product Supported At Retail? Reactive- Fixing order mistakes at the store level

Service Examples:

• Re-ticketing / Price Changes • Incorrect UPC

• Defective Merchandise • Packaging Issues

• Promotional / Branding Errors • Poor Sales Performance

How Is Product Supported At Retail? Reactive- Fixing order mistakes at the store level

Case study: Licensing Mistake

Issue: Logo tag used several months early

Risk: Lose logo license if not fixed within 10 days

Options: 1) Pull inventory and return to vendor2) Pull logo tag from inventory at store level

Results: Kept licenseKept inventory at retail

How Is Product Supported At Retail? Reactive- Fixing order mistakes at the store level

Case study: Trademark Infringement

Issue: Used trademark already registered

Risk: Lose lawsuit for trademark infringement

Options: 1) Pull inventory and return to vendor2) Cover trademark on all inventory at store level

Results: Minimized financial result of lawsuitKept inventory at retail

How Is Product Supported At Retail? Reactive- Fixing order mistakes at the store level

Case study: Packaging Failure

Issue: Packaging was breaking down at retail

Risk: Branding / Quality / Salability

Options: 1) Pull inventory and return to vendor2) Mark down product3) Fix / replace packaging of inventory at store level

Results: Improved packaging met branding standardsMaintained retail space and sold at full price

How Is Product Supported At Retail? Reactive- Fixing order mistakes at the store level

Case study: Instant Redeemable Coupon

Issue: Sales of select products down

Risk: Inventory Levels

Options: 1) Potential for product markdown 2) Affix / distribute coupon of inventory at store level

Results: Increased sales due to promotionMaintained retail space

How Is Product Supported At Retail? Proactive- Supporting brand / product at retail

Service Examples:

• Ongoing In-store Brand Support • Audits

• Promotion Sets / New Item Cut-ins • Restock

• Resets / Store Support • POP Materials

How Is Product Supported At Retail? Proactive- Supporting brand / product at retail

Case study: New Retailer Test

Issue: Supporting test to gain full chain distribution

Risk: Not gaining chain wide distribution

Options: 1) Monitor sales performance2) Work with retailer on suspected OOS3) Store visits to audit and eliminate OOS

Results: Eliminated OOSProvided retail intelligenceAchieved chain wide distribution

How Is Product Supported At Retail? Proactive- Supporting brand / product at retail

Case study: Driving sales through an endcap

Issue: # of stores that don’t set endcap on time

Risk: Loss of sales/promotions

Options: 1) Monitor sales performance2) Audit to ensure all endcaps are set, set if necessary

Results: All possible endcaps setReport provided for any endcaps not setIncreased sales

How Is Product Supported At Retail? Proactive- Supporting brand / product at retail

Case study: POP Placement

Issue: Differentiating product at retail

Risk: Effectiveness relative to other print media

Options: 1) Other print media than POP materials2) Differentiate product at shelf w/ POP materials

Results: Placed POP materials at 16,000+ locationsLearned that not all stores carried productEffective use of print media

How Is Product Supported At Retail? Interactive- Education of retailer employees and/or consumers

Service Examples:

• Product Knowledge training • Sampling/Demos

• Mystery Shopping • Suggestive Selling

• Store Placement Assistance • Order Recommendations

How Is Product Supported At Retail? Interactive- Education of retailer employees and/or consumers

Case study: Mystery Shop

Issue: Employee knowledge and service

Risk: Lack of in-store Brand support

Options: 1) Evaluate in-store support from sales data2) Use company personnel to observe in-store support3) Perform broader scope evaluation of in-store

support

Results: More comprehensive perspective on in-store supportIndependent perspective

How Is Product Supported At Retail? Interactive- Education of retailer employees and/or consumers

Case study: Brand ambassador

Issue: Fast growth company unable to support brand at retail

Risk: Loss of distribution

Options: 1) Make no changes and risk loss of distribution2) Hire and manage staff to support brand at retail3) Outsource and use services as needed

Results: Increased sales through store level insights Improved retailer relationshipsProtected distribution

How Is Product Supported At Retail? Interactive- Education of retailer employees and/or consumers

Case study: Seasonal product distribution

Issue: 2nd facing in another dept would improve sales

Risk: Not maximizing sales

Options: 1) Status quo2) Work with buyer to effect store level change3) Deploy store level solution to get 2nd facing

Results: 70% of stores got 2nd facing Sales increased

Summary

• Thank you!!

Cindy SattlerPresident and CEOLawrence Merchandising Servicescsattler@lmsvc.comO: 763-383-5709 M: 952-693-5491

Joel NelsonVice President Business DevelopmentLawrence Merchandising Servicesjnelson@lmsvc.comO: 763-383-5715 M: 612-616-4752