Promotional investment can increase sales and growth. But for many retailers, poor store compliance to head office plans erode planned returns as volume uplifts aren’t achieved, stock doesn’t stick to the shop floor and overhangs occur, lowering inventory turns, increasing complexity and impacting labour as associates manage the stock back into the store warehouse.
Without shared information on revenue, pricing and promotion, it’s almost impossible to develop or execute new promotions swiftly. Bad promotional design and poor communication combined with disparate systems and technologies adds multiple levels of complexity to an already ineffective process.
The sales profile for promotions is substantially biased, with up to 20% of planned incremental sales missed when products aren’t available in the first few days of launch. At the other end of the cycle, we see over 8% of working capital tied up in stock overhangs, resulting in the need to markdown.
Many corporate systems don’t have the required level of analytical capabilities to offer useful insight when connecting promotional design to execution. We’ve found the hours to implement new promotions, modular layouts and new product listings are significant, often accounting for 40% of total labour spent in store. But these activities are rarely informed or targeted by data and insight.
The national arm of a leading global retailer improved promotional setup compliance by 7%pts, generating incremental sales exceeding $127m
A UK grocer identified a 10% redeployment opportunity in their working capital by preventing post-promotion stock overhang
A US retailer estimated $1.2Bn of incremental sales growth, through improving modular setup and item availability during the first 30 days of NPD items’ life-cycle