As crazy and unfair as it sounds, the often-monumental effort to create, approve and get buy-off from the buyer for a trade promotion is only half the battle.  The promotion has to actually execute – it has to perform within every store, every market and every region in which it was planned to run.  The ageless and highly frustrating question asked by any company that offers channel incentives, trade promotion, cooperative advertising or market development funds is did it?

Retail Execution is the practice of physically going on site at each store (or representative and rotating locations) and performing audits the shelf, inventory, pricing, displays, planograms and other activities.  The merchandiser rep is the person who carries these functions out.

Compliance checking is certainly a critical function of retail execution, however there are other key areas of functionality that can and should be major components of the value drivers that impact trade promotion performance and ROI.  The linkages for each of these functions to trade promotion are often overlooked when TPx transformation initiatives such as TPM system replacement, promotion optimization integration (TPO) and/or improved promotion performance analytics tools are being considered by CPG companies.

For the most part, that oversight is the direct result of traditional assumptions that retail execution or even direct store delivery (DSD) processes and technology are not necessarily related to trade promotion management.  But for many people, the “x” in TPX includes the entire range of processes and technologies that comprises an end-to-end channel management which does indeed include retail execution as a mission critical function that must be aligned with the usual TPM or TPO applications.

Speaking with one of the more well-known retail execution systems vendors at a recent Consumer Goods Technology event, I heard a first-hand account of the level of frustration many REX executives have regarding the positioning and importance placed on them by CPG sales and marketing executives.

“Paramount in our pitch is the need to connect all of our functions on a real-time basis with the trade [promotion management] systems, and why,” he states. “When we show the path of data flow and promotion performance, it becomes evident what value the mobile retail execution system does bring to the ROI of trade spending.”

Indeed, the primary component functions of a traditional retail execution solution contribute much to the ultimate ROI of any trade promotion.  Let’s take a quick look at what they are and how each impacts trade promotion performance

Scheduling Store Visits

The late George Harrison sang, “If you don’t know where you’re goin’, any road will take you there!”  Great song, by the way.

Most field merchandisers will have a specific schedule of visits they will make to retail locations in their territory on a routine basis.  Mostly, these are set rotations, of course, due to the typically vast coverage they are responsible for.  They will have a set list of activities to perform, as below; but for the most part, the responsibilities are general from place to place.

The scheduling manager may, at times, have specific issues, problems or other reasons why they are sending a merchandiser to a particular retail outlet; and less often than expected they might include checking to see if a specific promotion is being executed properly (e.g. promotional price is accurately labeled, the display is in place, product is on the shelf, etc.).  These requests usually come to the scheduling manager ad hoc from a sales rep, or potentially a trade promotion manager.

One area of concern is that the scheduler cannot view or does not get real-time visibility to promotion plans as they are planned, and more specifically, within a few days of the scheduled start date.  If they had this information, even on an ad hoc basis, the scheduler could be poised to ready his field merchandiser reps to ensure that they check for promotion readiness.  Some systems do have this integration, and although there has been no research to prove out the theory, no doubt, there is a significant reduction in promotion compliance failure when this happens.

Regrettably, observation and experience show that most companies do not possess this intelligence, therefore, act more in a post-promotion response and debrief mode than in a clear preventative action posture.  While most systems do have the ability to display planned promotions, often there is little in the way of detail to enable effective preventative measures.  For instance, being able to generate reports on the fly that show persistent abusers among the store locations can enable a more effective scheduling of visits to target and fix these problem stores.

Instore Audits

The technology today that companies use to manage their retail execution and field merchandising activities has come a long way, to be sure.  However, the weak linkage in that technology is the data.

There are some very smart, attractive and highly functional tools in the marketplace for retail execution now; but the cost of integration and expansion of dashboards and lack of data driving other reports on the handheld mobile devices often fail to enable the visibility the field merchandiser needs to have to be more effective and efficient at rooting out specific problems.

For instance, reps often lack the details of the promotion that would enable a thorough audit.  Depending upon the specific tool, the item might be flagged as on promotion, but often the specific to/from dates or other details such as the tactics and pricing are not evident – there is no immediate, real-time link or access to the specific promotion plan.  Therefore, the rep cannot effectively audit the promotion compliance.  More modern REX systems can accommodate more detailed audits; however if any changes have been made to the promotion tactics, these would often be unavailable for verification.  Likewise, substantive issues such as store cleanliness, competitive placement, inaccurate pricing or lack of details (or illustrations) of the promotion displays will result in failure to adequately audit for compliance.

Inventory Management

Although the level of sophistication of REX systems has indeed increased, inventory tracking continues to be a highly volatile issue.  So many problems arise outside of the scope of the REX system management, of course, but having at least some idea of the expected inventory on hand or in transit would be a tremendous help to the merchandise rep.

Most mobile devices used include inventory counting and communications capabilities, but rarely can the merchandiser rep have any real power to do anything substantive in the way of a solution to a problem.  One flaw we have seen in some systems is that they do not show the pre-promotion support order – the shipment of inventory to a specific store as a result of the promotion sell-in.

One of the problems most people ignore is that when the promotions are finalized, sometimes as much as 8 weeks in advance of the promotion start date, the actual shipment of product intended to support that promotion is executed early on, with potentially weeks of normal sales activity reducing stocks and causing low or out-of-stock conditions at the start of the promotion. If the shipping dates and subsequent shipping results (e.g. delivery to the distribution center and store dock) were available to the scheduling manager and the merchandiser reps, more pinpointed visits could be scheduled to validate and verify with time enough, perhaps, to get inventory to the store before the promotion kicks off.

Some REX vendors acknowledge this and/or have added in access to inventory data and tracking.  Others are planning it, but too many others still fail to see that as a major component functionality of retail execution.

Order Management

With REX systems that have the ability to create and manage orders (apart from the traditional Direct Store Delivery or DSD functionality), there are capabilities to initiate emergency replenishment orders; however there has been a reluctance to have that be a duty of the merchandise rep.  Still, being able to physically check the inventory on hand in the shelf and especially at the store stockroom, then actually enable action to re-order would clearly help to decrease out-of-stock conditions that do not seem to be getting better in the industry.

Most CPG executives see this as a function of a direct store delivery or DSD tool and business process.  However, more and more CPG companies (as well as other industries that sell through retail) are beginning to give more order management responsibilities to the field merchandising teams to prevent out-of-stocks and increase promotion product on shelf, ensuring higher return on promotion dollars.

Depending upon the nature of the organizational structure of the retailer, the store managers may be in positions of authority over decisions of reordering.  In these cases, a final quick conference between the merchandising rep and the store manager can often result in an agreed amount of product orders to support the existing inventory for promotion.  Where there are no managerial product ordering responsibilities instore, the merchandising reps could initiate an emergency or replacement order based on threshold levels built into the system governance.

Today’s REX systems enable real-time ordering and digital signatures with strong databases that show product hierarchies, pricing and We will no doubt see more of that functionality as more technology is introduced.

Store Planning

Another major area of coverage is the ability to measure, analyze and create assortment plans and instore product positioning.  While this is typically outside the purview of trade promotion, we do see a potential to leverage these tools to create more effective trade promotion planning, especially around the growing popularity of demonstrations as a tactic, and, of course, where and how to place promotional displays, signage and other assets.

REX systems have the ability to photograph existing store fixtures, displays and overall environments to enable store and assortment planners to work with TPM planners to build more effective promotion ROI. In fact, considering that one of the industry’s most pressing issues, connecting sales and marketing teams with higher value collaboration, this would be a great tool to aid in that quest.  The more intelligence that the trade promotion planners can pick up from insights created through assortment and store planning, the more clever, creative and aggressive key account managers can be in their planning for promotions.

Sharing this intelligence with store buyers who often do not see these types of data accumulated for specific regions, locations and store clusters can also accelerate the value proposition the KAM’s bring to the buyer and store marketing teams.  This is another way to invigorate the promotions and increase POS results, driving high ROI and more effective collaboration.

Other functions like providing a presentation, sharing reporting and consumer data and  better visual acuity all contribute to the impact retail execution has on improving trade promotion spending ROI and generating higher average POS.

Author Rob Hand

Consumer products industry domain expert specializing in trade promotion management and execution. Experienced data and analytics professional focused on how your company can improve the ROI, reduce failure rates and improve overall value for the money you spend on trade promotion, co-op advertising, consumer marketing, demand planning and retail execution. When your company is ready to move to a new vendor, develop a more advanced data and AI capability, improve the collaboration with your marketing department and retail accounts, I am the best contact you can make. Independent, reliable domain knowledge and a long history of success will ensure your own successful results.

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