Ninety percent of purchasing decisions are based on visual appearance alone! Additionally, while product companies spend an average of 19% of their budget on promotional campaigns, less than 40% of displays are executed properly. If you are failing at merchandising, or merchandising execution, you are missing out on sales, period.
Use merchandising audits to ensure your displays are in place, your shelves are full, and your stores are ready to sell. If you are a merchandiser, retail operations professionals, area sales professional, consumer packaged goods manufacturer or wholesaler with product in physical locations, this article is for you.
Let’s dive in.
Purpose and scope of merchandising audits
First, merchandising audits fall in three broad categories.
1. Shelf audits
This category includes:
- Planogram compliance. Correct position on the shelf. Correct number of facings. No product “holes”. No out of stocks.
- Pricing. Correct price displayed by market and category. Correct label used.
2. Audits of seasonal programs and promotions
This category includes:
- In-store signage
- Special displays and ads
- Seasonal pricing and labels
- Sales associates’ training, awareness and compliance with in-store program
Across these broad categories, compliance means that a certain set of standards is met in a given time frame (duration of the program) at certain locations (seasonal programs may not be executed consistently across markets so the ability to “narrowcast” certain standards at certain locations is essential).
Unfortunately, merchandising compliance alone does not guarantee that a merchandising program will be a success at store level. For this reason, merchandisers need to look at the big picture and ask, for each store, “Would shoppers shop here?”. For this reason, we will add another non-merchandising category to our list of merchandising audit categories.
3. Audits of general appearance, presentation, cleanliness and store safety
The best merchandising program, even if implemented on time and in full, will be completely ineffective if shoppers won’t set foot in the store. For instance, if the general presentation, cleanliness, orderliness or safety of the store is not conducive to a positive customer experience, then customers won’t shop at your store.
Because of this, merchandising audits should not be conducted in vacuum. While your district managers, sales reps or other resources are in the store, have them conduct one or more audits on broad operational factors. For instance, audits focused on general cleanliness, health and safety, or loss prevention just to name a few.
It does not have to take a lot of time to complete these additional audits/inspections. And, they help paint a more complete picture that gives some context to your merchandising program.
Methods of conducting merchandising audits
Audit all stores
The merchandising audit should ideally take place in all stores. If this not be a possibility, pick a representative set. It is important to pick stores that truly represents your various markets (geography, socioeconomic factors, etc…) and store formats.
Make sure they happen!
The software or service you use should be able to tell you exactly who has and hasn’t done audits and where. Don’t assume audits are conducted, get quantifiable proof and detailed reports. Time stamps and photos don’t lie, get them!
Make sure that issues are addressed! An audit has more value if non-compliant issues are addressed and remedied. Again, software should help you with this. Software like Compliant IA shows you what is assigned and to whom as well as what hasn’t been fixed, and what’s late. Turn the audit into a vehicle for improvement and remedy issues before they jeopardize the success of the merchandising program.
Audits are a learning Opportunity
No store likes being “audited” or “inspected”…until you give the store something back! The word “audit” or “inspection” is often met with resistance initially. But, it doesn’t have to be this way. Give something back to the store.
Let stores know that audits help them track and manage their strengths and weaknesses. Use the “audit” as a vehicle for continuous training (include best practice photos and descriptions), not as a tool for finger-pointing.
Give stores a voice. Stores can comment on the audit and outstanding issues.
Equip employees to do their jobs. Show them best practices with words and pictures. This saves them time and helps them know who to do their job well.
Last, remember a store audit is an opportunity to grow sales and, if you put the right process and software in place, you will experience a “bottom up”, grass-root endorsement for your standards and significantly higher compliance.
Should you conduct merchandising audits internally or use a third party?
Some companies, like Compliant IA, sell turn-key mobile and tablet friendly software for retailers and manufacturers to audit their own stores, internally. Other companies offer a “merchandising service”, akin to a mystery shopper service, and send individuals under contract to audit your stores.
You should conduct audits internally if you have the resources to do so, want to control quality and/or don’t want to outsource a core competency like merchandising compliance. You should conduct audits externally (outsource), if you lack the resources internally and have no concern with the quality and reliability of an outsourced service.
Do you want more information on retail audits/inspections? See our definitive guide: