In an ever-more disrupted retail work, the ability to achieve “Perfect Store” in every point of sales has been considered the main driver of profit: let’s explain what lies behind this concept – and detail how your brand(s) could make the most out of it.
What happens in a few seconds in front of 4m² of shelf makes the difference between success and failure for global companies.
Think of your local supermarket and the shoppers in it, each with their own mission, tastes and preferences. Are they doing their weekly shop or have they come in for a specific item? As they move around the store, they will typically spend 10-30 seconds in front of a section of shelf. What should be on that shelf to help the shopper find what they need? To help the retailer sell more and to give the manufacturer the best chance of having its brand chosen?
That “moment of truth” is so critical that it is the focus of thousands of people in the retail and CPG industries – sales people, brand managers, category managers, package design, supply chain, pricing, store managers, buyers. They are all on a quest to design and execute the Perfect Store and the keys to getting it right are a deep understanding of the shopper combined with attention to detail in retail execution.
What is the "Perfect Store"?
The concept of Perfect Store (*) was developed in the early 2000’s in a number of big CPG companies, but it was popularised by Unilever and Bain. It encapsulates the idea of an ideal, yet achievable, shopping experience, that would maximize the brand’s chances of sell-out. I would describe it as the logical continuation of the marketing mix canvas – the well-known “4 Ps” (Product, Price, Place, Promotion), that were then turned into “6 Ps” (+ People, Process) some years ago.
If I were to give one definition for the Perfect Store, I would say it is THE set of in-store standards that a manufacturer has to reach in order to optimise its performance in offline retail.
- understanding shopper needs and behaviours
- facing the reality of what can really be achieved in the field – e.g. working within the constraints of available space
- making trade-offs between retailer and manufacturer objectives
- being clear and realistic as regards the objectives for profit and sales
Setting goals and tracking results play a key role: the ‘Perfect Store’ is a concept that is performance-oriented, thus being able to monitor retail KPIs is a necessity.
(*) “Perfect Store” is the official name given to this program at Unilever, but you might have heard other names – “Golden Store” (P&G), “RED – Right Execution Daily” (Coca-Cola), “Flawless Execution” (PepsiCo), “Pictures of Success”, “Perfect Sales”…
Four groups of Perfect Store KPIs
There is no “one size fits all” set of KPIs: each manufacturer has to define its own Perfect Store standards. And even at the level of one single manufacturer, there can be several definitions of what the Perfect Store is – depending on markets, channels, formats, etc.
But all in all, I’d say we could boil it down to 4 main groups of factors that impact the buyer’s decision, and for which you will have to define clear targets:
- Availability (presence, assortment compliance, out-of-stock…)
- Visibility (number of facings, share of shelf, planogram compliance, display layout, shelf level…)
- Display (share of total display, location in the store, NPI launch, promo compliance, promo price, promo stock levels…)
- Value (price, perceived value, recommendation…)
How to define your Perfect Store
Defining these standards generally isn’t a one-person job: it is multidisciplinary work that aims at filling all the gaps between the brand plans and the sales plans. Most often, the task is co-owned by the heads of category management, consumer insights and go-to-market. There are 3 main steps for your team to follow:
- Understand what shoppers want and list all the reasons why they would pick your products over the others
- Accordingly, define what success looks like for your products in terms of availability, visibility, display and value
- Prioritize and streamline your objectives so you can come up with the final list of Perfect Store standards that you will have to execute and monitor
As always in retail: winning at the shelf is a question of details. If you cannot come with a proper process to accurately measure your Perfect Store compliance scores, there is little chance that you will get something out of it. In a convenience store for instance, you have to set 4m² of shelf to make an impact on shoppers who will spend 10-30 seconds in front of that shelf: there is no room for error and inaccuracy.
Test, analyze, refine. And iterate.
Also, the definition of your Perfect Store should be dynamic: it will be a never-ending, iterative process. For those that do it once and then fix it in stone, the impact of their Perfect Store strategy will be more little, plus it will quickly fade over time. The reasons for that are quite simple:
- “Test and learn”: executing your Perfect Store will provide you with key learnings on what works and what does not, having you refine your definition over and over.
- Environment: retail is an always-changing world and you will continuously have to think in advance about how to adapt your Perfect Store to an evolving market.
- PS’ own impact: your retail execution should actually end up changing shopper behaviour towards your products – and therefore it will come back to you having to understand these new behaviours, redefining your Perfect Store, etc.
For big brands, trying to detect signals and understand correlations across thousands of stores using traditional methods can easily become an analytical nightmare: using data science and machine learning technologies will help.
How to implement your Perfect Store strategy
Once you have agreed on the definition of your Perfect Store, you would have to formulate clear execution guidelines for it to become a reality.
2 routes to impact in-store conditions must be taken into account:
- Headquarter influence = how you can negotiate with the retailers at the HQ level to have them agree on your Perfect Store standards
>> Working in partnership with retailers is critical for the success of your Perfect Store strategy. They will actually look to you for guidance on how shoppers behave in your category and will expect you to design a Perfect Store that helps maximise the sales potential of the whole category.
- Field influence = how your field force can monitor that every store delivers the standards that have been agreed on at the HQ level, and negotiate locally for all those store that have not
>> These retail execution KPIs will become your field force’s objectives and the bonuses of your sales reps will often end up being calculated based on the compliance of the stores on their territories with your Perfect Store standards.
Perfecting Perfect Store execution
Let’s be clear, field execution is the real challenge here:
- Communicating the guidelines from HQ level to field level is tough. Without specific tools and processes, it often results in salespeople not fully understanding, and thus not delivering, your Perfect Store objectives. Setting priorities and sharing them with your field reps – e.g. using a tool like Cockpit – is the key to success.
- Accurately and objectively measuring how well you achieve these KPIs is equally important. It helps you understand the return on your investment in sales and how you can improve over time. Manufacturers often rely on their own field teams to collect data in-store, which presents challenges:
- data collection steals time from the real work of making improvements in the store
- companies only get a partial picture of their retail execution, as their reps can not cover all the stores
- auditing often isn’t the core skill or preference of field people – and so gaps and errors creep in
- choosing the right auditing tools (that may need to include Image Recognition features) is crucial for reps to easily collect all the data that is required to produce your KPIs – you may want to have a look at what a tool like Compass offers
- there is a conflict of interest if reps are measuring their own performance
If data quantity and quality is something that worries you, and if you don’t want your field force to use time on data collection, I invite you to look at how BeMyEye’s crowdsourcing solution might help.
From FMCG to other retail segments
The Perfect Store was born in the world of FMCG. Companies like Unilever, P&G, Coca-Cola, Royal Canin, Mars and PepsiCo have adopted it as a critical tool to help them become more efficient and effective in a challenging and dynamic environment.
As they continue to develop and improve the process it has also been taken up by other industries. Samsung, for instance, is considered as a real trailblazer in Consumer Electronics. In the Consumer Health Care (CHC) sector, companies like Johnson & Johnson or Reckitt Benckiser also have successfully improved their retail execution thanks to Perfect Store strategy. Perfect Store standards can be quite different, however – in Consumer Electronics and OTC Pharma, the level of recommendation by the staff is one of the most important Perfect Store KPIs, whereas it is not the case at all for most FMCG companies.
All manufacturers have become aware that improving shopper journey based on data isn’t only the prerogative of e-commerce players anymore. By equipping themselves with the right tools and processes, by making their decisions based on clear KPIs and by paying attention to the smallest details, brands and retailers now have the keys to deeply changing the future of physical points of sales. Leaders in each industry have understood it: retail has become a science. Perfect Store is even reaching HoReCa channel: via its “Perfect Serve” strategy, Coca-Cola now starts to look after how its beverages are being served to consumers.
If you’d like to learn more about how your team can use image recognition to complete more efficient stores audits, read the full outlook in our white paper “SCANNING THE SHELVES – How Image Recognition Helps Consumer Brands To Boost Their Retail Execution” here.