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 chance of sell-out: I would actually describe it as the logical continuation of the marketing mix canvas – the well-known “4 Ps” (Product, Price, Place, Promotion), that were already 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. It is thus based on the understanding of shopper needs and behaviours, but it also involves:
- 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 is a huge part of the game: the Perfect Store is a 100% performance-oriented concept, and thus being able to monitor its KPIs is one of the top priorities.
(*) “Perfect Store” is the official name of the program at Unilever, but you might have heard other names for it, depending on the company – “Golden Store” (P&G), “RED – Right Execution Daily” (Coca-Cola), “Flawless Execution” (PepsiCo), “Pictures of Success”, “Perfect Sales”…
Four groups of Perfect Store KPIs
Of course, this is not a “one size fits all” concept, and each manufacturer has to define its own Perfect Store standards. 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:
- 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 pragmatic, multidisciplinary work that aims at filling all the gaps between the brand plans and the sales plans. Your team will have to follow 3 main steps in order to build them:
- 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 in order to come up with the final list of target standards for your Perfect Store – and that you will have to execute and monitor
As always in retail: winning at the shelf is a question of details. 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, so you need to be driven by science and measurement. If you don’t have a proper process to accurately measure your Perfect Store compliance scores, there is little chance that you will get something out of it.
Test, analyze, refine. And iterate.
Also, the Perfect Store should be considered a dynamic system: designing it will be a never-ending, iterative process. So if you think you may just do it once and then fix it in stone, you are missing it again – and the impact of your Perfect Store strategy will quickly fade over time. The reasons for that are quite simple:
- 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.
- “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.
- 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.
Using machine learning technologies will help you in that process: trying to detect signals and understand correlations across thousands of stores using traditional methods can easily become an analytical nightmare.
How to implement your Perfect Store strategy
Most often, the definition of the Perfect Store itself is co-owned by the heads of category management, consumer insights and go-to-market teams. Once they have agreed on the definition, they would also have to formulate clear execution guidelines for it to become a reality.
If you are part of this process there are 2 routes to impact in-store conditions that must be taken into account:
- HQ influence = how you can negotiate with the retailers to have them agree on the standards you wish to set
>> Working in partnership with retailers is critical for success. Your retail customers will look to you for guidance on how shoppers behave in your category. They 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
>> The retail execution KPIs that have been defined will become the field force’s objectives. The sales reps’ bonuses will often be calculated based on the compliance of their stores with these 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 can be tough. Without specific tools and processes, it will often result in salespeople not fully understanding (and thus not delivering) your Perfect Store objectives. Setting clear KPIs for field performance is a key to success.
- Accurately and objectively measuring how well you achieve these KPIs is equally important. It will help you understand the return on your investment in sales and help you improve over time. Some companies have used their field teams to collect data in-store but we find that this is becoming less common. Companies tell us that:
- their reps can not cover all stores and so they only get a partial picture
- data collection steals time from the real work of making improvements in the store
- auditing often isn’t the core skill or preference of field people and so gaps and errors creep in
- there is an investment in tools that can become obsolete or require training and troubleshooting (e.g. the time the rep spends waiting for images to be processed)
- 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 waste time on data collection, I invite you to look at how a 3rd-party retail execution tracking solution like BeMyEye might help.
When it comes to Perfect Store execution, the devil is in the details: if you don’t set clear standards and objective ways to measure them at all levels, even at the more micro ones, it is likely that your whole strategy will end up being wasted.
From FMCG to other retail segments
The Perfect Store was born in the world of FMCG. Companies like Unilever, P&G, Coca-Cola, 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.