Retailers struggle with in-store merchandising

In-store merchandising — one of the tenets of retail — is proving to be a challenge that, if not done correctly, could cut into sales.

Why it matters: Nearly two-thirds of retailers say they’ve lost more than 10% of their total annual sales because they weren’t able to display relevant products and execute promotions effectively, according to a new Coresight Research report.

• The survey, which was conducted with 222 retail merchandise decision-makers in North America, was developed for the retail merchandising platform One Door.

The big picture: Consumers have more ways to shop. They’re more digital than ever and they’re prone to changing their preferences, further compounding challenges.

Zoom out: Retailers have put money into solving labor inefficiencies and ineffective localization, but more investment is needed, the survey finds.

Zoom in: There is often a gap in communication, says Tom Erskine, CEO of One Door.

• “Retailers are putting a lot more emphasis on driving prescriptive plans from HQ into their store locations," he says, giving store and field teams much less autonomy with regard to merchandising.
• Many of those plans don’t account for the unique differences at each store location, making it difficult for the store teams to do their job effectively, he says.
• “The unfortunate reality that kicks a lot of upstream planners in the face is that there's just an incredible amount of variability, no matter how consistent you think your stores are,” he says.

Between the lines: “There's so many ways to kind of pick up the right labor dollars if we've got better processes in place,” Deborah Weinswig, CEO and founder of Coresight Research, says.

• Around 58% of retailers say they were able to save at least 10% of their annual labor expenditure by investing in improving labor inefficiencies.

• “It's all down to giving the associate everything they need in a single pane of glass to execute the work they need to do effectively at the shelf, and the at the shelf is important,” Erskine says.

Of note: This is where technology can help, especially around deep analytics of how products perform across stores, for instance.

• Around 77% of U.S. retailers said that they find it challenging to integrate advanced technology across their merchandise operations.

What they’re saying: “The transformation of these platforms is extremely challenging because they represent such a core part of the retailer's business,” Erskine says.

• What One Door does, he says, is “wrap and renew” legacy systems, as opposed to “rip and replace them.”