Positive Promotions

To remain relevant and competitive, retailers need to have a comprehensive merchandising strategy, as well as an effective way of communicating it to associates.

The fourth installment in a series of research and best practice sharing with SUPERVALU University focuses on organizational survey results from independent grocery retail associates in key areas of merchandising, and how they affect associate attitudes and perceptions of store operations.

Stores that scored well on promotion-related questions of the survey also ranked well on questions regarding communication and teamwork between departments and management when planning and implementing promotions. Competitive ad pricing was mentioned as well. Questions on which independent retailers scored low had to do with not getting an adequate return for promotional investments. Comments by associates at low-scoring retailers indicated that promotions were put together with little thought or strategy, and that industry trends were the only driving force behind sales and promotions.

Other survey ratings and comments centered on inventory levels, out-of-stocks, product assortment and having the right product for customer needs. High-scoring stores ranked well on questions such as inventory turns meeting or exceeding goals, and effective use of programs to lower the cost of goods. Associates agreed that customers recognized the stores for the quality and variety of their products, and for being well stocked and merchandised.

Questions on which independent retailers scored low related to out-of-stocks for ad items, ordering the wrong product, warehouse shortages on orders, poor rotation and expired products on shelves. Associates also mentioned incorrectly faced shelves and poor store conditions.

Other key indicators of success were whether a store had a price strategy in place and whether management was monitoring the competition. Associates at high-scoring stores agreed that management was pricing effectively in their markets, and that management was aware of competitors' retail pricing on key items. Low-scoring stores inspired many comments about customer complaints regarding high prices, and inconsistent pricing between the shelf and the store's system.

At high-scoring stores, management took an active role in the placement of products and involved associates in the decision process. Associates believed management was making good merchandising decisions with arrangement, display options and locations. They also thought management did a good job of bringing in new products and updating displays. Low-scoring stores had associate comments about displays and end caps that interrupted customer flow or caused traffic issues. Other comments mentioned that management didn't have a strategy for placement or didn't check displays' effectiveness.

Communication a Must

To be relevant to their customers and competitive in their markets, retailers must have a strategy for merchandising, a process for implementation and a means for measuring success. To determine the right product mix, placement, pricing and promotion, a strategic merchandising plan is created through partnerships between retailers and key suppliers. The plan is based on consumer and market data, and aligned with the store format, goals and objectives established by the retailer. Once a plan has been determined, implementing and measuring the results are critical to its success.

Best-in-class companies rely on good communication between departments and management, as well as teamwork and associate involvement in executing their merchandising plans. Associates of stores that scored well commented on the role good communication played.

Associates of stores that scored low in these areas commented on customer complaints regarding out-of-stocks, a dearth of new items, pricing that wasn't competitive, and outdated products. Employees also noted a lack of cleanliness, which is critical when customers are choosing a store at which to shop (Progressive Grocer Consumer Survey). As indicated by the comments, the lack of a plan, or a poorly communicated plan, can create a competitive and unproductive environment. Associates consequently are unaware of the company's goals and unable to help it reach them.

Merchandising affects not only customers' shopping experience, but also associates' working experience. Retailers that want to improve both should pay attention to all areas of merchandising by creating a plan, communicating it and involving all associates in implementing it. Through this process, best-in-class retailers have created cultures that support their strategy, empower their employees and meet the needs of their customers.