The “Wedge” and Store Execution

The focus on execution, specifically at the retail store level has been getting well deserved and overdue exposure lately. Recently there have been 2 major articles that serve, at least in our opinion, as a warning beacon to all retailers – that is, without accurate store execution, specifically of strategic merchandising plans, even the best retailers will have a hard time succeeding in the highly competitive markets that currently exist and will continue to exist in the foreseeable future.

The 2 major studies, (ISI Sharegroup, Supermarket News, Store Inefficiencies Cost Industry 1% of Sales, Sharegroup Says, Apr 25, 2008 6:00 AM, By Michael Garry) and ( Robert Angel’s Linking Execution With Strategy in Support Functions) clearly point out the distinct importance that execution has. Mr. Angel’s study applies to execution of strategy across all industries, and the ISI study is specific to the revenue opportunity that is left on the table for retailers due to store inefficiencies. It’s clear that even the best strategies require even better execution in order to get the desired results.

For retailers, execution is the biggest hurdle no matter how complex the initiative. Be it Customer Service, Inventory Management, Merchandising resets, new store setup, maintenance, or you name it, we believe tools in the store that minimize the burden of execution while improving the accuracy and execution are highly valuable. This is precisely why we find it so hard to believe that the services IPMS offers (i.e. integrated shelf strips and shelf labels – “Tools”), the provision of tools that virtually guarantee flawless execution in a retail store are still viewed as an expense! Viewed as a cost? Especially when all the research points to these types of tools as providing a sizable value?

Take a recent example of a conversation with a retailer regarding the use of these tools in stores. This particular retailer fits into the category of retailers (see previous blog – “Shelf Strips – Industry Assessment Today”) that have tried the use of these tools with mixed results and have reduced their use for a number of reasons. Mainly that the current service provider could not adapt to the changing needs of the business and, at least in the case of this retailer, these tools are viewed as an expense. So the performance of the tools are measured only by getting the lowest cost alone, not whether they provide the best quality and value that fits the current needs of the company. When presented with additional uses and ideas that would greatly improve the use and value to their stores, the response from executive management was that they were considering stopping the use of shelf strips in stores all together because it was less expensive to have the stores print all the labels. The impact to the store labor, the associates’ decreased ability to accurately set and maintain the shelves, the erosion of shelf integrity, all while the total cost to the company exponentially increases. However, in this case the main consideration was the per unit cost of a single item.

It is at this point when the “wedge” is usually discussed. Leveraging costs for increasing returns. It is hard to believe that even in today’s retail landscape that this concept is not given the spotlight it should have. Put simply, the tools we offer to link execution at the store to the strategic initiatives of the company continually reduce labor costs and increase revenue, the pure definition of the “wedge”. Understanding that the store labor budget and the shelf strip budget are typically different budgets, they both are compared to the same revenue line. Our belief is that the overall performance of the organization is paramount and how to account for these tools becomes much simpler to resolve than the hurdles each store is facing in order to get proper execution of strategic initiatives.

IPMS has been continually helping retailers expand the “wedge” and improving store execution for over 15 years by developing solutions that expand and evolve based on ever changing needs.

Let us develop solutions with you today. Contact IPMS

This entry was posted on Monday, June 16th, 2008 at 9:06 am by Bill Francis and is filed under Blog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.