5 of the biggest mistakes retailers make again and again

Over the past few weeks we gave you many tips on what to do to make your store design more effective, ranging from tracking touches to thinking about your ceiling height. But what are the big don’ts in retail execution? For this I turned to our retail experts Bas Kemme and Sebastiaan Vaessen, collectively >20 years of experience in retail consulting in FMCG, fashion and home furnishing.  What are some of the mistakes they’ve seen retailers make over and over again? Here’s the top 5.

*1. Suboptimal shelves

Creating the perfect shelf is a science as much as it is an art. As we’ve pointed out in an earlier post there are certain patterns in human behavior for retailers to take into account when designing a shelf. But the next question is: what to put on the shelf? You can make shelf allocation as complicated as you want and though the more sophisticated models might allow for most optimization, most retailers first have to get their basics right. What’s often the case is that too much shelf space is allocated to poor performing SKUs at the expense of well performing ones. Though it might sound like a no-brainer: have you actually allocated your shelf space in proportion to sales volumes?

*2. Promoting non-core items

We all have associations with certain brands. For Ralph Lauren this is a polo shirt, for McDonald’s a hamburger. Of course retailers need to innovate, spread their risks and offer a sufficiently  broad assortment, but promoting non-core items that do not sell can be a real killer to your brand. Don’t fall into the trap of spending all of your marketing budget on promoting items that are not in your primary category. You might feel that you need to promote items customers don’t know about yet, but think about the world’s most successful and iconic brands. Ralph Lauren still features polos in their major ad campaigns and so does Chanel with its N°5, while we all already know that that’s what they’re selling.

Chanel, 2014

3. Insufficient stock of promoted items

Inventory management is always a challenge, but particularly if you have an item on promotion it’s a waste of marketing dollars and store space if the promoted item is out of stock. A big mistake retailers make is a lack of investment in business intelligence capacity, to adequately plan and predict the necessary amount of stock. Of course a promotion can always be truly exceptionally successful, in which case today’s retailer has options for in-store ordering and home delivery.

4. Failed in-store advertising *

Placement of  in-store advertising and promotions often goes wrong. An obvious example we’ve encountered is wall-covering women’s ad towards the men’s section of the store. A more subtle and commonly made mistake is to put an ad up and then hanging or folding the item you’re promoting below or around that ad. Mixed with a whole bunch of other items. This prevents the promoted item from standing out, which is what you want to accomplish. The same goes for displaying items on a table. Often the table is relatively far removed from the item on the shelf or rack and the customer has long been distracted or the table is such a mess that the promotional message doesn’t come across.

5. Uninformed staff planning *

Many retailers do not plan their staff according to visitor numbers, but rather look at revenue or amount of (paying) customers. This is the first mistake, because revenue could potentially be higher, had you had enough staff to serve all those customers on a busy Saturday. For the retailers that do plan according to the number of visitors, there’s a more advanced metric to take into account, the demographics of the visitors. We’ve seen that right after Christmas, for instance, there’s a peak in female visitors in certain stores and you want to make sure that in that case there are enough staff member in that section of the store. There are currently only a handful of retailers that use retail analytics to track demographics, a truly missed opportunity.