A recent survey by the Harvest Group and WalmartHelp identified one issue as the biggest challenge faced by Walmart vendors: “fixing poor retail execution.”
56% of respondents chose this item from five options on the survey. The next largest issue was “unlocking insights from big data.” A recent study from Accelerated Analytics found that the average Walmart supplier spends 18 staff hours per week merely preparing Retail Link data for analysis, so the fact that retail execution issues dwarfed this concern says something striking about the problems with retail execution.
Respondents were thinking of things like promotional compliance and keeping products on the shelves. While on-shelf availability has been in the news recently, it’s not a new problem. A study by the University of Chicago Graduate School of Business a few years ago found that 65% of on-hand inventory records were wrong in the (unidentified) chain of stores audited, even though an electronic POS tracking system was in place. 240,000 items were affected in 37 stores.
The same study found that 16% of the products which were in the stores were misplaced — they were in the store and on a shelf, but not on the correct shelf.
The study concluded that these two issues caused significant loss of profit for the retailer. For suppliers, this kind of error can result not only in lost sales opportunities, but also in ongoing forecasting problems. When no sales are recorded because the item is not in stock or is shelved where consumers can’t find it — but Retail Link shows items in stock — demand forecasting can be inaccurate going forward from that point. An item might even be dropped by buyers because it looks as though the product is on the shelf and being rejected by shoppers.
The University of Chicago study concluded that problems were generally arising in the trenches, so to speak, from errors by retail workers. They cited simple errors like scanning one item twice while checking out two items, or exchanging a damaged item for a new one without scanning the barcodes of the two items. These small mistakes add up across a high volume of transactions. The authors recommended actions retailers might take to reduce errors.
Suppliers are in a different position from retailers in this case. You can’t increase training for Walmart employees or provide sanctions for making errors. You might be able to conduct physical checks in some stores to gain a sense of how close your data is to 100% accuracy — or that might not be a possibility for your company.
As in so many cases, your first line of defense is watching for surprises in Retail Link. Are you seeing a lack of sales in stores where items are shown as in stock in less than case quantities? Are you seeing zero sales in stores served by a particular distribution center? Surprising data is data that should be examined more closely.
8th & Walton offers a range of courses in the supply chain area which can help you cope with retail execution issues.