Auditing the Auditors

Measuring P-O-P execution is the hot-button issue of the industry. Marketers know it needs to be done, but the question is how? Until a revolutionary breakthrough occurs, consumer product goods marketers lean on audits -- whether by foot or by tag.ACNielsen, Schaumburg, IL, launched its first census retail tracking service in February, sending an army of folks into stores to track display execution and sales lift. Nielsen's Promotion Tracker Service is available at five national groceries that represent 40% of chain supermarket volume and more than 8,000 stores.More advanced, and more costly, RFID tags are also being employed to track P-O-P. Walgreens recently announced it would implement a chainwide RFID-enabled tracking system from Goliath Solutions, Deerfield, IL.Though RFID promises auditing solutions that will replace and surpass those offered through on-foot census tracking, the reality is that tomorrow's technology is still a plan for the future, and brands need hard data today. Some experts say marketers need to take a more serious approach, regardless of the method they choose.Tom Dowdy, CEO of retail services company National In-Store, Sarasota, FL, says too many CPG companies have done little to advance their auditing capabilities. "They recognize the importance," he says, but "a lot of CPG marketers are stuck in an old model where they cover the full spectrum of stores on a monthly or quarterly basis instead of doing it on a targeted basis."Those who use costly P-O-P need to be more sophisticated about tracking its effectiveness, says John Fermann, senior vice president of sales at SPAR Group, Tarrytown, NY, which conducts compliance audits. "The more expensive the P-O-S material, the more important it is to follow up on it," he says.Many times, execution depends on the retailer, says Bob Michelson, CEO of Goliath Solutions. "You might not know that things didn't get up, and you might not know why," he says. "You ask the store managers, and they say, 'We didn't put them up because they didn't fit on the gondola they were supposed to go on.'"Since so much depends on store personnel, Lynn Sutter, principal at Sutter Marketing Inc., Palatine, IL, adds, "It's kind of a crapshoot, a roll of the dice, if it's going to be put up, if it's going to be put up in a timely fashion, or if it's going to be put up properly."Marketers conduct audits for both strategic and tactical reasons, Michelson says. Insights cover what displays are being set up correctly, in which regions of the country and in which retail chains -- and then what's working in terms of gross sales and how much value the displays are creating for retailers.Such information is considerably more valuable if it's delivered in real time and can inspire mid-course corrections, says Paris Gogos, director of retail execution services at AC-Nielsen."The first step in understanding the return on that investment is being able to factor in the actual execution levels," he says. "That has been measured in the past, but not on a particularly granular level. I believe the industry is anxious to be able to view execution at a more granular and timely level so they can affect the outcome, as opposed to just analyzing the results post-event."SPAR Group is often asked to bird-dog those that are event-specific, Fermann says. For example, a liquor company shipping a Fourth of July display "want[s] to know what percentage of the shipment the distributor is using. The rest of it goes into the Dumpster. If it isn't being used, they'll send fewer," he says. "It could be that there are two or three types of P-O-P, and they want to know which one is being used."During a new product launch, National In-Store typically is asked to "cover the universe," checking where displays are and are not set up, and finding out why, Dowdy says. "You come out with a new Gillette Fusion razor," he says. "They have that four-week period from when it ships to the stores to when their advertising breaks. You've got to get it on the shelf."Once a product is in the pipeline, clients will become more targeted, reviewing P-O-P data to see which locations are not performing, Dowdy says. "That's just the challenge of retail," he says. "Why does this occur? Labor issues. Turnover. Other companies introducing new items that perhaps infringe on your shelf space and disrupt your distribution. The best thing you can do is to track the cycle, analyze it and react."RFID vs. Census TrackingNewer technologies like Nielsen's census tracking service and RFID solutions from Goliath and other companies will help deepen marketers' understanding of their markets, say those who offer them.Comparing the two, Michelson of Goliath points out that RFID provides an ongoing audit rather than a snapshot, and performance-related data rather than simply display execution."Nielsen is providing census tracking on very specific days for very specific stores," he says. "They do a great job of it. What we're doing instead of providing census tracking on a particular day, we're providing census tracking every day."Michelson says that constant tracking is important because the first day of a promotion might see 100% execution and then drop off rapidly. "With the other kind of tracking, you wouldn't know that," he says. And RFID provides real-time data, he adds. "As conditions change, we're in a position to do the quote-unquote census audit."Nielsen's Gogos agrees that RFID has potential, but does not believe that its day has arrived just yet for front-of-store. "The advantage is that shoe-leather is available and realistic today," he says. "RFID is still an emerging technology... Implementation is uniformly on a pilot basis." Gogos adds that the cost of RFID tags and concerns about consumer privacy still need to be worked out."I'm sure that in time, as RFID takes hold, a natural application for it is for ongoing monitoring of in-store conditions," Gogos says. But today, "One needs to have eyes on the in-store environment to understand what is actually being executed."The Promotion Tracker reports execution levels within 24 hours and distributes that data via the Web, "so that it isn't available solely to headquarters' analytical people but can be used viably by field management and even sales personnel," Gogos says. That's still fast enough to make changes during a promotion, which sets census tracking apart from past electronic data collection efforts, he says.Fermann of SPAR Group says RFID's day won't arrive until other chains follow Walgreens' lead and install tag readers in their stores. "You can say it arrived at the store, but unless the store is equipped, you won't know it's out on the floor," he says. National In-Store's Dowdy agrees that overall, RFID "is not there," but for a different reason. He sees important value in census tracking's analytic possibilities, such as tracking data and formulating different customer profiles. From the standpoint of market segmentation, he says, census data could help marketers create a different product mix in stores with different customer demographics."The challenge is, you no longer have a cookie-cutter store, and you have to merchandise it how many different ways," says Dowdy. "If you have 20 different profiles, you're going to have 20 different planograms and 20 different product selections.Brand RealityHow is the debate playing out in real brand strategies? Automation may be on marketers' radar, but many are hesitant to put their company's budget toward its development, especially when their product can be satisfactorily monitored by teams of people.Microsoft Corp., Redmond, WA, has not given the subject of automated tracking methods much time and attention, says Bill Brownell, director of retail marketing for Xbox. Although Brownell and his team are respected for what their large field force has accomplished in placing Xbox's costly merchandising, he admits he feels that he's behind in collecting point-of-sale data, and that he hopes to make strides. "We're probably behind the times on [electronic auditing]," Brownell says. "We're not the most sophisticated, and we need to be."Some smaller brands are waiting for an industry-wide indicator before investing time and money heavily in a third-party auditing solution. Stihl Inc., a power tool manufacturer in Virginia Beach, VA, receives "somewhat" automated data collection from the five distributors it owns, but everything is still manual at the seven others it uses, says Steve Parmentier, merchandising specialist. "We've looked at [more intensive auditing], and it's something we will do in the future, but I don't think we're going to be a leader in that field," he says. "We're going to let some of the bigger players take the lead on that."Stihl's software tracks the style of display, square footage, how it's being used, whether it's up, whether it's being restocked, and whether it's being restocked with Stihl products or those of a competitor, Parmentier says. "It has seemed to be pretty effective over the last several years," he says. "We've had continued sales growth. We want to see our sales-per-square-foot of display space, accessory sales per display space, [and] look at the product mix and see if there's enough space devoted to each part of the mix relative to the rest of the market."Parmentier figures Stihl will move toward RFID or census tracking when the company's manufacturing side sees one or the other as useful for internal purposes. "What type we use will be dependent on what manufacturing wants to do," he says. "Our retailers certainly aren't ready to ante up for RFID yet. But it's certainly coming."

Auditing the Auditors

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