The biggest challenge for most CPG companies is retail execution. In fact the average company loses over 20%+ of total sales opportunity and is at highest risk of getting product removed at retail due to issues occurring with retail execution.
Emerging brands historically have focused on new gaining distribution to drive sales.Established brands have historically focused on new product launches as well as price and display promotions to drive more sales. Although these two functions are critical to CPG brands, it’s actually retail execution which presents the biggest challenge. Basically ensuring the product is on the shelf how it should be at all times. Those who solve this challenge the best not only achieve highest sales velocity and profits, they also are able to sustain long-term competitive advantages and overall market share leadership over their similar competitors.
The reason retail execution is such a huge challenge is managing at store level across a scattered distributor and retailer network can be very challenging. Very often customers lack consistent data measured in a meaningful and actionable way to do much about it. As the adage says. “If you can’t measure it, you can’t improve it”. The other reason retail execution is such a challenge is that the impact of poor execution is often largely underestimated. If you look at out of stock and poor store condition rates, and not just measure the impact of a particular loss sale, but also the potential impact of losing a recurring sales if someone instead choose to buy your competitor, the retail execution sales loss figures can actually be higher than new distribution or new promotional sales lift figure in total.