RETAIL AUDITS: IMPORTANT THINGS YOU NEED TO KNOW (PART 1)

What is a retail audit?

Retail audits are studies of selected retail outlets performed by brand representatives or retail store employees for the purpose of collecting data about the health of the brand’s products. Retail-audit service providers gather information on a brand's sales volume, sales trends, stock levels, effectiveness of in-store display and promotion efforts, Competitor activity, Planogram compliance (shelf location, number of facings present, number of SKUs present, missing/inaccurate shelf tags), Pricing, In-store location of products, Product damage and other associated aspects.

Audit is important

There are two great benefits of conducting retail audits as below:

• Ensure retailers are complying with pre-established agreements on product placement, pricing, and promotion.
• Allow brands to accurately measure their success in the retail environment.

Beside that, the data that audits provide is the priceless commodity. This data was aggregating from various retail locations over time and comparing results, that allow managers to make actionable decisions that reduce inefficiencies and ultimately drive sales. 

Types of Retail Audits

Retail audit can record a lot of variance in the information, it makes sense to segment audits by data type. Different audit forms should be used to reflect the respective data being collected at a given store visit. Examples of the types of retail audits that a supplier might employ are listed below.

Retail Market Questionnaire

In some cases, brands might simply want to know the lay of the land where their products are being stocked (or could potentially be stocked in the future). Reps might document the following:

• Consumer sentiment towards the brand and its competitors as discovered by surveying passerby and observing how they interact with the brand.
• Store appearance and location. Is the store well-organized and clean? Is it located in a suburban or urban area? How does the facade of the store appear?
• Qualitative and quantitative information about other brands present in the store. How many facings do competing brands have on the shelf? Are there mostly emerging or established brands in your category? 

Merchandising Report

This type of store audit is primarily concerned with the brand’s performance. Reps use merchandising reports to log:

• Inventory levels
• Stock-outs
• Condition of products
• Amount of available shelf space
• Units ordered
• Retail price
• General shelf appearance 

This information can be compiled into a finished product that resembles the merchandising report below.

Promotional Report

If a brand is holding a sale or other type of special promotion, it’s important to track its success so as to know how it’s performing in the short-term and how to improve in the future. It’s key to report on:

• The type of promotion being used (tasting, demo, price reduction, etc.)
• The duration of the promotion
• The featured product SKUs
• In-store position
• Sales results
• General effectiveness of the promotion. Are consumers engaging with your brand? Are retailers complying with the placement of promotional materials? 

Reps can use this data to create a promotional report similar to the one below. 

Competitor Survey

One audit that brands shouldn’t overlook is the competitor survey, which can reveal invaluable insight into how your brand stacks up against others in its category. It’s a good idea to identify:

• Who your direct and indirect competitors are in the store
• Competitors’ pricing strategies
• How many facings competitors have on the shelf. Is your brand being significantly overshadowed?
• Where competitors’ products are located in the store. Do they have prime placement at eye-level or near a checkout counter? Are they located in a high- or low-traffic area?
• Any promotions competitors are running

Reference Source: Repsly