Page 65 - Retail World March 2021

discount, standard costs, maximum number of promotions. A good revenue management system then converts the pre-plan into final confirmed plan with ROI metrics set in place, linked to ROI efficiency and effectiveness, managing incremental contribution and net sales against incremental trade spend. As a consideration, while forecasting is key and requires constant new modelling and algorithm development, AI and machine learning capabilities will have been impacted by Covid-19. They may struggle with major disruptions to historical data patterns, so manufacturers and retailers need to take this into account when forecasting promotion impacts. At the promotion execution stage, technology enables manufacturers to ensure the promotional plan is populated and automatically distributed to the sales and distributor teams, and events are lined up with activity to ensure maximum impact in a series of simple dashboards. Relevant third- party data sources are linked, with full promotional spend management and end-to-end accruals and claims automation. From a promotions monitoring standpoint, real-time dashboards and inflight management enable the ability to use multiple data sources and calculate different variable impacts on the promotion on the fly, changing SKUs, product groupings, customer buying groups, volume, phasing, impacts of cannibalisation and sort term seasonality or external key event impacts – as well as real time changes to the forecast and any event that may cause out-of-stocks. Sales force, field and merchandising automation Sales force and field automation has been on an evolution curve in the past 10 years. In 2010, sales and field forces were performing primarily manual audits consisting of surveys, shelf audits, manual order entry and route planning. Circa 2015, the market moved to systemised audits. Sales and field routing was optimised, basic store analytics came into play, performance indicators and ‘perfect store’ guidelines were introduced. These resulted in increased sales force productivity, via: • A ~25 per cent reduction in store execution audit time. • The ability to map ROIs by sales territory including channel and geography. • Increased real-time daily reporting KPI compliance and traceability often increasing sales by one-two per cent. • Integrated deals and order management for promotions. • Systemised reporting and monitoring. • Retailer engagement in customer- centric selling. ERP, third party data and POP insights were incorporated to optimise financial and demand planning. From around 2015, sales forces began to implement automated audits incorporating image recognition, advanced route planning, prescriptive ordering and gamification. This reduced time in-store, such as a sub-three-minute KPI compliance check with up to 98 per cent accuracy performed in a 60-80 per cent reduced time window. Competitive intelligence was enhanced, blind spots reduced, and reporting and insights improved, along with top-down demand planning integration due to improved forecasting, all resulting in a three-five per cent increase in sales ... largely driven by KPI compliance. So where are we now? Fast forward to 2021 and we’re in the world of predictive analytics, facial recognition smart shelves and robotics. Smart AI audits mean the ‘store of the future’ will be fully digitised using shelf edge cameras or robotics. E-commerce and the virtual queue The growth of e-commerce, accelerated by the pandemic, has resulted in manufacturers having to satisfy different stock and supply requirements of global and local retail players. Direct-to- consumer sales have created additional costs and operational pressure. This has made forecasting more of an educated guess, as there is little or no history on which to base new assumptions (see previous point about AI and disruption to patterns). Different measures for success need to be developed, as do cost and profit profiles by channel and product. E-commerce retailers have become bullish in their negotiations as their growth has given them more leverage. At the same time, discounters have ‘suffered’ with fewer people shopping in-store. During the pandemic, retailers have adopted policies to deal with social distancing and better hygiene protocols. The Grocer magazine indicated that virtual queuing has been introduced on a trial basis at different UK retailers, that are trying to fit the ‘new normal’ constraints. Customers select the store where they wish to shop, and the app notifies them when they’re at the ‘front’ of the line, without the need to physically queue – a bit like the Starbucks app for physical in-store pick-up. From the few examples above, it can be observed that the discipline of revenue management, reliant as it is on data analytics, has only been enhanced by technology. This can only be expected to increase in the short to medium term. REVENUE MANAGEMENT About Simon Elsby and Exceedra Simon is Sales Director APAC at trade promotions specialists Exceedra. He has more than 25 years’ experience in shopper and category strategy, revenue management, and organisational performance and capability building, working with global manufacturers across Asia Pacific. Contact Simon at simon.elsby@exceedra.com. About Exceedra Exceedra is a leading, pure-play consumer goods solution provider with a breadth and depth of solutions to continuously drive business value for any consumer goods company no matter their size, maturity, route to market, category, or geographic location. Exceedra’s singular focus, broad solutions offering, and partnership culture equips customers with smarter sales and distribution capabilities that improve agility, increase efficiency, enable better decisions, and increase profitability. MAR, 2021 RETAIL WORLD 63