Market Insights

The Road to Retail Excellence Part 1

by Wade Garland ¬ 06/30/2015

These days, everyone is clear that excellence in retail execution and the First Moment of Truth (FMOT) IS important, but WHY?

You spend significant effort getting customers to the shelf, but that’s just half the battle. Once there, they are going to be subject to all kinds of influences, both positive and negative. If you don’t have your FMOT house in order, then the battle is already lost. Here are just a few things that can turn your prospective customer into a lost sale;

  • Out of stock/ thin stocks
  • Incorrect facings/ planogram non-compliance
  • Missing or damaged POS materials
  • Promotional mechanics missteps
  • Unclear pricing

While all of these problems will reduce effectiveness and consequently sales performance, nothing is so bad as simply not being present on the actual shelf (OOS). In fact, according to the Harvard Business Review*;

fmot_quote

This is important – it tells us that shelf Out Of Stocks hurt not only Brands but also Retailers themselves.

fmot_chart1

So, if you’re a brand and you are not on shelf when your consumers come looking for you, you can expect a full 35% of these potential sales to either not buy or worse: try one of your competitors.

fmot_chart2

40% record as lost sales, with 31% going to a competitor’s store to buy the product they are after.


In short then, outages at the Point of Sale and FMOT – such as shelf Out of Stocks – not only damage sales (it has been estimated that this costs retailers 4% and brands 2.5% of annual revenues) but actively introduce customers to your competitors. Not an ideal outcome when you are spending money driving your customers to the shelf in the first place.