Velocity Merchandising: An In-Depth Look at In-Store Programs & New Opportunities
August 27, 2018
Optimizing in-store gift card sales can be a challenge for large and small retailers alike. It can be resource-draining to ensure retailers get the most from in-store programs by having the right stock on the right pegs when and where it’s needed. Velocity Merchandising provides services designed to optimize sales, including merchandising execution, promotions support and strategic reporting to help guide ongoing success.
Larry Weissbach, Head of Business Operations at CashStar, recently sat down with Steve Silverstein, Vice President of Velocity Merchandising to discuss the intricacies and considerations of employing incremental merchandising services.
You’ve been in the merchandising industry for quite a while. What do you really like and what gets you charged up about merchandising?
S: The challenges at the store level are like a puzzle. I like to figure out how to solve problems and get stores more engaged through the data and analytics. A big part of that is the information that we collect and use to make both our team and the store smarter. The result is helping the brand better understand their value proposition and remembering why they’re in the business in the first place.
Steve, you set up merchandising services for Blackhawk Network internally. Last year, you opened it up to external parties who can take advantage of your services. What considerations did you take into account to make sure the program is a good value for the merchants’ side of first party?
S: Part of it was ensuring that, if we’re going to offer our services externally, we have built a good, reliable product. We have dependable, smart, consistent team members to manage the business. We took our own internal technology tool that we use to manage our business and turned it into something that we can build and configure for anyone else that wants to have visibility into in-store conditions and execution. We make sure we have the processes in place to measure the impact of what we do and to ensure it’s bulletproof and provable. We have a good history of verifiable data and performance so that customers can feel confident in using that data to make a decision.
How do you help motivate and inform the people that are in-store on the days that you’re not there to make sure that the right things are happening?
S: One thing that store clerks and managers don’t like is the merchandising representative that walks into their store, does work, and walks out—without communicating or building a relationship with that store. The store management actually wants to know who’s there doing the work. We have constant repeat interactions between our reps and the store, so we focus on building a relationship with them. We want to become a resource for the store versus somebody they feel they have to keep an eye on. Also, information is key to clerks as well. We make sure we’re sharing as much information as possible, including how they’re performing on our program and how they’re performing against other stores in their chain (they’re very competitive amongst themselves). We know it can be difficult for communication from corporate to make it down to the people on the sales floor. We try to be a partner for them.
Can you talk about the ROI of merchandising and the impact of investing more in merchandising to achieve incrementality and close gaps?
S: You have to look at both sides of the coin: continuity and promotions. With continuity, you can audit and discover issues and areas of opportunity. In many cases, regular continuity visits can yield an incremental 6-9% in sales. Merchants also need to focus on promotions and how to improve compliance in that area. When compliance for promotions is not up-to-par and we discover that through a continuity visit, we can close the gap very quickly—often within a couple of weeks, while the promotion is still running—and get compliance up to 95% or better.
Both large and small retailers benefit from this type of execution assistance. If you think about the resources and energy that go into brainstorming and planning a promotion, it becomes very understandable that headquarters is frustrated when these promotions are not executed to the fullest extent. Larger merchants can see improvements from spot checking 5-10% of stores prior to a promotion to ensure everything is in place and to use those findings as an indicator of the success of a promotion.
Steve, you work with merchants to capture all their requirements, design their programs, execute and deliver data. Can you walk us through what that looks like?
S: We start with identifying which metrics drive your business and we convert those into our objectives. We become the brand. We collaborate to make sure that what we’re doing in the store is all driving towards your defined objectives, including increasing sales. This requires deep collaboration upfront to ensure we’re executing toward the right goals. More importantly, this collaboration is where we’re building the outputs—the appropriate data for the analytics—to make sure we have visibility. Whether it’s a continuity-based program or promotional-based visit, we can provide real-time visibility. This allows for verification but also for midstream course correction. If we’re running a two-week promotion for you, you don’t want to wait until after the promotion is over to see how well you’ve done. We identify the ideal end-state and work backwards from there to build up appropriate processes and reporting to provide real-time visibility. We can tell you within the first 24 to 48 hours how the promotion is performing and discuss any challenges that arise. This affords the stores a chance to correct during the promotion to ensure its success despite any challenges that arise.
Steve, what special considerations do you account for when running a promotion? Can you speak to the differences between unmanaged vs. managed promotions?
S: It’s not uncommon to think that, once a promotion is set up at headquarters, everyone will execute and it will all happen as it should. The reality is that every retail store will face its own challenges and also have its own opportunities for improvement. So we look at past performance as an indicator to predict future performance and to identify which stores may need additional assistance. I have seen retailers leave a couple million dollars of promotional sales on the table in December because they only had 45% execution. We can narrow the opportunity gap by applying that knowledge in planning for the next promotion.
For people who are considering investing in incremental merchandising, what are the steps people should think through?
S: If you’re unsure of what your starting point is, work with and us we’ll put together a small, quick sample audit to paint a picture. We can do some sampling and figure out what needs to be customized and structured for your business and what the right scale is. For some, it may be a dedicated, unique program while others may be best served by bundling on with other brands that we’re serving. It really depends on whether the business wants execution and hands-on correction or simple audit information. There is always room for improvement and we can always identify gaps that need to be closed. I live by a saying: “Retail doesn’t just happen, you have to be there.” We’re able to provide that visibility and close the gaps.