Why so much waste?

Promotions are becoming important to attract and keep loyal customers. They are used to introduce products, revitalize poor sales or to respond to price points of competitors. Lockie Antonopoulos, Vice President, Client Services, Episys North America, discusses in detail. 

Only 20 per cent of promotions are advertised in advertising, magazines or large posters positioned outside the store. The other 80 per cent are only seen if a customer comes into the store.

It is the day before the launch of the latest Harry Potter blockbuster. To maximize sales the release is a Bank Holiday weekend.

Big Retailer learns late in the day that its competitor has advertised the books at 1.99 less than Big Retailers. The retailer changes its price to match, but it is too late for advertising on TV or leaflets so they arrange new POS giving the revised pricing. Problem solved?

It is Saturday. Shoppers make their way to the book department. As they reach the display of Harry Potter blockbusters, there is no special pricing or promotion signage.

The savvy shoppers have been watching prices and know that The Other Guys price has been reduced. Problems at Big Retailer mean the new POS is not in store, so they are unaware that the price has been dropped. As a result, the books are passed over.

Offers are used to attract business and wisdom dictates that this scenario is part of being a competitive retailer as it is not possible to predict the future.

Much planning goes into promotional pricing, but prices are often changed at the last minute. Usually, the process works well. However, with the costs of paper and labour, and the opportunity for error, there becomes a gap between a fair and optimal performance.

Retailers may not recognize that while poor signing may seem like a minor hassle, it is causing them to leak money. Modern signage can prevent this.

The conventional process
To consider the costs of signing and potential errors, it is helpful to review the steps involved in creating a promotion. It will become apparent that in-store signing is the weakest link.

The Buying Team determines which items will appear in promotion. Next, the pricing is set in the advertising system. The price is entered in the Head Office (HO) system with the event start and stop dates and discounts.

This information feeds the Point of Sale (EPOS) system. Next, the promotional pricing is entered into the HO signing system and scheduled to print either centrally or in-store. The signs are ordered through a user interface on a HO system or by email request to the HO signage team. Centrally printed signs are shipped to the store. With in-store printing the data for the signs is sent to the store and then printed locally.

Costly concerns
The signs are printed without regard to store inventory or store layout. In-store, they have to be sorted into order resulting in some wastage. The remaining signs are then checked against upcoming print advertisements.

The night before the promotion, store personnel scan items and compare the price in the EPOS system to the signs. If a sign is incorrect, the associate notes the item as in need of new signage.

The process
If signage is printed centrally, there is no option but to order a new sign from HO and wait for it to arrive.
In a better scenario, the store associate may use an online system and reprint the most recent sign. If the price on the sign is incorrect, however, this will not solve the problem.

Other times, the store associate will use a template to build a sign in-store. This is subject to error including incorrect spellings, inconsistent branding and wrong pricing. Signs must then be trimmed by hand. This leads to inconsistent signage. As well as wasting resources, there is reduced consumer confidence to consider.

What of the inaccurate signs posted? A customer sees a name-brand pair of jeans on sale for 12.95 and goes to the till with five pairs. However, the price is 21.95 per pair. The customer is annoyed and leaves with a bait and switch feeling. An honest mistake becomes a retail conspiracy.

Retailers must ensure that the correct sign is displayed on the merchandise to also avoid legal recourse. Government and consumer agencies audit retailers for price integrity. In some cases they are fined if the price at the till is lower than the price on the sign.

There is a solution - an Enterprise Signing Solution
Big Retailer could have leveraged existing back-office data and customers would have cleared the shelves of books. Greater sales revenue is just the start: Enterprise Signing Solution offers savings in paper, time, labour, customer trust, the avoidance of legal fees, and it speeds up response time to market changes.

Integration of the inventory data, the pricing and promotional data is key to eliminating error and curbing the costs. During the sign printing process, systems integrate with the inventory system at the store level to filter unwanted signs. This integration point means signs only print in the stores with the items in question.

This can be refined through automated business rules to print signs when a price book is used to allow customers to order goods not displayed on the shop floor.

To ensure the benefits of correct pricing, retailers should leverage the information in their EPOS systems. If price files that are fed to the in-store EPOS systems are used to supply the signing system with information for signage, the merchant no longer has to remember to enter pricing data into the system. It will use established rules to generate a sign automatically. This sign may have properties inherited from the price change such as start/stop date, and these aid in the set-up and takedown of the sign. In direct integration with the pricing system, the merchant can change pricing as near to the start date as possible for unadvertised goods.

Once the signage system is retrieving information from the EPOS system and is integrated with the inventory management system, the in-store process can be streamlined. The system prints signs only for those stores with the item in stock, so store associates need not sort through signs. There will still be spot-checking, but once the associates are used to the accuracy, checks become more of an audit. The benefit offered is that through using inventory to tailor menu signs to display only the items in stock, you eliminate the disappointment of a customer who has looked for an item not available in-store.

During the set-up, store associates will no longer be required to reference printed ads or reports and simply distribute the signs to the appropriate areas. To aid takedown, the signs display the end date of each promotional price. The associates reference the printed date and remove the outdated signs, making time and labor savings.

Signing paradise
Those in doubt of the Enterprise Signing Solution should look at the evidence. In the U.S. there exists a smart retailer leveraging all data possible to arrive at signing paradise. The wake-up call came as competition strengthened and media exposs on false pricing threatened consumer confidence.
Over a period of five years, the retailer increased its agility and now reacts to changes quickly, shortening the timeline between price finalization and sign printing, allowing more time for serving customers.

Up to $20 million dollars has been saved in costs, plus a significant increase in revenue.
A phased approach is key. The retailer began by automating business processes through integration with pricing, advertising, inventory, sales and their merchandise data warehouse. With integration points, they removed 15 days from their pre-promotional timeline. They were also sure to print the correct sign in the correct store with the correct price at the correct time.

The second phase: the retailer improved the set-up/take-down process. Through integration with handheld devices, the signing system data became back office data used to drive the associates workflow. With the handheld device, the store associate scans the signs, as they are set-up, checking the accuracy, recording when each is set-up and noting quantity. The system knows when each signs price ends. The set-up data and the pricing data are merged, and through the handheld device, the store associates are alerted when signs must be taken down. This is effective when a price is changed in the middle of a promotion.

In further phases, the retailer leveraged the new data created by the signing system, allowing the sign shop users to use the set-up/take-down metrics to better estimate the default quantity of each sign needed in proportion with store size and sales volume. Because they are integrated with the advertising system, they can estimate the number of signs to be printed per store giving the manager the information needed to estimate labour.

This particular retailer has integrated its rebate system. They print informational signs used by store associates to guide them in putting up vendor-supplied sidekicks and banners when promoting current rebates.

A middle-sized retailer has many items in its inventory. Each has a number, a description and a price. Most will experience one price change or price promotion during the year, and this will be advertised or unadvertised. The systems handling inventory, pricing and promotion are critical, as are signing systems.

Poor signing contributes to excess labour, high consumables costs, diminished customer confidence, and causes a retailer to be sluggish when responding to market changes.
Many retailers rely on a similar business process for signing, an Enterprise Signing Solution exists to reduce and/or eliminate signing setbacks.

By leveraging existing data and automating business processes, any retailer can bring consistent, efficient and informative signage to its shop floor while reducing costs and increasing revenue.

Comments (0)

Add a Comment

This thread has been closed from taking new comments.

Editorial: +44 (0)1892 536363
Publisher: +44 (0)208 440 0372
Subscribe FREE to the weekly E-newsletter