18th Oct, 2021
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- Discover the importance of retail audits in 2021 and its different forms and factors
- Know how modern-day retailers are employing virtual retail audit tools to course-correct and improve their store operations
Retailers, suppliers, and manufacturers experienced strong disruptions to their business continuity in 2020. To stay competitive in an increasingly digital world, it becomes important to create the right virtual retail strategy based on accurate on-ground data. Virtual retail audits are enabling retailers to collect data, understand customer preferences, and even analyze the most important parts of the supply chain – the store.
Let us understand virtual retail audits better, their importance, and how to conduct them for eliminating performance-sapping errors and improving the in-store experience.
What is a virtual retail audit?
Virtual retail audits are periodic audits conducted to evaluate store performance, compliance, and product profiling at retail stores. These audits are usually performed by area or district managers, internal or external auditors, suppliers, or field marketing agencies. The purpose of every audit may be different, but their ultimate objective remains to improve the product and store performance, alongside enhancing the customer experience.
As the name suggests, retail or store audits are conducted in person. The brand representative or store manager collects data by observing it on the ground. However, store visits and audits have dropped by over 75% since 2019 because such exercises now come with a considerable risk of spreading Covid-19.
Remote and virtual retail audits have emerged as a favorable solution to undertake retail audits with high levels of accuracy and precision. video surveillance systems, live video tours, virtual visits are conducted as a part of the exercise. These audits prevent unnecessary movement of staff between stores to carry out audits in person, thereby ensuring the continuity of the exercise while minimizing the risk of infection.
Types of retail audits
Since the data and information to be collected are so diverse, retail audits are segmented by the type of data collected. Different kinds of retail audits are conducted based on the objective and focus of the exercise:
Retail market audit
This kind of audit helps suppliers understand the retail store and partner better. It usually records information like consumer sentiment, store appearance, location, cleanliness, exterior facade, internal design and navigation, competing brands, the prominence given to emerging brands, etc. Such audits are conducted by brand representatives of current or potential suppliers.
Conducted by existing suppliers, the merchandising audit is a concise summary of vital indicators linked to the brand’s performance. It captures data related to product inventory levels, stockouts, and the condition of the product. Other information like the amount of shelf space provided, retail price of the product, and overall appearance of the shelf is also recorded.
Such audits are usually conducted during promotional campaigns or holiday sale season to understand the successes and failures in the short run. It usually contains in-depth information on the types of promotion, duration, in-store positions, customer reception and engagement, placement, SKUs, sale numbers, etc.
Loss prevention audit
These audits are focused specifically to stem product loss and damage. It helps understand the levels of retail shrinkage, its main sources, and how to put in the right safeguards to prevent it.
Competitor survey audit
Competitor surveys are undertaken to collect vital insights on how suppliers can best position their products as compared to other brands in the same category. Such surveys usually profile direct and indirect competitor products, pricing, placement, prominence, position, promotions, and other crucial information.
Why should businesses conduct retail audits?
There are several benefits for business suppliers and manufacturers to conduct retail audits periodically. Here are some of the core benefits that come along:
These exercises help suppliers and brands ensure that their retail partners are complying with the agreed terms of the partnership. Data regarding the product placement, retail planogram, pricing, and promotional strategies helps verify compliance. Audits also help cultivate a positive relationship with store managers and partners.
Accurate data collection
Due to its nature, data related to sales activity and processes in the retail industry is usually collected from third parties. Retail audits collect on-ground accurate and reliable data directly for the supplier to help identify strengths, correct mistakes and improve upon weaknesses effectively.
Assessing how their products are displayed and sold in stores helps suppliers understand key aspects of their manufacturing, delivery, and supply-chain processes. Such audits help get to the bottom of issues related to maintenance, operations, transportation, and quality.
Better customer insights
Retail audits are important to understand the experience that shoppers go through while visiting a store. They measure and monitor how this experience can be improved and help identify how to keep customers engaged.
Data-driven business decisions
All the insights derived from the above data points help make informed and data-driven business decisions. These decisions could be related to pricing, design, visual merchandising, product improvement, customer engagement, and others.
Also, read our blog “Core Denave Retail Capabilities: Retail Audits and Visual Merchandising to Augment Retail Operations” to get deeper insights about retail audit and visual merchandising solutions that helps retailers to enhance consumer engagement and retail compliance scores.
How to implement a retail audit program
Define business goals
The main business goal of the audit will help in choosing the right audit tools, adopting the best strategy, and determining the parameters for success. So be sure to clearly define whether the exercise intends to assess the store, take stock of merchandise, evaluate promotional success, or minimize losses.
Create data collection tools
As per the goal, select the most appropriate set of data gathering and analysis tools. For instance, a yes/no MCQ questionnaire works wonderfully for consumer surveys, whereas capturing images is suitable to assess the product placement, position, and prominence. Similarly, longer interviewers might be the best for understanding store manager challenges.
Train brand representatives
Usually, brand representatives undertake the data collection process by visiting stores in person. It is essential to train them adequately on how to gather information, frame questions, approach customers, input data, prevent errors, and observe. The training usually helps auditors extract information beyond what is visible on the surface.
Choose the location and timing of the audit as per the intended objective. Suppliers should schedule visits based on the customer footfall, holiday season, popularity and accessibility of stores, and other factors.
On the day of the scheduled visit, brand representatives must gather data with support from the store manager and employees. Depending on the size of the store, the audit may extend for a few days. Be sure to check all devices and technology a day before the audit to ensure that different kinds of data (text, images, audio, and video) are collected and stored safely.
Use retail audit software tools and solutions to standardize data representation and gather insights. Apply various statistical and data models to identify trends and patterns that otherwise remain invisible.
Implement changes to existing processes and strategies based on the findings. Address customer and partner pain points to ensure that they remain engaged.
Repeat the entire process periodically to ensure continued improvement of business and customer growth. Remember, retail auditing is an ongoing process that enables sustainable success.
How to build a retail audit checklist
Retail audits are at their core, intensive data collection processes compressed in a short time. If there is any discrepancy in the process of collecting accurate and relevant data, it will reduce the utility of the entire exercise. A retail audit checklist serves as a guide to ensure that no critical data point is missed and there is a standardized method to collect, record, and store data. In addition to optimizing the process, retail audit checklists save time, create a comprehensive database, and help on-ground staff with better organization.
Since most retail audits today use some form of retail audit technology and software, it is useful to devise a standard process to cover all aspects of the store. This includes, but is not limited to:
- Store exterior
- Presentation and merchandising
- Product placement
- Retail planogram
- Product knowledge
- Loss prevention
- Customer safety
- Cleanliness and hygiene
Other metrics to suit specific goals, like, promotion, operation, inventory, and safety can also be used. All these categories can be classified into different groups based on the location of the product in the store to help brand representatives navigate the entire process with ease.
The checklist is in the form of clear, descriptive, and simple questions with standard responses. For example, a question related to the product category could be:
- Was the product placed in the right product category and shelf?
- Was the price of the product mentioned correctly?
- Was the product placed at eye level?
- Was the product displayed before competitors or behind them?
There are plenty of readily available and customizable retail audit checklists available. Most retail audit service providers also offer checklists for better efficiency.
Retails audits: How to get started
Conclusion paragraph: A retail audit can be a valuable tool for retailers of all sizes. For those businesses that are not sure where to start, the guide above should serve as an excellent starting point on how they might want to go about conducting their own audits at their stores. However, partnering with the right virtual retail audit service provider will streamline this process even further and provide you or your team with expert guidance throughout the entire experience.
Contact Us! Our team of experts is ready and waiting to partner with you. Our retail experts can assess the store hygiene and help you weed out the performance-sapping errors.