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The Cost of Visual Merchandising Non-Compliance: 3 Reasons to Develop a Proactive Compliance Plan

Brick and mortar retail leaders spend a significant amount of time setting visual merchandising standards, yet the path to successful execution isn’t always smooth. Monitoring and tracking visual merchandising compliance are imperative to ensuring the frontline is executing those standards and providing a consistent customer experience, yet many retailers don’t have a system in place for doing so.

At the same time, the risks for non-compliance are obvious and significant– from brand consistency to ensuring customers are seeing accurate and timely promotions, optimizing retail operations includes having strong compliance rates across locations. Many organizations have found themselves evaluating compliance and the implications of non-compliance after the fact, but that’s a luxury that many don’t have in a post-pandemic world. Retailers who look at and manage compliance rates reactively often end up spending unnecessary time and resources evaluating the situation and what went wrong.

OR helps retailers approach compliance strategically so that there are no surprises, and no guesswork. Having a plan to oversee, monitor and report compliance levels are critical to successful and consistent execution at the store level, with three overarching reasons to take a proactive approach:

1. Store performance. With sub-par compliance levels, stores can find themselves reacting to the fallout of customers seeing incorrect pricing or promotions. Similarly, mismanaged campaigns and low compliance levels can result in missed sales, which impacts the bottom line and store performance. High compliance rates have the power to significantly impact store sales. For many of OR’s clients, we see that stores that are more than 95% compliant drive sales that are 2-3 times that of stores that are less than 40% compliant.
2. Brand integrity and loyalty. A consistent brand experience has a direct impact on loyalty and the customer journey. Inconsistent signage and chaotic displays negatively affect how customers view and experience a brand. By raising the bar on in-store compliance and ensuring the frontline is aware of and prioritizing visual merchandising standards, retailers can instill loyalty and confidence.
3. Visibility. Understanding which stores are compliant and which aren’t empowers retailer leaders to know where and when to focus their efforts. Only with detailed visibility into in-store compliance can management fully optimize their operations while saving themselves time and money.

Compliance tools are also becoming easier to use and providing even more value to retailers. OR, for example, has started incorporating AI technology with the platform’s Automated Photo Compliance (APC) feature. APC makes it easy for employees to execute a store fixture, confirm its level of compliance, or report an issue by directing their phone at a display. It also means HQ receives real time reporting on when a fixture is executed, and has an efficient compliance process in place that doesn’t require a manual review of thousands of pictures.

Google recently looked at the use of AI and ML across retail, and found some staggering numbers – “For Food, Drug, Mass merchant retail the research showed that the application of AI/ML technologies can potentially drive ~$280-650B across the value chain as adoption accelerates. Similarly for Speciality Retailers the research found a potential to deliver ~$230-520B in value by 2023. In an industry where profit margins are in the single digits, AI/ML is increasingly a foundational investment area for retail leaders.” The immediate and long-term benefits to retailers of incorporating AI and ML are significant, and compliance is one area where it has a direct impact on store performance.

In brick and mortar, compliance is about getting it right from planning to execution. It's about accountability, great training, and constant tracking. By taking a proactive approach to managing compliance levels and understanding variances across locations, retailers can feel confident in strong and consistent in-store execution.

OR makes it easy to develop a strategy for compliance, provide clear direction to stores, and have full visibility into those stores that are achieving compliance as well as those that need a bit of extra help. Let OR help you increase your competitiveness by elevating your in-store compliance rates.
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