The Disconnect Between Trade Promotion and Retail Execution

The Consumer Packaged Goods (CPG) industry is often hindered by a significant disconnect between Trade Promotion (TPx) and Retail Execution (REX) when implementing in-store promotions.

Research conducted by POI found that 75% of CPG brands struggle to execute their in-store promotions effectively. This may be due to several factors, including poor strategy, limited resources, ineffective communication, or inadequate measurement

and evaluation capabilities.

These challenges hinder CPG brands from achieving healthy ROI in one of their key marketing channels, rendering the resources poured into these activities ineffective.

Therefore, addressing the issues associated with implementing in-store marketing campaigns is vital. The CPG industry cannot afford to continue like this, as there are significant implications in terms of lost revenue, strained relationships, and diminished brand reputations.

This article will show you how to close the gap between REX and TPx with the right technology.

The current retail execution landscape

Successful retail execution requires effective planning, communication, and evaluation. If these elements are not present, in-store promotions will fail to succeed.

Companies may struggle with retail execution for many reasons, including:

• Poor planning: If the promotional campaign isn't well thought out or intentionally planned, it can hamper the success of in-store promotions. Companies need detailed plans that outline specific responsibilities, tasks, resources, etc.
  
• Lack of training: If the promotional campaign isn't compliant, then the training of the employees to implement it will also be negatively affected. Employees that don't have proper training on SKU features (or the details of a specific promotion), won't be engaged or motivated to promote it in-store.
  
• Poor communication: The data disconnect spreads out to communication, as the data from the store isn't always relayed back to head office (HQ). For example, HQ creates strategies and communicates them to the staff; however, data from those at the store might not be passed on to HQ. Think of it as a terrible case of the game of 'Pass it On' where the message goes through so many intermediaries that it gets distorted.
  
• Lack of real-time data analysis: CPG brands will struggle to adapt because consumer habits can change fast. Without access to data, brands are unable to measure their progress, evaluate trends or strategise for the future.

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How in-store execution affects the wider industry

Ineffective retail execution (REX) can cause several challenges for CPGs, including:

• A loss of market share/customer churn: As the in-store promotions become less effective, customers are more likely to be put off and flock to competitors. For instance, a 2023 survey of UK consumers found that only 34.2% will remain loyal to a CPG brand if cheaper alternatives are available.
  
• Devalued brands: When product displays are disorganised or there are out-of-stock items, this can create a negative perception of the brand, making it even more challenging to compete.
  
• More difficult negotiations with retailers: A low or negative marketing ROI can lead to Volume Incentive or Slotting Fee deals becoming harder to agree on, as the CPG brand has less leverage in negotiations.
  
• Failed new products: When in-store execution fails, it can hamper the success of new product launches. If stores aren't prepared to handle new products, it results in a lack of brand awareness, poor product placement, or inadequate shelf space.

Ultimately, when in-store execution fails, it causes a ripple effect throughout the industry - impacting sales, brand reputation, retailer relationships, etc.

However, synthetic image recognition technology is emerging to address these problems and create new business growth opportunities.

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How synthetic IR is helping CPG brands improve their in-store execution

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Synthetic image recognition uses synthetic computer vision to create 3D digital replicas of SKUs and retail displays. Find out more about how it works in this previous article.

There are many reasons why this revolutionary technology is making waves in the CPG space, including:

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Trade Promotion Optimisation

TPx optimisation is a critical aspect of CPG marketing strategies. Synthetic IR can analyse in-store images to evaluate the effectiveness of promotions; it's even able to detect fine-grain detail and work in environments with complex lighting and challenging conditions.

Brands can then determine if the promotions are executed correctly in terms of product placement, signage, pricing, and promotional materials. This helps CPGs identify discrepancies and ensure that trade promotions are properly implemented – maximising their impact and return on investment.

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Compliance Monitoring

Synthetic IR technology can monitor compliance with trade promotion guidelines and policies by analysing images to detect and assess in-store compliance metrics. For example, it can identify the proper display of promotional materials, adherence to pricing guidelines, and inclusion of all designated products.

Brands can use this information to identify non-compliant stores, take corrective actions, and enforce compliance. These crucial checks ensure that promotions are executed consistently across different retail locations.

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Shelf Share Analysis

Synthetic IR can accurately assess the shelf share of a brand's products in-store. It can analyse shelf images and determine the percentage of shelf space occupied by a specific brand compared to its competitors.

This information helps CPG brands evaluate their market presence, track shelf share changes over time, and assess the overall effectiveness of their retail execution strategies. By understanding their shelf share, brands can make informed decisions to improve their product visibility and market positioning.

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Real-Time Data and Analytics

Synthetic image recognition provides real-time data and analytics on TPx and REX. Analysing in-store images and extracting valuable insights helps brands access accurate and up-to-date information about the execution of their trade promotions, product placements, pricing, and other relevant factors.

Real-time data allows brands to make informed decisions, respond quickly to execution issues, and adjust strategies promptly, maximising the impact of their TPx and REX efforts.

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Introducing Neurolabs ChatCPG

Neurolabs' AI-driven shelf auditing assistant, ChatCPG, is making capturing data and gleaning insights from synthetic IR technology simpler than ever. You don't need any extra dashboards, data sets or deep investigation - simply converse in natural language with ChatCPG to receive instant, accurate answers.

This remarkable CPG sector breakthrough enables access to actionable intelligence more quickly and efficiently than ever before. You can find out more about ChatCPG here.

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How Synthetic IR improves Competitive Analysis

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Synthetic IR enables CPG brands to analyse in-store images to gain insights into their competitors' TPx and REX activities. Brands can compare promotional displays, pricing strategies, product placements, and more. This information helps identify areas of competitive advantage or areas for improvement. From here, brands can refine their own TPx and REX approaches to stay ahead in the market.

Moreover, synthetic IR's speed, accuracy, scalability, and cost efficiency are particularly noteworthy. For example, with Neurolabs ZIA, CPGs or field reps can add new SKU imagery via the ZIA Capture app and generate synthetic data to train its object detection algorithm within a few minutes – four times faster to market than traditional IR solutions.

This means a field rep can complete an in-store auditing visit eight times faster than traditional IR technology. Additionally, because ZIA utilises a synthetic dataset and does not rely on real data, it provides more diverse training data, leading to better accuracy that does not degrade over time.

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Don't miss out: Try Neurolabs ZIA today

Synthetic IR is gaining traction in retail, with many global players adopting this new generation IR to take their TPx and REX strategies to the next level.

Brands that harness the power of synthetic image recognition solutions offered by Neurolabs ZIA (with new features like ChatCPG) are better equipped to improve their in-store execution. Our solution easily detects out-of-stocks, empowers CPGs to organise their shelves efficiently and ensures price and promotion accuracy.

It can also help you leverage information from data insights to help improve KPIs. For instance, it can foster faster implementation and promote high precision, scalability, and cost-effectiveness, all while creating new growth opportunities.

Get in touch for more information on how Synthetic IR can benefit your business.

At Neurolabs, we are revolutionising in-store retail performance with our advanced image recognition technology, ZIA. Our cutting-edge technology enables retailers, field marketing agencies and CPG brands to optimise store execution, enhance the customer experience, and boost revenue as we build the most comprehensive 3D asset library for product recognition in the CPG industry.