If you don't know what is or isn't working in your store, how will you ever know what to improve? How can you expect to provide the right products to your customers? And how are you supposed to survive as a retail store? The short answer is that you'll struggle. This is why a store audit is so essential.
About the contributors
Nadia Cloete joined DotActiv in 2017 as a shelf planner, creating data-driven planograms for Makro, a wholesaler chain and subsidiary of Massmart that has international ties to Walmart. She currently works on the Makro General Merchandise account.
Chrystle-Dee Gray joined DotActiv in 2019 as a senior space planner, working on the Pick n Pay account. She was appointed as an assortment analyst for GMD where she created and maintained the ranges. She has since expanded her role to work on the Dis-Chem account.
Karike Pieters joined DotActiv in 2019 as a space planner for the Health and Pharmacy Department at Dis-Chem. Since then, she has changed roles to floor planner. She has a BSc Degree in Consumer Science.
What is a store audit?
Before we get into the different types of store audits and why they are worth doing, it’s critical to unpack what we mean by ‘store audit’.
To answer that is to look at it from a few angles. Depending on which angle you take, it could appear to mean something slightly different. However, these are all different facets of the same thing.
Lauren Ufford, a writer and editor with expertise in retail, ecommerce, and tech points out that a store audit “assesses the health of your retail location using hard data.”
That could be through “an examination of information relating to different products sold in a store”. Alternatively, it could be the analysis of the amount of space available to your store along with your total categories and departments.
On this second point, knowing this will allow you to accurately determine how to layout your store to accommodate not only your customers but also to help you reach your business goals.
We’ll touch on this more in the next section. Suffice it to say, you can view any store auditing exercise as a checklist opportunity. By checking off items and actions to take as you look at your retail business, you’ll be in a better position to gauge your health.
Why should you conduct a store audit?
Besides the fact that a store audit can help you to assess your health as a business, it can also help you find out where to improve.
Let’s consider a few instances. One is if and when you build floor plans for your store.
Here, a store audit is critical because it allows you to accurately determine the space that each of your categories deserves according to their sales contribution. You can also determine the flow and know exactly where departments are situated in your store. That means you can begin to layout your store without any unnecessary complications.
Another is if you’re conducting a clustering exercise.
If you don’t know the size of your category per store, you’ll struggle to cluster and not have the correct planograms to match. For example, if you wanted to introduce a new category, how will you know which category must receive less shelf space? And, which more, to meet the shopping needs of your customers?
A third such instance relates to assortment planning.
In assortment planning, you need to have the number of drops available per category to understand your range cap. Your range cap refers to the maximum number of products that you can list and/or fit within the space available for your category or cluster.
Let’s say, for example, you complete a store audit and you are advised that your Cereals category must have 12 drops available. However, what happens if the category should get 15 drops? If that’s the case, and you haven’t accounted for that, your store is likely to lose out on sales.
What type of in-store audits should you conduct?
Now that we’re touched on what store audits are and why they are so critical, it’s worth looking at the different types of audits. For sake of this article, we’re only looking at three different audits that you can do in-store. There are others that you can, and should also consider.
1. A Fixture Audit
The first is a fixture audit, which requires you to know the type of fixture that each of your categories uses in-store.
For example, it could be refrigeration units if you stock frozen items, bulk racking if you stock heavy-duty items or unique display units supplied by suppliers. So long as the fixtures match and present your products in the best way possible, it doesn’t matter.
What does matter is that the objective would be to capture not only the fixture type but also the dimensions of each of your fixtures.
In DotActiv software, for example, you can create any fixture you require for your planograms with the only input required being your fixture dimensions.
These dimensions ensure that your work is accurate and implementable, and without these dimensions, any generated planograms would not be able to be implemented as planned.
Of course, this audit doesn’t only affect your planograms. It also affects your floor plans and how you build them.
For your floor plans to be exact and fit your store space, you need accurate measurements. This allows you to understand the space that your fixtures would take up on the shop floor. Besides that, you can also understand which fixtures can’t be moved such as your wall fridges or bulk shelving, both of which might be bolted to the floor.
The more information you receive about your retail and in-store fixtures, the more realistic your floor plans will become.
2. A Drop Count Audit
Drop counts form another crucial source of information that can help you to understand your space and how best to optimise it.
This specific audit requires much less effort than a fixture audit because it does not require all the measurements and details that you would provide in a fixture audit. However, that doesn’t make it any less crucial.
In the context of this article, a “drop” is the width of one shelf and the height of a fixture from the floor to the top of the backboard.
When performing this type of audit, you'd likely be asked to count the number of drops according to a specific requirement.
This might take the form of counting all drops on your shop floor to provide your assortment analyst with an idea of the space available so that an appropriate range is assigned to your store.
Such an exercise is crucial because it prevents an assortment analyst from assigning a range that could be well above what your store would realistically be able to stock on the shop floor.
Assortment analysts have a database of products with physical product dimensions that they use to help them understand the space that a range would consume.
A less intensive exercise for a drop count audit might take the form of capturing drop count for a category. This is important not only for an assortment analyst but a space planner as well.
To generate a performance-enhancing planogram, a space planner would typically require:
- Product dimensions;
- A Range; and
- A Drop count.
The drop count is important because if the space planner casually packs the range on the shelf and it amounts to too few drops, your store will have an empty drop. What’s more, you’ll be required to either have the planogram reworked or will have to figure out what to put in the space on your own.
Conversely, the space planner could create a planogram that’s too large, which could result in your store being unable to implement the planogram because of space constraints or a knock-on effect being created because your categories will eat into one another’s space. This could lead to some categories being left out altogether.
3. A Stocktake Audit
Alongside the need for a fixture or drop count audit is the necessity of a stocktake audit. You can also refer to this as a merchandising audit.
A mistake can happen in stocktaking when you don't count sections altogether. Or, don't keep track of where you have placed items in-store. It’s a common mistake if you doing stocktake manually and can, quite easily, result in out of stocks if you’re not aware of what’s in your store.
For example, you could find while counting items in one category that you’re missing a certain number of items. But then you realise that you have cross-merchandised these items in a different category. Or perhaps you find your staff stuck in a store until midnight trying to find sweeteners in the sugar section when you’ve placed them elsewhere.
A floor plan with a category map would improve the situation substantially, and allow you not only to be thorough and methodical when you stocktake but also reduce the need to search for categories in the store.
As part of this category map, you could also indicate where you’re cross-merchandised items.
From there, having your planograms readily available in your sections will also make things smoother. That’s because you’ll be able to easily identify the sweeteners and which shelf you can find them on just by flipping through a few pages of your planogram.
With this audit, you can also do planogram compliance checks to ensure that everything is where it should be.
More often than not, store audits require help from a few key stakeholders and should be given the greatest care and effort when being carried out. They also form part of the backbone of any efficient category management process and are crucial to ensuring that the work done is accurate and as easy to implement as possible.