CASE STUDY

Compliance Intelligence Solutions Enabled Fewer Stockouts in Stores for CPG Client by Analyzing the Promotional Compliance

Aug 21, 2022

Highlights of the Case Study: 

Particulars Description 
Client A major CPG player was dealing with revenue loss, customer and branding issues, and operational challenges due to the stockouts in retail stores and distribution centers. 
Business Challenge The client wanted to leverage our customized, advanced tech-based solutions to identify the root cause behind the rising out-of-stock rate and rectify the problem. 
Impact Quantzig identified the root cause of the issue and implemented a compliance intelligence protocol to track and monitor the activation of promotional plans. This helped the client prevent potential loss of revenue and customers. 

Game-Changing Solutions for the CPG Industry 

On-shelf availability of products defines the success in the consumer-packaged goods (CPG) industry. Quantzig estimates suggest that 40 percent of the customers switch stores to find the same brand, and 60 percent switch brands if they cannot find the product. As a result, CPG companies miss out on trillions of dollars in sales when products are out of stock.  

Quantzig’s integrated retail (IR) analytics solutions provide an edge in shelf wars. Our team of industry analysts and compliance monitoring protocol invigorates retailers with cutting-edge tech-based insights and data-driven strategies to address the challenge of stockouts in the CPG industry.  

The Challenges of the CPG Client 

Our client is a major CPG player dealing with revenue loss, customer and branding issues, and operational challenges due to the stockouts in retail stores and distribution centers. The client’s products are in high demand and are sold worldwide. It held the largest market share in most product segments but has recently witnessed a shrinkage in its business and is losing to competitors. The client wanted to leverage our customized and advanced tech-based solutions to identify the root cause behind the losses in revenue and rectify some of the below-listed issues:  

  • Annual loss from products out of stock was 12.9 billion dollars in the North American region alone.  
  • The average stockout rate turned out to be six percent, with a turnover loss of three percent of revenue.  

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Quantzig’s Compliance Intelligence Solutions

Quantzig’s data and compliance team identified the reasons behind our client losing its leadership position in the market –  

  • Our client was spending 25 percent of its budget on promotional plans, and nine percent of the total promoted inventory was out of stock  
  • As the products were out of stock from most of the stores across the region, customers chose to switch to other more readily available brands.  
  • Stock out rate exceeded nine percent of the total promoted inventory, impacting the sales channel and retail partners 
  • Our client was losing around 40 percent of its revenue because of non-compliance with promotional plans   

Quantzig’s compliance intelligence team leveraged advanced analytics solutions to track the activation of promotional plans, which enabled our client to keep a remote watch on stores and intervene whenever the stores were not compliant. We created a monitoring system “compliance tracker” that took real-time data from the IoT-enabled stores, giving an intuitive view of the store’s execution status of promotional plans. With this, our client could successfully monitor all its stores in one go.  

Impact Analysis of Quantzig’s Machine Learning Optimizers:

Our compliance tracker had the following impact on the client’s business:  

  • The client can now monitor the display presence, shelf availability of promo products, and overall stock level in all its stores across all regions. 
  • It recorded a 3% reduction in stock out rates across all stores.  
  • It achieved an instant three percent reduction in stockouts and scaled up revenue by 10 billion dollars.  
  • The client regained its market leadership position with time.  

Key outcomes of Quantzig’s Integrated Solutions: 

The problem of unavailable products on supermarket shelves led new customers to choose another brand, while a few loyal customers postponed their purchase.  

However, fast-moving consumer packaged goods are not something consumers are likely to postpone purchasing for a long time. Hence, it is possible that if the client had not taken timely action, there would have been a further shrinkage in its customer base. This would lead to higher losses. Therefore, timely intervention with the help of Quantzig’s advanced analytics solutions helped the client to plug his losses and retain customers. Seeing this success, two other CPG brands partnered with Quantzig to leverage its expertise in promotional compliance and deploy its “compliance tracker.”  

A Broad Perspective on the role of Compliance Intelligence in the CPG Sector: 

The consumer-packaged goods (CPG) industry’s annual investment in trade promotions is about 30 percent of the total revenue. However, only a few top leaders in the industry can recover that amount and profit from it. Most CPG companies lose money (60 percent in the United States). There is a vast scope for both CPG players and retailers to improve marginal return on investment (ROI) on their trade-promotion investments by ensuring promotional compliance.  

Key Takeaways of Compliance Intelligence Solutions:

  • The client achieved a 3% reduction in stockouts 
  • Increased revenue by 10 billion dollars 
  • Regained lost customers 
  • Added new customers  
  • Gained better visibility over store inventory and compliance 

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