VMSD - January 2018 - 50

A d v e r t i s e m e n t

Merchandising Lessons to be
Learned From ... McDonald's?
By: Marc Gingras
Marc Gingras is
the CEO of Foko
Retail, a platform
that delivers the
science of retail
execution and
merchandising.
He is an entrepreneur and
angel investor,
and sold his last
venture, Tungle.
me, to Blackberry. Marc holds
an MBA from
INSEAD, a MASc
in Management
Sciences from
the University of
Waterloo and a
BASc in Mechanical Engineering
from the University of Ottawa.

153A Promenade
du Portage
Suite 200
Gatineau, QC
Canada
J8X 2K4
+1 (877) 235-5808
www.fokoretail.com

Why Retailers Could Stand to Learn a Thing or Two From the Fast Food Giant

cDonald's, like most other restaurants, started out small. Its ﬁrst franchise was opened
in 1955 (at the time, the ninth McDonald's
location) by businessman Ray Kroc. Fast forward
to today and McDonald's is one of the most popular restaurant chains in the world, serving a reported 68 million customers every day. Its success is no
coincidence. At its core, McDonald's is a business
model that revolves around getting the operations
of each location down to an exact science. All
aspects of the restaurant are meticulously planned
using vast amounts of data. The McDonald's
analytics teams look at every facet of restaurant
operations-from equipment and layout, to processes and staﬃng-to determine how they can operate
as eﬃciently as possible. This relentless pursuit of
data-driven decision making has kept McDonald's
on top.
Like most other industries, the retail industry at
large is facing a similar data-driven transformation, one focused on how shoppers are buying and
analyzing their oﬀ- and online habits. Retailers
have become obsessed with tracking the customer journey, from online to in store and back. The
goal is to understand the habits and life cycles of
shoppers so they can better convert those patterns
to dollars, and those page views and store visits to
long-term, repeat customers.
When it comes to collecting data, online retailers
undoubtedly have the upper hand over their brickand-mortar counterparts. They can ﬁgure out how
to maximize sales with the ability to track, test and
tweak any part of the shopping experience on their
websites. They can identify patterns, test diﬀerent
hypotheses and use those interpretations to improve sales conversions.
Digital merchandising is a great example of how
e-commerce retailers harness data to their advantage. The way products and promotions are displayed online is determined through careful analysis and testing. Let's say you have a new product
and you're trying to ﬁgure out how it should be
presented. You'd probably test out a few diﬀerent
image options in focus groups and the one with

the highest conversion rate is the one you'd end up
using. Having detailed analytics at your ﬁngertips
means you can establish patterns, test diﬀerent options and land on the solution that's going to yield
the best sales. In other words, there's no guesswork
involved. That's because digital merchandising is
not an art: it's a science.
For most brick-and-mortar retailers, however,
merchandising is still a guessing-game. Similarly
to online merchandising, not all in-store displays
are created equal. But unlike e-commerce retailers,
brick-and-mortar retailers are usually blind to the
performance of their displays. They have no idea
which display will have the highest conversion rate,
and have no system in place to track the sales data
related to each.
Beyond not understanding how their merchandising eﬀorts impact store performance, many
brick-and-mortar retailers may not even know if
their displays look the way they were designed to.
Consider this: According to RIS, almost half of retailers only measure compliance 1-2 times a year or
less, while nearly 20 percent never measure it at all.
Retailers are sending out directives to their stores,
but aren't able to verify that they are actually being
executed to meet brand standards.
Physical retailers have yet to learn "The McDonald's Lesson." Many retailers seem to understand
the importance of collecting data to improve store
performance, but they can't see the forest for the
trees. They're focused on how customers are buying, what they're buying and where they're buying, but completely neglecting the importance of
crunching the data behind the in-store experience,
how it impacts the customer journey, and ultimately, sales.
Merchandising is, of course, an art. In order for
retailers to succeed in today's competitive market,
they have to understand that it's also a science.
It's time for retailers to take oﬀ the blindfold. You
can know what you've sold, but you don't know
what you could have sold. After all, as the saying
goes, "If you can't measure it, you can't manage it."

http://www.fokoretail.com

Table of Contents for the Digital Edition of VMSD - January 2018