⭐ Retail Audits – The Definitive Guide

This definitive guide to retail audits is everything you need to plan, build and launch a retail audit program across your retail network.

Who is this Guide for?

This guide for retail audits is for multi-unit retailers in industries like food service, convenience stores, pharmacies, spas and clinics, telecommunications, and alcohol retailers. This guide also helps parking operators and manufacturers or distributors of consumer packaged goods.

If you need to audit stores and sites across a retail or hospitality network, this definitive guide to retail audits is for you!

Contents

What is a Retail Audit?

Why Conduct Retail Audits?

Who Benefits from Retail Audits and Retail Audit Software?

– Head Office

– Vice Presidents and Directors

– District/Regional Managers and CPG Field Representatives

– Franchisees and Managers

– Customers

How to Implement a Retail Audit Program

How to Build a Retail Audit Checklist

Types of Retail Audits

– Merchandising Audit

– Loss Prevention Audit

– Health and Safety Audit

– Competitive Analysis Audit

Industry-Specific Retail Audit Checklists

How to Conduct a Retail Audit

Retail Audit Action Plan

How to Calibrate a Retail Audit Program

– Calibrating the Form

– Calibrate the Team

How to Manage Retail Audit Expectations

How to Help Stores Process a Low Score

Excel vs. Retail Audit Software

ROI for Retail Audit Software

Retail Audit Software – Buy vs. Build

What is a Retail Audit?

A retail audit allows retail and hospitality brands to execute brand standards, programs, and policies in areas such as operations, merchandising, loss prevention, health and safety and security across all stores, on time and in full. The audit is sometimes called an assessment or simply a visit.

The audit uses retail audit software, an actionable form with best-practice pictures, photos, videos, supporting files, signatures, conditional logic, critical items and action plan recommendations

Retailers and hospitality networks typically conduct audits for operations, merchandising, loss prevention and health and safety throughout the year. These audits are conducted to uphold brand standards and to prepare for and support store initiatives and seasonal programs.

Retail audits can be announced or unannounced. Audits may be conducted as a “self-audit” by a franchisee, store manager/employee or by a district manager/field representative visiting the store.

Why Conduct Retail Audits?

1. Ensure Programs and Standards are Executed

The fundamental purpose of an audit or inspection is to ensure programs and standards are executed at each site, in full and on time. Brands deploy their district managers to sites such as retail stores or hotels, who then assess the site and determine whether or not everything is on brand. 

For instance, if a retail brand is running a promotion across their locations, the company may send district managers to visit participating stores so they can check whether or not each store has followed the merchandising guidelines, and used proper materials at the right time. 

This is also true of signage and components that project the brand’s image onto customers and guests. Is the right signage used, from the right vendor? It is current, is is properly placed and functioning?

As such, inspectors need to be organized and systematic with their assessments. Retail stores and hotels have plenty of moving parts, so you simply cannot afford to be “all over the place” with your audits.

To stay on point, you first need to clarify your objectives, as doing so will tell you and your team what to prioritize and focus on during the audit. 

Brands “should articulate their goals, as to what is the objective of conducting the inspection of their stores. These objectives should also be passed on to their staff members to ensure high quality,” says Cale Loken Chief Executive Officer at 301 Madison Consulting.

From there, map out a checklist of what specific components to inspect. This checklist should contain “all the crucial aspects that you wish to remain consistent across all stores,” says Jessica Kats, an ecommerce and retail expert at Soxy.

Items on the checklist may include things like:

• Proper in-store signage
• Correct pricing 
• Correct product placements
• Staff knowledge and demeanor

“Once you create a checklist with these items, it becomes easy to conduct store inspections,” adds Kats. “You can visit multiple branches of your store and check off each aspect one by one. This will also help you quickly identify if anything is out of place and not in line with other branches. In essence, the entire inspection process will become more streamlined.”

Pro tip

Need help creating checklists for your inspections? Bindy’s form builder lets you set up multi-lingual checklists right from your phone or computer. You can also upload checklists from Excel, as well as clone existing checklists for multiple inspections.  

2. Reduce risks and liabilities

It only takes one scandal or lawsuit to ruin a brand. For this reason, it’s essential that you set and monitor your standards when it comes to health, safety, and security.

Regular inspections can protect your brand from risks and liabilities by helping your team spot and address issues before they land you in legal hot water. 

For example, an on-site visit may surface problems like expired fire extinguishers or malfunctioning fire alarms. Left unchecked, these things can lead to safety incidents, lawsuits, and brand backlash. 

So, ensure that your site inspections cover safety and security. These aspects may not be as flashy as customer-facing components like branding, signage and promotions, but they are just as important.

Pro tip

Use Bindy to collect insurance certificates and details from your sites and franchisees. This will ensure they have sufficient coverage and that you have the information and documents on file in case of an accident or claim.  

3. Cut Losses

Loss prevention is a very real challenge for retailers. However, causes are largely preventable.

4. Identify staff training opportunities 

Strong branding isn’t just about visual elements. While factors like signage and packaging certainly matter, the people representing your brand also play a major role in shaping the perception of your customers.

This is why it’s critical to evaluate your staff’s brand knowledge and demeanor when conducting site audits. Pay attention to:

How well they know your brand. This includes knowledge of your products and their features, as well as the teams’ familiarity with the key messaging and talking points you want to promote. 

How they embody the brand. Evaluate the demeanor of your employees and ensure that their behaviors are in line with the image you’d like to convey. For example, if they’re representing a friendly and outgoing brand, then associates must act accordingly. 

By taking note of these things during your retail inspections, you’ll be able to identify coaching opportunities for your team. If there are associates who aren’t meeting your brand standards, you’ll be able to see them first-hand and recommend corrective action. 

5. Obtain feedback

Site audits give you the opportunity to get feedback from your employees. Your team members can relay information about how the brand is performing, as well as what they’ve seen from retail customers. 

Take the time to gather qualitative feedback from in-store teams. What comments do they typically hear when customers talk about your brand? How do they feel about this recent offer or promotion? Do they have any suggestions for improvement?

The answers to these questions can give you the intel you need to improve your branding efforts. 

6. Promote accountability and better output

It’s a known fact that humans perform better when they know someone is watching. As the Harvard Business Review points out, “When they are observed, people run faster, are more creative, and think harder about problems.”

This same principle can be applied to retail audits. You may not be able to observe employees 100% of the time, but conducting in-person visits communicates that the business is paying attention.

When employees know that their work will be evaluated, they’re more likely to bring to A-game and stay on brand.  

Who Benefits from Retail Audits and Retail Audit Software?

Here are some of the benefits you can expect from regularly visiting and auditing your sites and facilities.

Executive Management Benefits

• An increase in same-store sales.
• An increase in the effectiveness of in-store merchandising. No further investments are required. Audits simply ensure the seasonal and merchandising programs you already pay for are executed consistently, at every site, every time.
• A reduction in business risks and liabilities.
• A reduction in commercial insurance premiums for franchisees.
• A reduction in theft and fraud across the network.

Senior Management Benefits

• Better tracking and measurement of site execution of programs and brand standards…in real time!
• More segmented tracking of the performance of programs, regions, stores, and individuals. Easy identification of outliers and opportunities for further training, assistance or follow up.
• Complete oversight and a collaborative workflow involving the district manager and franchisee. The reduction of communication overheads and costly back-and-forth. It just works.

District and Area Management Benefits

• Simplified, time-saving actionable data collection on any device, both online and offline.
• Around-the-clock access to historical store data, including notes, signatures, photos, and videos at any of your stores, anywhere, on any device. View repeat unacceptables, trends and store-to-district comparisons.
• The utilization of performance data to inform, engage and advise franchisees on driving their business and the brand forward.
• No more Excel, fewer emails, fewer follow-up phone calls! Free up your time to do what you do best: help the stores achieve better results!

Franchisee Benefits

• Around-the-clock access to historical site data anywhere, on any device. View the district manager’s notes, recommendations, photos, and videos.
• Closing of issues with verification photos, videos, and signatures.
• Easy-to-use reports showing historical best and worst performing areas, trends and notes from all prior visits.

Customer Benefits

• Consistent execution of service, merchandising and health & safety standards improve the customer experience, reduce customer complaints and improve same-store sales.
• Customers have a way of thanking stores, hotels and facilities that are well run…they come back!

How to Implement a Retail Audit Program

Implementing a retail audit program is neither time-consuming nor difficult. It is perhaps one of the easiest things an operations/sales team can do to boost in-store execution, customer satisfaction and sales. Here is how you can implement a retail audit program in five steps:

Step 1: Let’s Pause. do you need retail audit software?

Asking a retail audit software vendor whether you need automation software may be like asking a shoe salesperson whether you really need shoes. If your retail chain is small, have no problem stores and/or no franchisees, you may not need it.

If you are already using paper-based or excel audits regularly, consider how the time you save with automation could be invested into other areas of the business!

Step 2: Build an audit form or checklist

There is a science and an art to building a form for retail audits and inspections. This form should encompass the service, merchandising, safety and loss-prevention standards you need your stores to uphold. These are the standards that define and protect the brand, that drive sale and cut costs and shrink.

A complete overview of considerations and best practices for building a retail audit checklist is available at How to Build A Retail Audit Checklist.

Step 3: Launch the form on a small scale with a small group and “calibrate” the form and the team

The purpose of calibration is to vet and tweak the form(s) with a sample group of users and stores prior to general launch.

A complete discussion of the purpose, benefits and some best practices for calibrating forms is available at Retail Audit Calibration – Purpose and Best Practices.

Step 4: Determine whether you need to buy or build your retail audit software

Now that you’ve seen how effective a regular store audit can be, you may want to consider your own form of automation.

The factors that need to drive your decision are your costs, your return on investment, your time-to-market and the value and benefits that you will derive from the software you chose.  A complete discussion on the economics of buying vs building your audit tool is available at Retail Audit Software: Buy vs Build.

Whatever you do, we do not recommend using Excel and email. When used for brand standards and execution, Excel is slow, labor-intensive and error-prone.

Step 5: Deploy and track results

Deploy the program to your stores, record results, tracks trends and use the available reports and graphs to note the positive impact on your sales and customer satisfaction. Retail audits have known and documented benefits that significantly exceed their costs.

How to Build a Retail Audit Checklist

What should go on a retail audit checklist? The answer depends on what you want to know about your locations. Are you a retailer starting your audit program from scratch? Are you a CPG brand interested in shelf space, pricing accuracy, and tracking your competition? Regardless of the specific circumstances, here are a list of best-practices to help you build your retail audit or CPG merchandising checklist.

Step 1: Think about the checklist’s “metadata”

Metadata is data about the store visit. Customers who use Excel-based forms typically expect user-entered fields such as store number, completed by, date, etc…

Metadata is largely automated/pre-populated with retail audit software. With retail audit software, the auditor’s information is derived from the login, the store pick-list is built specifically for each user and based on the user’s current GPS location and the date selected. 

Step 2: Group items into sections. order sections according to the “natural flow” of the visit.

Whenever possible, sections should be laid out to match the natural flow of a visit (a district/area manager physically walking the store).

Start with the exterior (the parking lot if applicable, the window in a mall location) and work your way in, around the aisles and into the back of the store.

While you can jump around between sections during or after the visit, setting up your retail audit checklist according to the natural flow of a visit saves time and is more intuitive.

Step 3: Think about “non-applicable” items and sections

Certain sections or items on your retail audit checklist may not be applicable to all locations. For example, the “Washrooms” section is probably not applicable to a store located in a shopping center. Likewise, the “Drive-thru” section won’t be applicable to a restaurant that does not have one.

Doing this saves time and is more intuitive. Retail audit software allows you to disable entire sections and items at certain stores according to the store type. 

Step 4: Make sure your checklist has adequate coverage

While individual situations vary, you should address some or all of the following areas, each represented as a section:

1. Store exterior (sample exterior area checklist)
2. Presentation and Merchandising (sample merchandising checklist)
3. Products and Preparation (sample food safety checklist)
4. Staff and Speed of Service
5. Personnel and Training
6. Equipment (sample commercial kitchen equipment checklist)
7. Security, Cash Handling and Loss Prevention (sample loss prevention checklist)
8. Drive-thru (sample drive-thru checklist)
9. Promotions (sample merchandising checklist)
10. Back of the Store and Inventory
11. Washrooms (sample commercial restroom cleaning checklist)
12. Safety (sample fire protection checklist)
13. Policy (sample sexual harassment checklist)

Step 5: Avoid large sections

Instead of creating a small number of large sections, consider creating a larger number of small sections. This helps with data-entry, especially on smartphones, and also renders the reporting more granular and meaningful.

Step 6: Assign points to items according to their relative importance

Assign points according to the relative importance of each criterion. While it is easy to think of everything as important (and if a criterion is not important, it should not be on your retail audit checklist), some items are more important than others, sometimes critical to business continuity. Health and safety issues come to mind.

Assign points and make use of the “Critical” flag accordingly. A critical item sets the value of the entire section to zero, regardless of other items, if found non-compliant during the visit.

Step 7: Be specific, descriptive and visual

Standards should be clear and unequivocal. Don’t use vague words like “recent” or “good”. For example, instead of saying, “Recent staff meeting held”, consider using, “Staff meeting held less than 5 calendar days ago”. If referring to temperatures or lapsed times, give actual numbers. Clearly spell out what the standard is.

If it takes one paragraph to define the standard, use one paragraph. If you have one, attach a best practice photo to an item to illustrate the standard; a picture is often worth 1,000 words and more likely to make an impression than words alone.

Retail audit software often allows you to attach pictures and supporting documents to any form item and section as well as tasks.

Step 8: Think about visit frequency

The frequency of district manager visits (at least visits involving the retail audit checklist) can vary greatly from one organization to the next.

On one end of the spectrum, some organizations (including large organizations in the food service and hospitality business) tend to conduct as many as one visit every other week. Other organizations may only conduct one visit per quarter. Some organizations use a hybrid model. They use a standard form to capture their core standards (say twice a year) and create a number of smaller forms for visits throughout the year, sometimes tying these visits to seasonal programs.

It is customary to create one form per key risk area or business unit: Operations, Merchandising, Health and Safety, Security, Front of house and Back of house.

Retail audit software allows an organization to create any number of forms, each with its own start and end date. Retail audit software also supports self-audits which can be used as a stop-gap measure until a district manager visit can be performed.

Step 9: Calibrate the checklist with your field team

Discuss the checklist with your district managers, franchisees and managers. Solicit their input and feedback. We call this phase “calibration“.

A retail audit checklist is as much an inspection tool as it is a training vehicle. Define the standard, communicate and measure it. Meet the standard, and achieve your goals.

Step 10: Are you building your own or using a ready-made app?

The factors that need to drive your decision are costs, return on investment, time-to-market and the value and benefits you will derive from the software you choose. Read more on buy vs build: Retail Audit Software: Buy vs Build 

pro tip: Don’t use Excel and Email

Whatever you do, we do not recommend using Excel and email for this. Excel is not a workflow engine and lacks essential features needed for audits. When it comes to programs and brand standards, Excel and email won’t help your business, they will hold it back.

Types of Retail Audits

Retailers and CPG brands can conduct numerous types of audits: operations, merchandising, loss prevention, health and safety, training, facilities, etc. Below we define four of the most common types of retail audits.

Merchandising Audits

Both multi-unit retailers and CPG brands invest a large amount of resources in branding, signage, and displays. Brands use merchandising audits to track the execution of in-store programs.

Lack of in-store execution can be costly, with sub-optimal merchandising leading to a 1% loss of gross sales. Across the board, display compliance can be as low as 40%.

Merchandising audits can be divided into two overarching categories:

1. Shelf audits (planogram compliance, no product holes, facings, pricing, correct SKUs)
2. Promotional audits (seasonal programs, supporting signage, special displays/ads, special pricing, employee awareness of and knowledge about the promotion)

It is a retail best practice for multi-unit retailers to combine merchandising audits with audits for general store presentation and cleanliness to ensure customers have an optimal experience.

Loss Prevention Audits

Loss prevention audits are designed to minimize waste, vandalism, theft, and risk. Taking a prevention vs. reaction approach reduces costly disruptions, protects the brand and helps build up the relationship between head office and store. Loss prevention audits put your policy front and center and makes the process transparent for stores.

According to retail experts, employees are the best line of defense. Loss prevention audits reinforce previous employee training, demonstrate that loss prevention is a company priority, and offer the opportunity for employees to ask questions.

Health and Safety Audits

Health and safety audits ensure compliance with government regulations and proper product handling to protect companies from lawsuits, claims, brand tarnishing events, and other costly disruptions.

These audits are not limited to foodservice fields. Pharmacies must ensure medication is properly stored, secured, and dispensed. Constructions sites need to monitor for proper equipment, signage, and barriers as work progresses to keep both workers and the public safe.

Furniture retailers should keep cords, ladders to bunk beds, and décor secured appropriately. Distributors must monitor worker safety and ensure that delivery and warehouse personnel lift and move products correctly to avoid injury.

Health and safety audits should be conducted routinely, with critical issues always a part of every audit. Doing so will support operational best practices and employee training.

Turnover in retail can be high, so a regular emphasis on health and safety keeps everyone involved and informed.

Competitive Analysis Audits

Competitive analysis audits are most commonly conducted by CPG manufacturers to track competitor activity in a specific vertical. To make the most of a competitive analysis audit, it is critical that you carefully consider the scope and the data you want to gather before sending your reps into the field.

• Choose your product. CPGs often manufacture more than one type of product. First, consider what specific product you want to know about. Then, identify your top 2-4 direct competitors for that product. If you are interested in gathering data about several products, ensure that each product has its own section on your form.
• Consider what you want to know. Are you interested in your competitors pricing strategy? Special promotions and offers? How they define and talk about the product? Number of facings? Product location and POP displays?
• Think about where you will visit. CPG brands may have their merchandise in 1000s of locations. Will you visit all locations or a selective sample?
• Consult with your retail partners. Before leaving the store, consult with your retail partners and employees on the floor. Are employees likely to recommend a competitor over your product? Employees knowledgeable about your product? Are they knowledgeable about your competitor’s product? Remember, successful collaboration and a positive relationship with your retail partners can raise shelf stock rates by 5-8% and reduce manufacturing costs by 5-15%!

For tips to promote better collaboration with your retail partners see: 5 Tips to Improve CPG and Retailer Collaboration and In-store Demonstrations Improve CPG & Retailer Collaboration.

Industry-Specific Retail Audit Checklists

The Bindy blog offers a number of free, industry specific retail audit checklists:

• Merchandising Checklist
• Loss Prevention Checklist
• Washroom Checklist
• Fire Protection Checklist
• Sexual Harassment Prevention Checklist
• CPG Merchandising Checklist
• Alcohol Retailer Checklist
• Gas Station Checklist
• Pharmacy Checklist
• Telecommunications Retailers Checklist
• Hotel Safety and Security Checklist
• Lottery Retailer Checklist
• Drive-Thru Checklist
• Restaurant Kitchen Checklist

How to Conduct a Retail Audit

Step 1: Build Forms

Build custom actionable forms with the Form Builder or build forms in Excel and upload them. You can build your own forms or get them from the system’s library of forms.

Each form represents a certain program. It could be an operations program or a merchandising / seasonal initiative. It could be a loss prevention or security program.

A form represents any information, data, photos, videos, or files you wish to collect at your sites.

Set your permissions and restrictions. Choose who on your team can use the form, when they can use the form, and where they can use it.

One form may be a self-assessment to be completed by the store manager or hotel’s general manager once a week. Another form may be completed by the district or cluster manager once a quarter. You control access, frequency and effective dates on a form-by-form basis.

Using the built-in site tagging module, target specific sites, formats and/or users with specific forms, sections, and items (if needed). Not all forms may be applicable to all sites. You control this.

Illustrate items with best-practice pictures and include attachments. A picture is worth a thousand words. This is particularly useful for visual merchandising. Don’t just tell the field what the standard is, show them.

Use conditional logic to drill down on root causes. If “Last fire inspection more than 6 months old” was answered yes, trigger an item to collect the last fire inspection report on file for example.

Specify whether photos and videos are mandatory.

For best results, calibrate the form with your team.

Step 2: Schedule the Audit

Use the calendar to schedule one-off or recurring inspections. Choose the site, the appropriate form, and whether the inspection should recur.

Send notifications (subject to whether the visit is announced to the site or a “surprise” visit). Export the scheduled visit to Outlook if needed.

Announced

This is typically the case with merchandising audits, particularly those preceding an in-store merchandising campaign or seasonal program. The intention being to prepare for significant upcoming dates and execute the facets of the seasonal program as laid out by head office.

Unannounced

The district manager shows up without prior warning to conduct an on-the-spot audit. This is often the case with service and health & safety compliance. Unannounced audits gauge the store’s compliance with standards on a typical day with no additional preparation or training before to the audit.

Step 3: Conduct the Audit

Bindy features advanced data collection capabilities. Site visits can be conducted in real-time or offline on any mobile device, laptop or tablet. Site visits are aided by geo-location and geo-fencing, item descriptions, best practice pictures and attachments.

You can take photos and upload videos during the visit. Unlike the “best practice photos” added to items when the form was created, these are field photos of how this item, at this site, on this day, looked.

You can also collect files and attachments as part of the visit. This could be a proof of insurance for example, a security certificate in PDF or raw sales data in Excel.

The system is store-list and hierarchy aware so if a district manager is affiliated with 30 sites, this district manager may only visit and run reports against these 30 sites.

Note that the person or role designated to conduct the visit (also view it, sign it, get notified, etc…) is not static. It varies by form depending on the business objectives of each form. For example, you may have a “Quarterly Ops Review” conducted by the District Manager and signed by the Store Manager. You may also have a “Daily Opening Checklist” conducted by the Assistant Store Manager, effectively as a self assessment, and viewable by the Store Manager and the District Manager. Each form represents a customizable workflow that is created when the form is built.

Step 4: Create an action plan

The action plan is automatically generated by extracting all non-compliant items from the visit.

The action plan allows the user conducting the visit to assign corrective actions, a person responsible and a target date to each problem area.

Emails and notifications are automatically sent to those with action plan responsibilities. This also shows up on their dashboards and on reports for outstanding items, including time-to-completion.

District managers and owners/franchisees/managers can enter their own notes and view each other’s notes thus making issue-resolution collaborative and transparent.

Verification photos can be added to each item.

Step 5: sign the Audit

The system allows the brand to designate several users who are allowed to sign and “sign off” on the visit on a form-by-form basis. This provides a record of integrity and locks the visit from further edits. Sign the visit electronically with any touch screen device (or even a mouse!).

Step 6: Track and follow-up

Bindy has built-in monitoring for “outstanding” tasks and responsibilities. At any given time, anyone may log-in (system may also send email notifications) to check what has and hasn’t been done. This results in significant savings to the organization. A Bindy retail audit saves the organization over 2 hours and $84.

Bindy also allows organizations to manage operations remotely and deploy “self assessments” from stores and franchisees where additional savings are realized.

Step 7: Report, refine, repeat

The return on investment does not end with collecting inspection data, or even applying corrective actions, that’s just where it begins.

Bindy has industry leading analytics and graphically-oriented tools and charts to help you find your best and worst items, operators, regions, repeat unaceptables and a lot more. Bindy turns data into information so you can make informed business decisions.

Spot trends, average scores, worst and best performers, and much more. With this information, the organization can further tune the form(s) and repeat the cycle of compliance with brand standards and programs.

Retail Audit Action Plan

Accountability

The action plan fosters ownership and accountability at each site. It also allows district managers and franchisees/managers to work together towards a shared goal: making each site more performant and profitable. Corrective actions are about seizing the opportunity to do better. Remember, don’t sweat the score, seize the opportunity.

Efficiency

The action plan breeds efficiency. It allows for corrections to happen with no time wasted with back-and-forth communication between the franchisee/store manager and the district manager or head office. You’ll never be asked again “is it done yet?”. You’ll mark the corrective action fixed (optionally upload a verification picture), you’ll know, they’ll know. What will you do with your free time?

Find a deficiency, assign it as a corrective action, fix it…done!

Don’t just Find Problems…Fix Them!

Don’t spend time and resources looking for issues unless you are committed to correcting them.

The goal of a product like Bindy is not to help you find problems. The goal is continuous improvement, resolution, and closure. Finding problems is good. Fixing them is better.

Close the loop on Site execution

At its core, the action plan is a vehicle for improvement. Success in retail and hospitality hinges largely on execution. The action plan is execution.

The action plan is the continuation of the visit, the key to getting resolution and closure.

If you think of problems as ailments, the action plan is the cure. Don’t leave the site without one!

How to Calibrate a Retail Audit Program

Whenever possible, Bindy recommends a gradual roll-out where some users/districts are trained, feedback is collected, the forms/workflow adjusted, and the program iteratively expanded by training another batch of users/districts. We call this step “calibration”.

In a retail and hospitality environment, a checklist is a collection of brand standards and best practices.

What goes on the checklist reflects what matters to the brand (strategic initiatives, seasonal programs, etc…), what the brand is required to do (laws and regulations, health and safety, etc…) and what it aspires to be, operationally and in the eyes of its customers.

The checklist needs to be representative of business programs and objectives but also clear and well understood by the field team responsible for executing these brand standards. This is where “calibration” comes in.

Don’t bet the farm on unproven brand standards and gaps in understanding. Calibrate then scale.

There are two facets of calibration we need to consider: calibrating the checklist and calibrating the team. Let’s dive in.

Checklist calibration

Calibrating the checklist entails selecting, grouping and ordering what goes on the checklist. This is often driven by the operations team with input from other departments (merchandising, marketing, human resources, loss prevention, etc…).

Checklist items should be sufficiently clear and detailed while avoiding repetition. The checklist must provide good coverage of all areas of interest to the business and be laid out in such a manner as to optimize the district manager’s time doing the visit.

While much can be done at head office, there is simply no substitute for “hands-on” time in the field. Giving a select group of district managers access to the checklist, even if it is just a draft, allows head office to fine tune and calibrate the checklist with real-world feedback. It is often at this stage that unclear copy, repetitive standards or inadequate ordering are noted and addressed.

Team Calibration

Calibrating the team is a form of applied-training that ensures standards are evaluated using a consistent and fair scale. While the judgement of a district manager is tremendously important to the success of the audit program, consistency in the rating and grading are equally important.

Calibrating the team entails training operations personnel to have a shared understanding of the operating standards and how to rate and handle deviation from the standards.

Calibrating the team also means demonstrating where the definition of the standard ends and where the district’s manager’s need to make a judgement call begins.

Dealing with people is not always as black and white as checking off a box on an electronic form. The operations team needs to know how to handle sometime sensitive and confidential personnel issues for example.

Why Calibrate?

A calibrated checklist reduces confusion, back and forth questions and also facilitates the dissemination of operating standards as well as adoption.

Calibration also ensures standards are rated fairly and consistently. Consistency breeds trust with the overall score and lends itself to aggregate reporting, comparisons across users, regions and time frames.

To reach your business goals, you need to vet and “calibrate” checklists with a sample group of users and stores prior to general launch. Don’t bet the farm on unproven processes. Calibrate then scale.

 calibration best-practices

Use pilot stores to obtain initial results. Don’t bet the farm on an unproven checklist, run a small pilot and calibrate it until you are satisfied with the outcome.

Start with a small group of users and stores. The idea is to get feedback early and often before you deploy to a larger group.

Test-drive the checklist in the field!  A checklist may look fine at head office but may prove to have severe shortcomings when you actually conduct a store visit. An inefficient checklist may cause the district manager to have to step back or repeatedly jump around the store to complete the visit.

Don’t sweat the score, Seize the Opportunity

Assigning point values to inspection items is a common practice in retail and hospitality audits. The idea is to obtain an overall score for the site and an indication of the site’s compliance with a program or sets of standards. Scoring a site may however trigger unexpected reactions from the franchisee or store manager.

Most operators and franchisees take pride in their work and can struggle with a disappointing visit score and the district manager’s guidance.

Was the district manager too harsh or unfair? Is my store really lacking in certain areas as the visit’s score, notes and action plan suggest? It can be a lot to deal with on a professional level but also on a personal level.

While we understand an operator’s pride and commitment to excellence, we have the following advice for anyone disappointed with the outcome of their last district manager visit: don’t sweat the score, and don’t waste the opportunity.

Don’t Sweat the Score

There is no such thing as a perfect visit in retail. Turnover happens. Weather happens. Human errors happen. Even the best operators let a thing or two fall through the cracks, occasionally.

Getting a less-than-perfect score is not, in and of itself, a grave concern nor particularly unexpected. The best ball players in the world don’t throw the perfect pitch 100% of the time, neither do the best retail operators.

Team calibration plays a certain role in this and so does managing expectations. Remember that the purpose of a retail audit is not to score, but to improve the store’s sales and bottom line.

Didn’t get a perfect score? Were the store’s presentation, merchandising and service standards perfect in every way? Perfection is a journey, not a destination.

Seize the opportunity

So what’s the opportunity?  

For a district manager, the opportunity is to hold his/her stores to the highest standards. Anything less is unfair to the brand, the franchisee and the customers.

For a franchisee, the opportunity is to uphold and execute on those standards.

So don’t sweat a low score. A low score can happen on any journey to greatness. Focus on the opportunity, the end goal and a chance to do better next time.

Excel vs. Retail Audit Software

Many retailers who do monitor store compliance with company standards continue to rely on paper, email, and phone support. While phone and email are ubiquitous methods of communication, neither was designed to be bi-directional, traceable, or reportable.

Using Excel or paper for your forms can be slow and labor intensive. Scores must be tallied, data gathered, input and shared, multiple emails must be sent to report deficiencies. A completed audit sitting on someone’s desk is no help to a company that requires up-to-date data to make informed business decisions.

ROI for Retail Audit Software

Retail audits have measurable benefits inside and outside of the company. For companies who continue to rely on paper/Excel, automating retail audit programs with software demonstrates ROI on process improvement alone and gives all levels of the company access to data instantly.

Retail audit software saves 145 minutes per audit per store.

• Scheduling the audit and notifying stores is automated.
• Review past audits quickly using reports instead of sifting through paper/email and creating a summary.
• Forms are intuitive: only showing items (questions) that are applicable to the location and the user.
• Next, scoring is automatic.
• Data does not need a summary but is available to all levels in real time.
• With one click, action plans are automatically created for all non-compliant items identified during the audit.
• Assign action plans and tasks. The software automatically follow-ups on overdue responsibilities.
• Track completion from anywhere, any time with simple reports

For the company, retail audit software eliminates the cost of data entry, mailing paper forms, and physical data storage. Software gives brands the capability to adjust forms quickly and eliminates distribution costs.

Form builders can work collaboratively with their team on a single platform to calibrate the form as opposed to sharing by email and waiting for a response.

Head office can handle unexpected emergencies and changes (product recall, regulation changes, equipment breakdown, viral negative customer review) for any personnel level instantly with task management.

Retail audit software saves money lost on poor execution.

The cost of sub-optimal merchandising is approximately 1% of gross product sales. Success comes down to proper execution.

• Only 40% of contracted promotional displays are executed properly.
• Successful CPG collaboration with retail partners for merchandising execution can generate up to 10% in operating margin improvements and reduce inventories by an average of 10%.
• Real-time access to information between head office, teams, and stores facilitates identifying campaign problems early on and assigning issues for resolution to correct lackluster campaigns.

Retail audit software reduces loss associated with theft, fraud, vandalism and waste.

A recent study by the National Retail Federation (NRF) found an average shrink rate of 1.44%, costing “the overall U.S. retail economy $48.9 billion.”

• Companies that deploy efficient processes can do more with less. Almost 8% of loss prevention departments are seeing budgets decrease by 20%.
• Use retail audit software to distribute loss prevention policies and review tests to ensure standards are understood at the store level.
• Task management modules enable brands to assign and track LP policy review.
• Quickly distribute updates to loss prevention policy.
• Retail audit software provides a history of due diligence should a critical incident occur.

Retail audit software protects the company

Audits protect companies from claims, fines, and lawsuits due to health and safety violations.

• 70% of small retail businesses feel overwhelmed by government regulations including safety guidelines and labor regulations.
• Change employee behavior by clearly communicating health and safety standards.
• Use task management to assign essential equipment maintenance.
• Attach policy and regulation updates to the form so that information is easily accessible.
• Demonstrate due diligence for disaster and emergency preparedness with an electronic, easily accessible audit history for each location.

Retail Audit Software – Buy vs. Build

Retailers, manufacturers, distributors and operators are all struggling to do more with less. Fewer resources, smaller budget, less time.

You need to communicate and execute programs and standards, you need to protect the brand, collect information from the field, and send directives to stores. You need to do that with limited resources. Do you buy or build?

Let’s dive in and consider four key factors.

You don’t mean Excel right?

Before we get started, let’s get something out of the way. For the purpose of this comparison, “build” refers to building software with the help of professional software developers and your IT department.

If you are looking to compare a software platform you can buy and deploy instantly (Bindy) to a custom workflow built around Excel and Email (or similar tools), refer instead to Excel and Email vs. Bindy.

Now let’s dive into the merits of buy vs build.

Factor #1: development and maintenance Costs

It is common to ask the IT department for an estimate of costs to develop an in-house solution. When asking for an estimate, remember to inquire about ongoing support and maintenance costs associated with the entire lifecycle of the software and ongoing usage.

This is especially important for small and medium-sized retailers. SMBs may not have the IT cycles to develop software are provide ongoing support.

Regardless of your size, it is important to be aware that a large number of IT projects go over budget. A study by the Project Management Institute (PMI) found that 43% of projects exceeded their initial budget.

Remember that 70% of software costs occur after implementation! 

“A rigorous life cycle analysis that realistically estimates ongoing maintenance by in-house developers often tips the balance in favor of buying.” – Mark Lutchen, former global CIO of PriceWaterhouseCoopers

Factor #2: Return on investment

Once you have an estimate of the cost to build, deploy and support, you can begin to compare a ready-made solution.

Utilizing a retail audit software has a measurable impact across all areas of the company. For those previously relying on paper/Excel, automating audit programs with software demonstrates ROI on process improvement alone and gives all levels of the company real-time access to data instantly.

Bindy saves an average 145 minutes per audit per store:

• Scheduling the audit and notifying stores is automated.
• Review past audits quickly using reports instead of searching through paper/email data.
• Forms are intuitive: only showing items (questions) that are applicable to the location and the user.
• Scoring is automatic.
• Data is available in real time.
• With one click, action plans are automatically created for all non-compliant items identified during the audit.
• Assigned action plans and tasks reminders are automated instead of chasing after staff with emails, phone calls, and chat threads.
• Track completion and trends on any device, any time with simple reports.

An out of the box solution will save you the cost of data entry, postage and physical data storage. It gives brands the capability to create and edit forms quickly and eliminates distribution costs associated with sending and/or printing endless hard copy audits.

An appointed form builder can work collaboratively with their team on a single platform to calibrate their forms/checklists as opposed to sharing by email and waiting for a response.

Head office can handle unexpected emergencies and changes (product recall, regulation changes, equipment breakdown, viral negative customer review) for any personnel level instantly with task management.

Save money lost on substandard execution

The cost of sub-optimal merchandising is approximately 1% of gross product sales. Success ultimately comes down to proper execution.

• Only 40% of contracted promotional displays are executed properly.
• Successful CPG collaboration with retail partners for merchandising execution can generate up to 10% in operating margin improvements and reduce inventories by an average of 10%.
• Real-time access to information between head office, teams, and stores facilitates communication that can allow teams to address issues immediately. For time-sensitive campaigns, this assists in a faster improvement to underperforming campaigns.

Reduce losses associated with theft, fraud, vandalism, and waste

A recent study by the National Retail Federation (NRF) found an average shrink rate of 1.44%, costing “the overall U.S. retail economy $48.9 billion.”

• Companies with efficient processes in place, save time and money. Almost 8% of loss prevention departments are seeing budgets decrease by 20%.
• Use retail audit software to distribute loss prevention policies and review tests to ensure standards are understood at the store level.
• Task management modules enable brands to assign and track LP policy review.
• Quickly distribute updates to loss prevention policy. Ensure that users have reviewed in real time and follow up with those who have the task outstanding.
• Retail audit software provides a history of due diligence should a critical incident occur.

Protect the company from claims, fines, and lawsuits due to health and safety violations

• 70% of small retail businesses feel overwhelmed by government regulations including safety guidelines and labor regulations.
• Change employee behavior by clearly communicating health and safety standards.
• Use task management to assign essential equipment maintenance.
• Attach policy and regulation updates to the form so that information is easily accessible.
• Demonstrate due diligence for disaster and emergency preparedness with an electronic, easily accessible audit history for each location.

Factor #3: Time to Market

PIM reports that 49% of IT projects finished late. So when deciding between buying a software solution and building a solution, there are important questions you need to ask yourself.

How soon do you need a solution? If your in-house development team lacks the skill set required for certain areas of the project, do you have the time to wait for and resources to bring in an additional expert? How “right the first time” must the solution be? Do you have the resources to wait for debugging issues?

PIM reports that 49% of IT project finished late.

Building an in-house solution takes a substantial upfront commitment and the development process from conception, to testing, debugging, and deployment can be months, or longer depending on the solution’s complexity.

Consider your type of business. Forbes observes that for most retail businesses (QSRs, c-stores, furniture retailers, etc.) a great software solution is likely readily available and has already proven effective in your vertical.

Before you decide to build, explore retail audit software solutions that offer a free trial. Other than a few minutes of exploration, your upfront investment is essentially nil. Some applications allow you to be up and running in one day so that you can “test-drive” the solution in your stores with your existing forms or checklists.

Factor #4: Ongoing Support

As noted above, building software is only one part of the process. As the company scales and technology continues to change, it is important to consider the resources required to provide ongoing support and updates.

Security and recovery

How is data backed up, recovered in case of a system failure, and secured from hacking?

Documentation and upkeep

Who will author best practice documents, provide training, and keep resources up to date?

Usability

How will the company respond to technology changes (mobile, tablet, app, browser upgrades), requests for new features and ensure uptime for end users?

In the past, a lack of pre-packaged software was a major reason for opting to develop a solution in-house. Today, the competitive nature of the industry requires software vendors to be transparent about offerings and costs.

This means you can choose a vendor whose package includes all of the above as well as upfront pricing for additional modules and features. One major benefit of purchasing a retail audit solution is budgetary predictability.

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