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Case StudyShop’n Chek® helps PetSmart® Boost SalesPetSmart (NASDAQ:PETM) is the largest specialty provider of products, services and solutions for the lifetime needs of pets in North America. With more than 860 stores in the United States and Canada and $3.8 billion in annual revenue, they are 28th on the Fortune 500 list of top specialty retailers. PetSmart’s strategy is to attract and keep their customers by becoming the preferred provider of Total Lifetime Care for pets. PetSmart has been a Shop’n Chek client since 2003. Throughout this relationship, Shop’n Chek has provided PetSmart with an integrated suite of customer experience and merchandising solutions including in-store, phone and catalog call center mystery shopping, and price integrity audits – all focused on PetSmart’s goal of delivering complete customer satisfaction.Coming up Short: The Out-of-Stock Problem While gathering feedback from its customers, PetSmart Store Operations executives began to receive complaints regarding out-of-stock items in PetSmart stores. According to industry studies, more than $6 billion in revenues each year are lost due to products being out-of-stock. With no inventory audit program and Point-of-Sale scanners capable of tracking only purchase transactions, PetSmart knew what had been shipped and what was in the stores, but not what was actually on the shelf. In their effort to increase customer satisfaction and maximize sales, PetSmart needed to develop a clear understanding of their out-of-stock problem and the reasons behind it. They turned to Shop’n Chek for help in August 2005, looking for a prompt and efficient solution to address the problem at the store level. Sales analyses showed that PetSmart’s 150 top selling products represented a significant percentage of their sales. If PetSmart could assure in-stock status for those key products, they could boost sales and customer satisfaction. These products became the focus of Shop’n Chek’s solution. Audit in Action: The In-Stock Solution Working closely with PetSmart executives, Shop’n Chek quickly implemented a comprehensive in-stock audit solution. Shop’n Chek assembled a nationwide team of auditors drawn from its network of over 200,000 individuals. It also leveraged its program experience and scheduling software to develop an audit rotation plan covering both weekends and weekdays while providing adequate spacing between audits at a given store. In less than 30 days from the initial identification of the problem, Shop’n Chek developed, tested and implemented a comprehensive revealed audit program to verify the in-stock status of PetSmart’s 150 top selling items across the approximately 800 locations PetSmart had at the time. Throughout the 3rd and 4th quarters of 2005, Shop’n Chek auditors completed 11 in-stock audits at each PetSmart store. The increased visibility provided by these audits, as well as the procedural changes they initiated, helped PetSmart raise the in-stock percentage for their top 150 products by about 4% after four months. Effective in 2006, PetSmart expanded the universe of items to be audited to include the 75 top selling items, as well as a rotating group of 75 items selected from the 450 best sellers. Using this new rotating list of products, audits are conducted two times every month in each PetSmart store. Results are factored into the bonus program for store managers. In response to PetSmart’s ongoing auditing needs, Shop’n Chek can apply its nationwide network of auditors to a new list of products within 12 hours. Audit results at the store, regional and national level are available to PetSmart personnel 24 hours a day through a dedicated web-based reporting system, and Shop’n Chek provides daily file transfers to PetSmart’s IT department to keep them continually apprised of in-stock status. A Real ROI: Audit Results Due to the revealed audit findings, PetSmart: 1) Identified specific gaps in their inventory of key products across all stores. 2) Implemented changes to their supply chain and inventory management programs. 3) Established a “hole-counting” daily program where the manager walks the store each morning and provides an update to corporate headquarters. 4) Uncovered a glitch where inventory control alerts were not correctly set for newly opened stores. The quantitative results of the in-stock audit program are impressive: 1) Boosted in-stock rates for the top 150 items by about 4%. 2) Contributed to a 4.5% increase in comparable store sales from the 4th quarter of 2004 to the 4th quarter of 2005. The financial and procedural impacts of Shop’n Chek’s in-stock audit solution for PetSmart have been significant. This ongoing program has helped ensure that customers can count on finding the products they want in-stock at every visit. As a result, sales have increased and PetSmart is closer to delivering its goal of complete customer satisfaction. Click here for a PDF version of the Case Study |
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