The retail industry is evolving to meet consumer demands by adding new channels and expanding their partnerships with suppliers to serve consumers wherever, whenever, and however they choose to shop. These industry changes are resulting in more creative promotional funding programs to drive sales.

 

While this evolution will result in more business opportunities, it also proves challenging for grocers and other high volume retailers to keep up with the pace of change in the promotional landscape. Retailers are struggling with data, systems, and tracking the more complex promotional models to ensure visibility into promotional funding.

 

As organizations experience these struggles, they are also wrestling with ways to prevent errors going forward. Recovery audits have historically been reliable stopgaps for retailers to ensure any leakage is eventually captured. But in today’s complicated retail environment, it is even more critical to ensure processes and systems are correct upfront. Therefore, the recovery audit industry can also evolve to meet the demands of runaway complexity and better serve the retail industry.

 

Although it is impossible to eliminate all errors, with the right tools and processes up to 60% of traditional recovery audit findings can be identified and corrected before the promotional event occurs. However, many organizations lack the systems and strategies to flag and address systemic errors before they have an impact. Without timely recovery audits, it is difficult to identify common root causes of promotional funding issues.

 

PRGX believes the top root causes of preventable errors in the retail industry include:

  1. Omitted items (missed family items, new products, old/new models and/or product lines);
  2. Missing deals (promotion in the sales planner, but there is no billing contract/deal);
  3. Date misalignment (divisional date extensions/ adjustments, incorrect funding);
  4. Funding gaps (identified gap in required funding to support promotion);
  5. Rebate/Co-op setup errors; and
  6. Missing off-set allowances (freight and/or defective allowances).

 

Want to learn more?

Check out the Reinventing Recovery Audit for Today’s Retail Environment white paper or webianr where we examine how the recovery audit process can transform from a postpayment audit practice to a prepayment and error prevention solution.


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