Retail shelf strategy & shelf optimisation: what they are and why they matter

Key takeaways

• Strategic foundation: Shelf strategy sets the high-level plan for brand presence while optimisation is the tactical engine that makes that plan operational.

• Real-time auditing: AI-driven tools like image recognition allow field teams to audit shelves in seconds rather than minutes.

• Incremental sales: Leveraging AI-driven sales recommendations helps identify whitespace and optimise inventory to reduce out-of-stocks.

• Perfect store execution: Integrating strategy with automated tasks ensures promotion compliance and consistent results at scale.

Executive Summary

In-store execution is a critical lever for sales growth, yet it remains one of the most difficult to control. For many FMCG brands, fragmented tools, manual auditing and delayed reporting create a "black hole" in visibility, leading to lost revenue and market share.

To overcome these challenges, brands must master two distinct but connected disciplines: retail shelf strategy and shelf optimization. While strategy provides the foundational blueprint for success, optimization is the engine that drives real-time execution. TELUS Agriculture & Consumer Goods bridges the gap between these two by transforming your shelf strategy into an actionable growth driver through our AI-powered Retail Execution solution.

By replacing manual guesswork with real-time precision, we empower brands to navigate the complexities of modern commerce with confidence. To win at the point of purchase, Irish manufacturers are moving beyond spreadsheets to a robust framework where continuous optimization ensures every product is in the right place, at the right time and every time.

What is retail shelf strategy?

Retail shelf strategy is the foundational blueprint that defines how a brand should appear in-store to achieve its sales goals. It determines exactly where a product sits, how much space it commands and how it stands out against competitors. It encompasses your perfect store strategy—the ideal arrangement of products, pricing and promotional materials that maximises shopper engagement.

A strong strategy targets the right stores with strategic precision to ensure every minute spent in the field is focussed on high-impact results. This includes analysing store clusters and historical performance to determine the optimal "picture of success".

What is shelf optimisation?

While strategy is the "what," shelf optimisation is the "how". It is the tactical, ongoing process of using real-time insights to adjust shelf positioning, improve product availability and ensure promotion compliance.

Optimisation involves using technology like image recognition to instantly identify gaps—such as out-of-stocks or planogram deviations—and remediating them during the same visit. This proactive approach ensures that the strategic vision is actually realised on the physical shelf.

Shelf strategy vs. shelf optimisation: how they work together

Strategy and optimisation are two sides of the same coin. Strategy sets the direction, defining active campaigns and mandatory shelf audit requirements. Optimisation makes that strategy perform by providing field reps with guided visit plans that adapt based on store format and conditions.

You need both: strategy sets the vision while optimisation makes it operational. Without strategy, optimisation lacks focus; without optimisation, strategy remains theoretical. Together, they create a feedback loop where execution data informs future strategic planning.

The fundamentals of success at the shelf

Winning at the point of purchase requires a consistent approach to the "perfect store" framework:

• Route optimisation: Automatically ranking stores based on multiple KPIs to ensure reps visit high-value locations first and spend more time with the right customers.

• AI-powered orders: Managing inventory and growing sales with replenishment recommendations to avoid out-of-stocks and prevent excess inventory.

• Guided merchandising: Empowering field teams with mobile tools that tell them exactly what to check and where to focus.

How data and technology drive performance

Manual, spreadsheet-based processes are prone to errors and delays. Modern tools replace these with real-time dashboards and actionable visit summaries. Manufacturers across the region are facing increased pressure to protect margins as prices in the European Union in late 2024 were more than 20% higher than in early 2020. Precision at the shelf is critical to avoid wasted spend.

Precision at the shelf is critical to avoid wasted spend. Especially as Eurozone retail trade volume continues to fluctuate near 0% year-on-year growth, according to Eurostat, making every individual sale more valuable.

As 86% of C-suite leaders plan to increase AI investment, tools that automate compliance are essential for staying competitive. Despite the buzz, Eurostat data shows only about 8% of EU enterprises currently use AI, meaning those who adopt image recognition now gain a significant first-mover advantage. Artificial intelligence allows brands to move from passive dashboards to active, contextual insight delivery.

How to build a shelf strategy and optimisation programme

1. Analyse historical data: Review past visit results and compliance gaps using smart analytics to find patterns.

2. Define your "picture of success": Establish clear planograms and promotion standards for every store format.

3. Optimise routes: Use smart navigation and intelligent ranking to reach more customers in less time. This is increasingly vital in markets like the UK, where PwC reported over 14,000 store closures in 2024, requiring brands to be more selective about which locations they service.

4. Execute automatically: Use image recognition to capture shelf intelligence in seconds, allowing reps to focus on relationship building and selling.

5. Coach reps: Utilise real-time performance monitoring and coaching tools to align on next steps while visits are still fresh.

What KPIs matter most?

To achieve a perfect store, brands must assess on-shelf KPIs that make a real difference:

• On-shelf availability (OSA): Identifying missing products in real-time to prevent shoppers switching to competitors.

• Assortment compliance: Validating that the right product mix is present on the shelf according to the planogram.

• Share of shelf (SOS): Measuring your brand's physical presence on the shelf relative to competitors.

• Promotion & price compliance: Ensuring displays and pricing are run as planned.

Common challenges and how to fix them

With 70% of organisations reporting that they cannot effectively evaluate their promotions, precision at the shelf is critical. With global retailers losing approximately $1.2 trillion annually due to out-of-stocks, manufacturers can reduce stockouts and increase brand share by harmonising disparate data and using AI recommendations. Transitioning to a data-driven strategy ensures every decision is backed by measurable results.

How TELUS Retail Execution helps strategy and optimisation

TELUS Retail Execution equips field teams to work smarter by providing AI-driven sales recommendations and task automation. By using image recognition to capture real-time shelf data, our solution helps FMCG manufacturers identify urgent gaps and evaluate results instantly. Whether you are perfecting a planogram or managing direct store delivery (DSD), TELUS helps your entire commercial organisation work more efficiently to win with shoppers at the point of purchase.

FAQ

• What is the difference between shelf strategy and shelf optimization? The difference between shelf strategy and shelf optimization is that shelf strategy is the long-term plan or blueprint for how products should be placed, while shelf optimization is the real-time tactical execution that uses data to remediate gaps in the moment.

• How does AI help with retail execution? AI helps with retail execution by automating shelf audits through image recognition and provides predictive ordering recommendations to prevent out-of-stocks based on store-level demand.

• Why is on-shelf availability (OSA) so critical? On-shelf availability is so critical because when a product is unavailable, shoppers often switch to a competitor, contributing to the global $1.2 trillion annual loss retailers face due to out-of-stocks. Improving OSA by just a small percentage can lead to significant revenue recovery.