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

Key takeaways

• Strategic foundation: Shelf strategy sets the high-level plan for brand presence while optimization 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 Al-driven sales recommendations helps identify whitespace and optimize 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 CPG 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, US 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 is the "science" of product placement, determining 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 maximizes shopper engagement.

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

What is shelf optimization?

While strategy is the "what," shelf optimization 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.

Optimization 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 realized on the physical shelf. Without optimization, even the best strategy will fail at the "final mile" of execution.

Shelf strategy vs. shelf optimization: how they work together

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

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

The fundamentals of success at the shelf

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

• Route optimization: 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. As 86% of C-suite leaders plan to increase AI investment, tools that automate compliance checks and replenishment are becoming essential for staying competitive.

Artificial intelligence allows brands to move from passive dashboards to active, contextual insight delivery. This means field reps aren't just collecting data; they are receiving instructions on how to drive faster, governed decisions that directly impact the bottom line.

How to build a shelf strategy and optimization program

1. Analyze 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. Optimize routes: Use smart navigation and intelligent ranking to reach more customers in less time.

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

5. Coach reps: Utilize 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 from 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 global retailers losing approximately $1.2 trillion annually due to out-of-stocks, the financial stakes are high. Many CPGs find their processes are too manual and time-consuming.

By harmonizing disparate data and using AI recommendations, CPGs can significantly reduce stockouts and ensure the "perfect store" vision becomes operational reality. Transitioning to a data-driven strategy takes retail execution from guesswork to precision, ensuring every decision is backed by measurable results.

How TELUS Retail Execution helps strategy and optimization

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 CPG 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 organization work more efficiently to win 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.