Hi again. In this article we will talk about shelf optimization and the two different “general” views that exist about it.
You see, the point is that for the retailer who runs a business these days, the shelf is the one that makes the sale, which is why so much attention is given to it. Because the
- shelf is where the customer makes the purchase decision, there is less work for a salesperson. Now, through the knowledge of customer behaviour and psychology, the entire store design and product organisation within it responds profitably to this information every inch.
- The shelf projects and responds to the sales strategy and other characteristics of the store:
- Displaying the product selection, as well as the number of brands and skus (store units).
- Show how deep each category goes!
- View the quality of the selected products.
- Show the pricing strategy and thus understand the purpose of the store. etcetera.
To better understand the shelf, let me give you some proven facts:
- 9% of the customers’ attention goes to top-level products.
- Products at sight or eye level get 52% of customer attention.
- Hand-level products get 26% of customer attention.
- Foot-level products get 13% of customer attention.
- The number of facings influences the customer’s attention, and that is because he can perceive the uniformity of the respective block of products.
- Vertical disposition has the same effect as described above.
Another fact is that as the customer travels up the alleyways, products placed more in the middle get more attention, while products at each end of the alley get less attention. The shelf has
two very general points of view. One is, of course, the point of view of the store owner, the retailer, and the other is the view of the supplier, or person selling to the retailer. (
Each of them has a different agenda. To illustrate this very quickly, I’m going to give you an example:
Here are the facts:
- The market for product “X” has a leading brand.
- This leading brand has a low profit margin for the retailer, say 18%.
- This leading brand sells 60% more units of the product than the next selling competitive brand and holds 65% of the market share.
- The second-selling brand has a bigger profit margin for the retailer, let’s say 28%.
What is the supplier’s interest now:
- He sells more. He wants to be in the middle of the alley.
- He sells more. He wants to be at eye level with the shelf.
- He sells more. His products should have more veneers.
And what is the retailer’s interest now:
- Product “B” gives him more profitability. He wants to sell more of it.
- Product “B” gives him more profitability. He wants to give it more shelf space.
- Product leader “A” sells more but gives him less profit. He wants it to sell less and
- The retailer wants customers to prefer brand “B.” Now,
suppose you are the supplier, and you make a prepackaged offer with one main product and a second one free. Suppose the customer is going to save $15.00 by purchasing this listing for $50.00. You negotiate this offer with your customer, the retailer, and you tell them you want it to be on the hottest place on the shelf posted… and what does the retailer say… no, it goes at foot level… you are shocked. You make an investment to attract new customers, you want to sell.
On the other hand, the shopkeeper thinks in a different way: this is a good product range, has great value, and will attract the customer’s attention strongly, so it doesn’t have to go to the level of more attention. I’m going to put a product that isn’t selling too well at eye level so that I can sell that low-priced product and also this great product offering.
How about that? a large contradiction and a large negotiation problem. It is the situation of a daily negotiation and the situation that the merchandising of a leading product faces every day. The employees of each side are looking for a different result. One wants to sell the other, the other protects and wants to make more profit from every inch of the store.
If you have any questions or would like to discuss a specific issue, please feel free to contact us.
Have fantastic sales.