An entrepreneur, after months of tireless work, has finally managed to get his product on the shelves of a small local retail store. Proud of his success and feeling accomplished, he walks into the retailer to see how his product looks on the shelf. After 15 minutes of searching the store, frustration sets in and he asks an employee where he can find his product. Finally, in the back corner of the store, sitting lonely on a bottom shelf by the floor, sits the product of our understandably upset entrepreneur.
While the above account is completely fictional, the scenario described is an unfortunate reality for many entrepreneurs and small businesses looking to get their product on retail shlves. While it might seem that getting a product into a retail outlet is always worth the time and effort required, such is not the case. Spending time and resources to get a product onto an inefficient shelf location can be a recipe for disaster, and can prevent a product from ever reaching its full sales potential. Retail merchandising displays are a science.
Depending on the product being sold, different in-store locations will offer vastly different shopping experiences for consumers. These experiences shape the buying process for potential customers, and in many cases can influence purchasing decisions.
A retail merchandising study published by the University Of Chicago Graduate School Of Business describes the differences in sales for the same products placed in “the worst” shelf location vs. “the best”. What was considered the best or worst location for retail merchandising depended on the product category, and both horizontal and vertical shelf positions were considered. What the study found is that while horizontal movement to “the best” spot yielded a 15% increase in sales on average, vertical changes in location had a much more profound impact on sales, at 39% on average.
What exactly determines which retail merchandising position is best depends heavily on the type of product being offered, but some patterns do form when looking across all products. In general, products displayed on eye-level merchandising displays have higher sales than their bottom or top-shelf counterparts.
For some high-competition products, such as cereal or coffee where the consumer has many choices in front of them at the same time, being in the center of the aisle can be beneficial, leading customers away from the stress of high-traffic aisles and giving them the opportunity to evaluate the product. Understanding customer mentality is invaluable information to have when deciding on what shelf location to pursue.
Product location and merchandising solutions don't stop at position on the shelf. Procuring the prime real-estate that each retail channel sells to suppliers is not easy, and it is key to enter negotiations with as much leverage as possible. This means providing a promotional plan, a convincing sales pitch, and providing a past history of successful sales if possible. Following the above tips will hopefully mean that the next time our entrepreneur goes into a retail outlet, he doesn’t have to search to find his product—it will be walking out the door in the hands of a happy new customer.