Expert Opinion: Convenience Store Merchandising

Key Takeaways

Convenience store merchandising should focus on enhancing visibility, guiding customer behavior, and optimizing the store layout using data-driven insights.

• Convenience store merchandising is about visibility and accessibility. 

• Strategic placement of products increases impulse purchases. 

• Signage and promotions help guide customers. 

• Data analytics help optimize store layout. 

• Regular updates to displays maintain customer interest.

There has been a significant increase in the popularity of convenience stores over the past few years. Today, shoppers increasingly prefer small stores, where shopping time does not take more than half an hour. In other words, the time factor has become more important than the price factor.

In an attempt to provide their customers with the necessary range of goods and create a cozy "home" environment, small stores are successfully competing with super and hypermarkets. The number of such stores has grown steadily, trying to take advantage of the favorable situation and gain a foothold in the market.

Scaling up, convenience store merchandising companies face growth challenges that they are sometimes unprepared for. With each new store, issues related to the management of merchandise display and convenience store layout become more and more acute.

• How do you fit an assortment onto the shelves of all your stores?
• How to use every inch of the sales floor, since there is so little space?
• How do you quickly get the word out to all the stores about changes in merchandise display when there are so many of them?
• How do you make sure that all the products are on the shelves?

These issues can be solved by qualitatively built convenience store merchandising. Development of convenience store planograms, in which each product has its place, centralized management of merchandising in stores, control over the execution of planograms, and multi-level analytics - these are the main components that will help to optimize the company's time and resources in the process of working with the convenience store layout of goods.

An automated merchandising software solution will serve as a handy tool. Until recently, such systems could afford only large chains of super and hypermarkets, because the implementation of such a system required significant financial and intellectual resources.

Modern cloud-based IT solutions are bringing innovations that are now available to businesses. Now even small family-run companies can afford a state-of-the-art merchandising system. Rental payment for such a system is made monthly, and training on the program and implementation in the business processes of the company is made with the help of a team of professional consultants. Daily support does not leave the client alone with problems and a new software product. These factors significantly reduce the resources required for implementing a new product, while providing the company with a convenient tool for managing the convenience store layout of goods.

An example of effective use of an automatic convenience store merchandising system is the company "A Good Shop". Qualitatively building business processes for merchandise display management, the company was able to answer several key issues encountered as a result of opening new stores.

Convenience stores have a big problem they need to solve. Their main issue is deciding what products to put on their limited shelves. Unlike bigger stores, they can't fix mistakes using less shelf space. Also, because they usually don't have warehouses, even one wrong decision in choosing which products to stock can lead to having too much of some items or not enough of others, which can drive customers away.

"A Good Shop" has answered this question. Given the size of the goods and the parameters of the racks in the stores, they developed planograms, where each product has its place. Through the use of specialized Leafio software, the process of creating unique planograms did not take much time.

Item-by-item planograms made it possible to identify the oversupply of assortment. Working with the assortment had a positive effect on the marketing value of the position on the shelf.

Despite assortment reduction, the marketing value of the position on the shelf increased by 40%, which shows that suppliers were also interested in working only with active assortment with its place on the shelf.

As a consequence of a wrongly defined assortment, convenience stores display merchandiser cases overflowing with goods that do not fit on the shelves. Warehouses and aisles are cluttered with merchandise leftovers, preventing employees from moving around the store and getting to the items they need. As a result, the goods on the shelves are not those that sell better, but those that are more convenient to get out of the warehouse or that get in the way in the aisles.

By optimizing the assortment by almost a third, the company "A Good Shop" was able to reduce inventory by 23%. According to the CEO, cutting the assortment and placing the goods on the shelves freed up storage space, reduced breakdowns (especially of beverages), and accelerated the processes of layout and re-checking. As a result, turnover of certain categories accelerated by 25-30%.

Often, in small stores, this function is taken over by store managers or even vendor sales representatives, who find it more profitable to solve their tasks of presenting the assortment, and then the store’s tasks. To maintain well-organized shelves, you should have centralized management of convenience store layouts.

How do you quickly get information about changes to stores from the central office? Calling a few dozen stores or writing letters to all of them is difficult to do in a day. But the stores need to be under control to be sure that:

• the best products are on the golden shelves; 
• the first price product is always the first on the shelf; 
• that stores are similar to each other, etc.

Stores are automatically notified of display changes, and they always have access to the latest, up-to-date planograms, including on a smartphone or tablet.

With the mobile app, it’s easy for stores to give feedback on layouts by simply taking a picture of a shelf on the sales floor and marking it as done on a smartphone. The process of sharing information between the office and the stores is no longer manual, thereby freeing up a significant amount of work time.

Everyone understands the importance of analytics in any company’s business process. Analysis of convenience store design layout is no exception. What sells and what doesn't, what goods does the company earn, what goods act as anchors, and how much space should be allocated to these goods in the salesroom? In fact, for analysis, you need to unload reports from the accounting system, collect data on the layout from stores, bring it all together, and then try to analyze it. All this is quite a time-consuming process.

As for convenience store merchandise, if you are in the market, such analytics is especially relevant because it helps you keep track of unsold goods and categories and reduce their display space on the sales floor in time. This makes it possible to react to customer needs and expand the assortment that is really in demand.

In automated shelf merchandising, the analysis of convenience store merchandise display is performed directly in the Leafio planogram optimization program, allowing real-time assessment of the effectiveness of product placement in the context of groups, and categories. An important difference in this analysis is the calculation of performance indicators, considering the occupied space on each product's shelf.

Solving these key issues helped “A Good Shop” to optimize the use of the working time of the central office staff. The main factor was that the Leafio merchandising software made it possible to do much of the work using a computer. Shelf space calculation, analysis of product sales and product placement efficiency, communication with stores - all this can and does be done by a modern merchandising program, thus allowing the central office to devote more time to studying the needs of its customers and creating a home atmosphere in stores - factors that create a competitive advantage and make the segment unique in the market.

Merchandising and Planogram Automation: Tips to increase shelf space profitability