There are three leading players in retail: a manufacturer, a retailer and a customer. Each has their interests. Retailers care about the overall turnover and inventory level. Their goal is to raise their profits through sales and suppliers' marketing budgets. Manufacturers want their products to be in the best places, participate in promotions, and sell at their most profitable prices. Customers want to buy quality products they need at the best value and expect the buying process to be quick, convenient and enjoyable.
It is up to the retailer how the interests of each "triangle" participant will be combined and achieved as the interaction of the parties takes place in the store. To find the right balance, retailers must rely on data and analytics. That's how they can ensure customer loyalty, solid sales and alignment with supplier interests.
According to the Point of Sale Promotion Association International (POPAI), by correctly placing product groups in a store and taking customer behavior into account, sales can increase by 10%. Correct merchandising will increase revenue by another 15%, and accenting techniques will increase sales by another 25%.
We have collected practical merchandising principles and special ways of displaying goods on the sales floor which can be used to increase sales in a supermarket.
Merchandising specifics of supermarkets
Merchandising utilizes every square meter of the store rationally, effectively demonstrates products to customers and encourages them to make emotional purchases in the physical store.
What rules should be considered when working with supermarket layout to make it most effective?
1. Create a display of goods depending on profit
Remember that a product should not take up more space than it makes a profit. For popular products, you should allocate more selling space. If a particular group of products brings you 10% of the total profit, give it 10% of the shelf space. Use LEAFIO Shelf Efficiency analytics to monitor the ratio of shelf space to product revenue.
2. Do not fail to operate a wide assortment
The complexity of handling a wide assortment consists in creating a layout that fits the company's strategy, generates profit, and satisfies customer demand. By creating a data-based planogram and following the merchandising strategy of the chain, it is possible to systematize work with the range, comply with the agreements with suppliers, follow the chain rules of visual merchandising, facilitate further analysis of the planogram and improve its performance.
In addition, when creating supermarket layouts, it is crucial to consider the storage characteristics of different categories. For example, "fresh" goods have a short shelf life (up to 30 days). At the end of the shelf life, such goods are written off, which leads to additional costs.
Planogram specialists need to correctly calculate the display and stock on the shelf based on the pace of sales. This will help avoid higher write-off rates and missed sales. With LEAFIO Shelf Efficiency, for example, you can plan your shelf display based on deliveries and current inventory balances.
3. Create brand zones and promotional zones
Build brand blocks and promotional areas. With brand blocks in merchandising, you can control the display of a particular brand and its impact on sales. In turn, promotional zones help you create layouts from surplus products, discounted items, or any other function you need.
Analyze the effectiveness of displays on brand blocks and in promotional areas, increasing chain profits and customer loyalty. With modern planogram software, you can create these zones and fill them automatically using the parameters you're interested in: turnover, price, brand, supplier or other product characteristics.
4. Do not forget about traffic accounting
Customers should be free to move around the store without feeling cramped. It is vital to provide a free path to the central aisle and departments of the store. At the same time, the layout should encourage the visitor to go around most of the sales floor, covering areas for goods that attract impulse purchases and places for new products.
Analyze "hot" and "cold" zones on the sales floor to monitor the efficiency of merchandise display with LEAFIO Shelf Efficiency as part of your store floor plan analytics.
5. Use the six-step principle
A visitor who has just entered the supermarket needs orientation, so customer activity in the first six steps is minimal. At the entrance, place goods at special prices or discounts. A person forms their first impression about the store’s pricing range and is more likely to buy goods already at the entrance.
6. Follow the "two-finger rule"
From the edge of the goods to the edge of the shelf, it is recommended to leave a two-finger distance. With a smaller distance, the goods are difficult to take; with a larger, the space on the shelves is not fully used. At the same time, it is recommended to leave a small gap between the goods so that they can be easily taken. If you follow these rules, you will notice that the effective selling space of the store increases dramatically. LEAFIO Shelf Efficiency helps you put as many facings of product on the shelf as possible so that the shelf space is not empty – and vice versa: so that it doesn't look crowded.
7. Regularly update category placement
The store layout should be changed at least once a season to bring "variety" into the buyer's path. But the changes should not be radical, so as not to irritate or disorient customers.
Changes in the categories' locations should also be prompted visually and analytically. Regularly analyze the "hot" and "cold" zones of the supermarket for the efficient arrangement of positions on the sales floor. This can be done with the help of LEAFIO Shelf Efficiency. The tool allows you to design the sales floor and arrange equipment with planograms. You can manually rearrange planograms from equipment to equipment when you change the placement of categories.
8. Create a layout of goods from different categories that complement each other
For example, tea goes with sweets; pasta is accompanied by sauces and meat by spices. It is also effective to create layouts of products that can be used for a quick and easy lunch.
Such layouts make shopping easier and encourage unplanned purchases. Regularly referring to LEAFIO Shelf Efficiency's sales and display analytics can help you determine if your display is functioning and make necessary adjustments.
“LEAFIO Shelf Efficiency provides real-time analytics to help you analyze sales and ABC data in just a few clicks.”
– Lana Panasenko, Product Director of LEAFIO AI Retail Solutions
9. Use the POS materials
Customers may come to the store looking for a particular product. Special signs and markings help guide visitors, simplify orientation on the sales floor and make the shopping process more enjoyable and efficient. In addition, POS materials help draw attention to products, promotional merchandise or a local brand. However, it is critical to analyze whether POS materials influence sales indirectly by comparing sales over specific periods.
With LEAFIO Shelf Efficiency, you can add instructions on where to place POS materials using the label functionality. The solution helps to draw a planogram with placed POS materials, as well as the direction of the customer's movement.
10. Influence shoppers' emotions with music and fragrances
When working with displays and other merchandising elements, keep the five senses in mind, and try to tap into them in different ways.
You can play the music that matches the company branding or the atmosphere you want to create. The sound design allows you to influence customer desires. Studies show that when a supermarket plays German music, customers are more likely to buy German wines, and when they play French songs, they tend to buy French wines.
And you can also aromatize the product or retail space to activate customers’ pleasure senses and the desire to buy. According to studies, about 75% of the emotions we experience daily depend on a scent.
11. Control the display of merchandise on the shelves
Make sure store employees regularly check shelves and displays and that they are stocked according to planograms. Organized display cases contribute to increased sales and customer loyalty.
Applying the shelf space management automation capabilities of the LEAFIO Shelf Efficiency mobile app saves you from initiating manual planogram checks daily. You can send a task to store employees in a few clicks and get photos of the shelf layout in the desktop version. This way, you avoid increasing the percentage of missed sales.
12. Create unique or format planograms
There are often stores in a chain that need individual planograms. This can happen, for example, due to non-standard equipment or differences in assortment due to local features of demand.
At LEAFIO Shelf Efficiency, a planogram specialist can work with unique planograms linked to specific stores to make individual changes.
If the chain doesn't have such a need, specialists can cluster stores and create format planograms that unify display throughout the chain. Specific changes in such planograms will be visible in all stores.
Display specifics of goods on the shelves
When a buyer shops for the goods they need, it should be as simple and convenient as possible, and the layout should draw their attention and involve them in shopping.
Display by level
The space on the shelves can be divided into several zones:
- Hat level (170+cm). This is one of the most ineffective places to place merchandise. Shoppers will have to reach to get products at this level. Nevertheless, some products are set at "hat level" for safety and convenience reasons: these are small and lightweight products that are easy to remove from the top shelves.
- Eye level. The “golden” shelves are placed at 150-170 cm from floor level (about +20 cm from human eye level) and at the visitor's eye level (about 110-120 cm from floor level). Research by French chain Carrefour shows that sales can be increased by 78% when appropriate positions are placed at eye level.
- Wrist level/middle shelves (50-120 cm). Here it is recommended to put products that visitors are willing to bend down for purposefully, for example, products of prime necessity (salt/sugar and cereals in the medium price category). It's also effective to place promotional or seasonal products on the middle shelves: décor, picnic items, and swimming gear.
One more thing: Have you ever noticed that supermarkets place items such as toys and candy on the middle shelves? These are eye-level purchases for children.
- "Dead" level/bottom shelves. At the very bottom of the shelf, you should place products that are bulky and in low demand, such as pre-packaged goods, as well as firewood, large quantities of detergents or water.
Location of goods on the shelf
It's not just the level but also the part of the shelf where the product is located. For example, the central part grabs the visitors' attention. Also, consider that the customer's gaze moves in the same way as when reading: from left to right and from top to bottom.
- Layout in the center of the shelf. In supermarkets, the average visitor looks at the shelves with peripheral vision. The trajectory of the gaze resembles a rhombus: from a narrow place at the edge, it expands to the center of the category and narrows again. That is, the product located at the top, bottom and edges of the category is less visible than those in the center.
- Vertical layouts. Stores often use separate vertical brand boxes. This type of display is most often used to increase the recognition of a particular brand. Brand boxes "catch the eye," interrupting the quick scanning of shelves and increasing the time visitors spend near products.
For the retailer, such boxes help create effective planograms that increase sales. LEAFIO Shelf Efficiency allows you to create brand zones and fill them automatically using the parameters you are interested in: turnover, price, brand, supplier, and other characteristics.
- Layout with "gaps” on the shelf. To stimulate sales, merchandisers recommend removing 1-2 packages from the shelf, engaging the psychological principle of "scarcity.” It's easier for the buyer to decide on purchasing if there is a space on the shelf. No product? It means it was bought. And this suggests that the product is in demand and is of high quality or low price.
Last but not least: The display should be diverse in assortment, color, and size. Place new items slightly above the customer’s eye level. Place goods with expiration dates closer to the customer, with later expiration dates deeper on the shelf. Place popular items at the beginning and end of the shelf. The rest are in the middle since unsellable goods sell better next to popular products.
Ensure that the price tags are up to date and consistent with the product. The information on the price tags should be readable and understandable and the product cards should be clean. They should be placed clearly under the item. Compliance with this rule reduces consumer confusion.
LEAFIO Shelf Efficiency for grocery retailers
To increase sales in retail, today's companies spend enormous amounts of money: on shop equipment, decorating sales areas, advertising and developing promotions. Often this brings no more than a 2-5% increase. Merchandising and modern technology can achieve much more with less.
Take advantage of LEAFIO Shelf Efficiency, the solution based on our clients’ experience from various sectors. For over 15 years, we've been helping retailers make more money, make fewer errors and work more efficiently. LEAFIO has 160 retailers in 17 countries that use our cloud technology.
The solution allows you to:
- Collect product dimensions and photos with the ability to transfer them to the web version of LEAFIO Shelf Efficiency.
- Create unique planograms for each store and unify planograms for the entire chain. LEAFIO Shelf Efficiency lets you work with unique planograms or format planograms for specific store types, which you use to unify the layout across the chain.
- Fulfill shelf zoning and auto-completion according to a chosen attribute or combination of attributes: price, brand, stock quantity, ABC indicators, etc.
- Implement the auto layout function – the automatic display of a certain number of layouts of the selected goods on the shelves.
- Control the realization of the display. This can be implemented through a mobile app. You set the task, and the employees send you a photo of the result. This ensures the layout is created according to your planograms and is accurate and actual for customers.
Use the mobile app to send product dimensions and photos to the web version of LEAFIO Shelf Efficiency. And you also have the opportunity to reduce the use of paper for printing planograms for your stores because all planograms will now be on your employees' phones.
- Rotate assortments across your entire chain in a few clicks.
- Analyze the performance of planograms, sales per meter, location of categories on the sales floor ("hot" and "cold" zones) and many other indicators that will show you how to improve your layouts.
- Digitize your shelf space management processes and control every stage of their execution.
In the first months of implementation of the LEAFIO solution, international companies noted a sales increase of at least 8%, cost savings of 50%, and manual labor reduction of 80%.
And finally
Retail is a business where nothing is done “just for show.” It is essential to determine how your store is organized and what journey your customer goes through, what emotions they get from visiting your outlet and the shopping process.
In addition, keep in mind branded KPIs such as turnover, margin, total orders, LTV (lifetime value), and ROMI (Return on Marketing Investments). Retailers need to rely on data and analytics to strike that right balance.
We at LEAFIO help supermarkets build efficient business processes, as well as provide the best service and experience for customers. We will help you develop a plan for the optimal placement of goods in retail outlets and on shelves, taking into account the physiological and psychological characteristics of your customers to take your grocery store merchandising to a new level.
