Retailers and their suppliers should make sure they pay more attention to what’s going on at shelf level, according to a new report from sales and marketing agency Acosta, called Shelf Management: The Value of Space Done Right.
“Shoppers report that more than half of their grocery buying decisions are made at the shelf, proving that influence in store is crucial for brand success,” said John Clevenger, SVP/managing director at the advisors at Jacksonville based Acosta. “It has become imperative to shift to a comprehensive approach for shelf management. Traditional practices like slotting fees still matter, but new technological advances provide game-changing insights and incorporating them can create a competitive advantage for leading-edge manufacturers and retailers.”
Manufacturers spend $100 billion annually on promotions, versus $300 million on shelf management, yet shelf management accounts for 66 percent of sales and 85 percent of profits.
While the industry has seen promotional tactics get less effective over the past several years, "fixing the shelf" yields a 6 percent sales lift. Fifty-five percent of shoppers decide which brand to buy in store, with common in-store purchasing decisions regarding spices/seasonings, cookies, meat marinades/rubs, chocolate candy and tuna.
Private brands tend to get more shelf space than they deserve and are 11 percent over-spaced on average, which can have an adverse effect on productivity and out-of-stocks.
As the perimeter of the store continues to rise in popularity, many retailers have responded by shrinking center store to allocate more space to such sections as delicatessens, prepared foods, organic foods and fresh produce.
Retailers have responded to the rise of e-commerce in various ways, among them providing grocery pickup services and offering less assortment in store and larger assortment online.
Progressivegrocer.com reports how Shelf Management: The Value of Space Done Right was compiled from a range of Acosta's resources, including an online survey of its proprietary shopper community.