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The importance of product placement in the retail


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Counter Intelligence - Retail services provider in the Greater Toronto Area, including planogram maintenance and inventory control services.

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The importance of product placement in the retail

  1. 1. The Importance Of ProductPlacement In the Retail World
  2. 2.  Many consumers that stroll into a retail store looking to do a little shopping, really have no idea about the thought and work that went into the placement of all the products on the shelves. Product placement in retail stores is about so much more than just what looks nice where, or what may fit the best in different areas of the store.
  3. 3.  There is a definite science to placing products in retail stores, and the better a business is at doing it, the more sales and more profit they will make. It all starts with how the general consumer thinks and acts when he or she enters a store.
  4. 4. Consumer Behaviour Where certain types of items are placed within the store falls right into how the common consumer thinks and acts. Everyday items, also know as ‘destination’ items are often placed toward the interior or back part of a store. This way, you and I must pass right by strategically placed impulse items in order to get to them. This means: You must pass by scores of other products, increasing the likelihood of ◦ buying one or more of them. You will remain the store longer, meaning you’ll be exposed to in-store ◦ marketing longer. The store controls what you see and how you see it. ◦ These factors mean that products, signs, offers and promotions can be ◦ placed at eye level on the journey back to get those items you went for in the first place. It enables the merchandisers and marketers to grab attention and pull the ◦ consumer in, because they know the window is not very big.
  5. 5. Consumer Behaviour  Precisely where and how a product is positioned on store shelves can either send sales through the roof or make them never really reach their full potential. Both temporary and permanent displays are often used to divert a consumer’s attention from his or her original goal.   Some of the visual product placement techniques retailers use to capitalize on consumer behaviour includes: Block Placement – this is when items that are related to one another are placed together. Vertical Placement – this refers to merchandise being displayed on more than one shelf level. Commercial Placement – items with a higher perceived value are given more desirable shelf position, while items thatdon’t add much to the bottom line are given less desirable space. Margin Product Placement – the more profit an individual item gives the retailer, the better position it will receive. Market Share Placement – the highest revenue generators are placed in spots that customers can easily find them.  Some studies suggest that consumers scan shelves from left to right, starting at eye-level first and then working down. Many savvy merchandisers and retailers will take this into consideration when laying out the product placement for a store.
  6. 6. Planograms A planogram is a tool that retailers use to assist in the merchandising process. Basically, a planogram is a drawing or visual diagram that details where every product should be placed inside the store. The detail extends to specific departments in the store, specific aisles and even specific shelves. A planogram is created by using software that’s designed for that specific task. A planogram may be very complex or relatively simple depending on the size of the store and number of products on the shelves.
  7. 7. Planograms Planograms definitely help with the science of product placement and increasing sales, but they also have other goals, including: ◦ Improving visual appearance to please customers ◦ Better inventory control and fewer ‘out-of-stocks’ ◦ Utilizing every square foot of space to maximize selling potential ◦ Easier product replenishment
  8. 8. Important Tips Whether you shell out big bucks for an expensiveplanogram, devise a system on your own computer or use apaper and pen, there are several factors to consider in the artof product placement. Some important tips to consider are: ◦ When creating your placement strategy, leave enough space for customers to move through in both directions. Leave space for carts going both ways if your store uses them. ◦ Make the checkout area and customer service area visible to customers when they enter the store.
  9. 9. Important Tips ◦ Consider laying out the aisles in a horseshoe pattern, with in-demand items near the start. ◦ Experiment with placing both high selling items and slower selling items at eye-level, to see which approach yields higher overall sales. ◦ Make the lines of sight as uncluttered as possible to help make the store appear cleaner and deter shoplifting. ◦ Even though it may be tempting, try to avoid overstocking shelves as it might overwhelm customers.