Jacksonville, Fla., (December 4, 2018) – Getting into a shopper’s cart is quite possibly the most important step for every product, but it’s becoming more difficult when the options are nearly endless for shoppers when it comes to what, where and how to buy. Considering the sheer variety of products and brands, the strengthening of e-commerce, store space shifts and the growth of private brands, retailers are facing a bevy of challenges. Shelf Management: The Value of Getting the Shelf Right, a new report from Acosta — a leading full-service sales and marketing agency in the consumer packaged goods industry — explores the dynamics of this topic and explains why and how to employ a comprehensive strategy.
“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, Senior Vice President/Managing Director, Strategic Advisors at 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.”
Acosta’s 2018 Shelf Management: The Value of Getting the Shelf Right report takes an in-depth look at the state of grocery shelf management, trends and technological advancements, highlighting:
The Importance of Getting the Shelf Right
- Manufacturers spend $100 billion annually on promotions versus $300 million on shelf management, yet shelf management represents 66 percent of sales and 85 percent of profits.
- While the industry has experienced a decline in lift from promotional tactics over the past several years, “fixing the shelf” achieves a six percent sales lift.
- Fifty-five percent of shoppers decide which brand to buy in-store, with common in-store purchasing decisions made about spices/seasonings, cookies, meat marinades/rubs, chocolate candy and tuna.
Key Trends Impacting the Shelf
- Private brands tend to receive more shelf space than they deserve and are 11 percent over-spaced on average, which can have a negative impact on productivity and out-of-stocks.
- As the perimeter of the store continues to gain in popularity, many retailers have responded by decreasing the size of center store to give more space for areas such as delis, prepared foods, organic foods and fresh produce.
- Retailers have reacted to the rise of e-commerce in several ways, including offering grocery pick-up services and offering less assortment in-store and an expanded assortment online.
Technology Upgrades and Analytics to Support Shelf Management
- Virtual shopping research tracks shopper responses to a digitally-created shopping experience to find the optimal balance between speed, cost and accuracy.
- Simulated eye tracking predicts what shoppers will see in the first three to five seconds of shopping and can influence what the shopper ultimately purchases from the shelf.
- Trax technology captures everything a shopper would see in-store, then digitizes shelf images down to the SKU level to minimize out-of-stocks (estimated at $54 billion in lost sales), ensure effective in-store execution/pricing and see what competitors are doing at the shelf.
“Advancements in technology and automation have transformed shelf management from an art to a new level of science,” added Jim Hanson, Senior Vice President, Space Management Solutions at Acosta. “At times, manufacturers and retailers have chosen to invest in other category management practices besides the shelf, since it can be difficult to quantify the impact of shelving activities. Retailers can now create a more efficient shelf management process, and therefore spend more time on high value analytics which is what truly drives sales.”
Acosta’s 2018 Shelf Management: The Value of Getting the Shelf Right report was compiled from a variety of Acosta’s resources including an online survey of the company’s proprietary shopper community.