By Jim Dudlicek / NGA Director, Communications and External Affairs
In today’s competitive environment, significant thought and consideration must be given to managing available shelf space. The arrangement of products demands creativity and foresight. To optimize available space, placement of items within a category must be done deliberately and artfully.
Using data-driven planograms, or maps of products arranged on shelf, ensures logical groupings and adjacencies, and ultimately, profitable placement. As covered in the first of this three-part series (The Science of Selection) with the Hamacher Resource Group, success begins with the correct product selection.
The latest webinar hosted by HRG and NGA addressed how appropriate product placement and merchandising are vital factors that can substantially impact category profitability. The discussion was led by HRG’s Dave Wendland, vice president of strategic relations, and Kyle Lentz, category analyst.
Here are some key takeaways from the discussion:
Placement matters. Active category management can produce a 10% boost in sales, a 3% increase in profit margin and a 15% reduction in inventory, so getting it right at the shelf can make a big difference.
The best arrangement strategies are a combination of visual merchandising, product display tactics and logical store layout. Arrangement should consider category size, store size, assortment options, private label, foot traffic and data sources.
Planograms take the guesswork out of the arrangement process. Shoppers want a store that looks tidy and is easy to shop. Effective space management enhances visual appeal that leads to increased sales. Planograms allow retailers to maximize space for effective positioning of best-selling items.
Automated planning software offers tools that can simplify analyzing space needs. But take care, Lentz warns: “If you put junk in, you’ll get junk out.” Also, software “doesn’t know about real-life situations” – for example, weather emergencies that might boost short-term demand for staples.
Expand your sources of data beyond customer feedback and loyalty data to syndicated data and other sources that may reveal sales potential for products you’re not currently selling.
Consider strategy as part of the thought process. Your store’s overall mission must play a role in category management. How does private label play a role – a lower-cost alternative to national brands or a fully developed own-brand program?
Remember, it’s not a one-person process. You’ll have to justify the reasoning behind assortment and arrangement decisions to upper management. Ultimately, the goal is to make things easier for yourself and your shoppers, with a store that’s clean, cohesive and filled with products that people want most.
To view a recording of the complete webinar with all of HRG’s exclusive insights, click here.
The final webinar in this current three-part NGA/HRG Independent Grocery Strategy Series, “The Power of Positioning,” is scheduled for June 21, 2023. Find more information and register here.