With only one third of in-store purchases being pre-planned, product placement is crucial to influence consumer purchasing decisions.

Retailbiz speaks with an expert about the importance of product placement on shelves and the most common mistakes made by retailers when merchandising stock.

Founder and CEO of Melbourne research technology company Glow, Tim Clover has worked with companies across the globe to help them boost their bottom line by improving product placement. 

Retailbiz asked Mr Clover about the importance of shelf positioning and location and the impact it has on a product’s success.  

RB: Can you elaborate on how important shelf position is in consumer purchasing behaviours?

TC: It’s critical on a number of levels. Consider this: you’re in a store looking for something to eat for lunch. You either know what you’re looking for, or you’re browsing. Humans browse by scanning and then focussing. We look at a number of cues (prices, labels, displays) when we browse. Items from waist to head height get the most you-time. So that’s the scanning level (or planogram, as it’s called in stores). Then, we may be looking for a particular category of product. That means we need to find our way to the category (scanning shelves all the way most likely, picking up impulse items along the way). Once we find the category we’re looking for, say “ready meals”, we take a look at the different types available based on our core drivers – things like portion size, brand, price, quality and freshness. These are usually grouped together into competitive sets or (for some brands) they are grouped by brand in blocks. If you’re looking for a category, then brands that are prominent and in your consideration set (think brand health from awareness to loyal; consideration is second in the funnel) are likely to win. If I was looking for ready meals then the occasion is a meal time. This is the occasion level of shelf position, but it’s more about how the shelf is organised and which category you’re in. We’ll come back to this.

Now, consider you’re in a store in the morning. You may not be getting lunch specifically, but you’re there to get some bits and you haven’t got lunch sorted. Are you likely to head to the ready meals section? Therefore, is placement or organisation of that category important? No, because you’re not associating the retailer with fulfilling a later lunch requirement. But if you’re looking for some bits to stock up at home, such as canned tuna, you will head to the relevant aisles to get what you need. Then, when you’re there you start scanning. If, while scanning, you come across a great product that will sort lunch out for you, suddenly you’ve got a solution to a problem later that you don’t need to think about later. So you buy the tuna and the lunch option. And you’ve made your life easier. And this is the solution level that makes you feel great because it’s unplanned, but it solves a real problem for you. It’s also associated with impulse buys where we pick stuff up we don’t really need, but we’re consumers so we like to stock up and consume.

So how important is shelf position? In the example above, it’s about making sure you’re able to solve the problem for more people. And there are more people buying tuna each day that might want lunch (we all eat lunch) than there are that go to the supermarket just looking for lunch options. The brand in its category that extends the scope of purchases by using its brand effectively in other occasions has the consumer in a clean, uncluttered headspace. The brand isn’t competing with anyone else for lunch. It’s got a home run on that occasion just by upselling a solution. These are the nuances of shelf space that brands need to explore carefully before negotiating their position in store with retailers.

RB: Do you think the importance of shelf placement is known by retailers?

TC: Somewhat. I think retailers have a good view of what works in their stores at a basic level but within a category or an occasion it becomes difficult for them to really pinpoint highly successful strategies because there is so much data to get through. Also, retailers tend to have their merchandising teams rotate quite a lot, which means that knowledge is easily lost. 

Consumer habits change a lot – think Deliveroo for meal delivery and how it’s transformed mealtimes for a lot of people – so as habits change, it’s really hard to stay on top of current needs and behaviours. A lot of guesswork happens at retailer level and it’s often left to brands to “pitch” strategies that are likely to work. Brands that turn up with sophisticated shopper-focussed marketing strategies based on sound data are more likely to:

  1. Sell effectively into the right distribution channels. For example, retailers in many cases and
  2. Sell more products on the shelves of those retailers. 

Retailers, therefore, are quite happy for brands to pitch ideas that have solid research and consideration into the motivations and numbers behind the strategies that are presented to them.

RB: What are some of the most common mistakes retailers make in regard to product placement on the shelves

TC: The most common mistakes we see are:

  1. Too many products in the consideration set for consumers (clutter). Shelves that are too busy make the human brain go into “meltdown mode” and cause us to stick to what we know. We lose our ability to use or consider new options. Less is more in many cases. The risk then shifts to the range you sell – if you declutter by deleting brands that make up big baskets but may not contribute strongly to direct category sales you may be in for a backlash at store level, or worse.
  2. Poor shelf replenishment outside of the goldilocks zone (waist to head height). While we humans scan best in this zone as shoppers, we also scan best as shelf stackers too. As a shelf stacker you’re much more likely to replenish your high-volume gaps in the middle shelves than to notice a few missing “facings” near the floor or up high. This further compounds the issue for brands placed at these planogram extremities and reduces the appeal of using bricks and mortar retail if you’re not “goldilocked in” for great placement. If you’re outside this zone then you’re already considering online store options where you can at least compete on equal terms.
  3. Confusing or unclear category groupings. This is especially important outside of grocery retail where consumers are looking for a solution that they wouldn’t buy every day and therefore aren’t familiar with the store’s layout (It’s also true in grocery when you’re on holiday and you visit a new store, though). 
  • If you’re looking for an electrical item at a hardware store, you’ll usually head to the section where the trade group is represented and start scanning. If the subcategory you’re looking for (Eg. extension cables) aren’t with the rest of the electrical items you may leave thinking they’re not stocked.

    The best retailers keep their categories clear and allow their stocked brands to build trust and extend baskets by making it easy for the customer to get more value from their seven minutes in store. The more problems we can solve in less time, the more accomplished we consumers feel as humans – we’re great problem solvers! The best retailers are great at helping us solve problems ahead of time. Get the core need covered, then make it easy to solve problems for later while we’re there.

RB: How are companies/ FMCG brands starting to use data to better understand this?

TC: Brands are starting to get smart and agile with the way they purchase and use data. The days of spending huge amounts on locked contracts for standard format data are numbered. Brands are starting to “pay to play” more and more, to get what they need just in time before making decisions. 

Key trend and sales data are important to help measure performance – the rear mirror view. Brands that are moving the needle are starting to think ahead and consider the consumer journey and need to start to set a trail of breadcrumbs that make the consumer feel like they’ve solved a problem AND build sales and market share. Traditionally this required large studies every few years at great expense. 

We’re seeing brands dipping into consumers to gather data around their category usage and attitudes (U&A), understand their occasional needs and path to purchase and track their brands. We’re also seeing more brands test their products early in the lifecycle to reduce easy-to-avoid mistakes that lead to product failure and deletion. I remember hearing about a retailer who launched their own brand microwavable lasagne, only for it to be launched and the pack would not to fit in a home oven – it had been tested in an industrial microwave! This is obviously an extreme example of a silly mistake, but they happen. Lots of brands are trying to win the scanning level, occasion level the solution level wars in combination by creating sophisticated strategies in a short amount of time using the right tools and agency partners. 

Sirena Tuna is a great example of a brand that’s insights-led and managed to persuade a retailer to stock their meal product in a specific location for massive sales and category growth benefits. At the same time, they redeveloped their packaging to win the scanning consumer over – the right artwork, claims, brand hierarchy and claims and information. They tested a number of variants with thousands of consumers in days to get the structure right before spending thousands on repackaging. The resulting story was well received by the busy retailer and it’s built their sales, credibility and brand perception in the market on the back of more successful media targeting and spend – knowing (not guessing) what’s important to consumers. 

More and more brands are starting to think this way, and retailers are doing the same with their own private label ranges and assortments. What’s important is to force all decisions to be laser focused on consumers’ needs and values. The rest is just about getting the right data to piece the puzzle together, present a defensible story and deploy marketing capital where it’s going to have the biggest impact. In store, that’s about positioning, trade spend efficiency and shelf appeal. A lot of great companies like Focus Insights are helping brands of all sizes get the consumer information they need quickly, easily and affordably. The bigger “end of town” data and research houses such as Nielsen are also recognising the importance of quick-access, agile and new (recently gathered) data and they’re investing in helping their clients access it. The market is having to move more nimbly to meet the needs of a super-busy and ever-changing consumer. 

The way we shop is changing fast. An effective product that is well-branded and placed in the right shelf, the right category and the right store is fundamental to success. Successful strategies source data across the product lifecycle and consumer journey to pinpoint more moments that matter, which make the shelf space worth negotiating hard for!

For the latest retail industry news and insights straight to your mailbox sign up to RetailBiz’ weekly newsletter. If you have any news or feature tips or know a retail who would make a good retail profile please email Georgia Clark at gclark@intermedia.com.au