At our seminar in June Lizzie Lee, Director of Apollo Solutions International, took a look at how IRI can make a difference to your merchandising effectiveness
Effective merchandising relies on four key factors being successful. These are: store planning, shelf planning, on shelf availability and compliance. Central to all of this and in the main oblivious to the importance of these factors, is the shopper. But while the planning is often assiduously adhered to, the implementation sometimes fails, which means the shopper goes shopping in another store or for another product.
Store level planning is critical to success as manufacturers such as Sony and Apple prove. Their stores bring their brands to life by means of innovative layouts and presentation of products. But even if you don’t have the luxury of having your own store stocked with only your own products, the real key is to ensure that the strategy is also the reality. By getting the stores laid out as planned, you can be loyal to your customers, while at the same time exploiting supply chain efficiencies to control your costs. This also serves to strengthen your brand and directly contributes to the all important return on investment.
The power of the shelf should not be underestimated. L’Oreal’s Project Dreamwall provides a palette approach to make up and shows the consumer how the product range is organised. This not only showcases the range in a way that is different from what is currently available, but also provides a context where people feel comfortable and are happy to try and buy.
Having planned your shelf the next step is to ensure on-shelf availability. Lack of product availability remains one of the biggest challenges in the retailing world – costing the industry up to £3bn – but there are techniques to address this issue.
One is the emergence of shelf ready packaging or retail ready packaging (RRP). This has been taken up in France at global retailing giant Carrefour, amongst others, and the success of RRP has led to the same initiatives being rolled out across Europe and also in Asia and Latin America. With around 9% of products already in RRP, this is clearly a growing market.
However, for all the positive aspects of RRP such as improved brand recognition, ease of shopping and stock rotation, there are several downsides as well. Chief amongst these is probably cost, as somebody somewhere has to pay for it, while environmental concerns and consumer perceptions of price need also to be considered. The answer is a combination of innovative new approaches such as RRP alongside retailer/manufacturer collaboration, coupled with integrated technology solutions.
Finally, and perhaps most importantly, is compliance. You can produce the most brilliant plans but if they don’t fit in-store, or are simply not carried out, compliance is impossible to achieve. And with more than a third of companies still not measuring the implementation of category planograms in-store, their compliance levels are likely to remain below 60%, which certainly makes a difference in-store but probably not the one you want. Simply by measuring compliance and collaborating with retailers, manufacturers can help to increase sales and profits.