By GMDC
As suppliers turn more of their attention to at-retail marketing, they are colliding with merchants' policies of operating an increasingly clutter-free shopping environment that calls for fewer displayers and more space, according to an IRI study on CPG trends.
The collision is putting some important issues on the table relative to what will work and what won't in the future for in-store merchandising. Tried and true at-retail solutions appear to be seriously challenged, but new strategies, tactics and hardware do not yet seem adequate. At risk is the development of sales within the retail store.
Clean-floor retailing is indeed expanding. For example, according to IRI, the number of grocery store displays is down 10 percent over the last two years, and another 4.4 percent decline was posted at midyear. Additionally, IRI reports that the proportion of CPG categories in which only 30 percent of volume is supported by in-store merchandising of any kind expanded from 33 percent to 38 percent over the same period.
Retailers' perspectives are starting to change, too. Retail executives are far more interested today in using a vast array of shopper insights than they were 10 or 15 years ago, and they are much more adept at using the data to identify high potential trips and specifically targeting them with innovative merchandising, promotional and assortment strategies.
At the same time, there is growing interest among marketers to field new technology in the at-retail marketing arena. For example, the IRI study quotes stats from an In-Store Marketing Institute study, which states that 44 percent of marketers interviewed believe that small digital shelf signs, which are non-intrusive on floor space, have the greatest potential to transform in-store marketing. Some 18 percent think that large network monitors at the store perimeter can do this while 24 percent believe that smart shopping carts are the way to go. And, at least one retailer is testing a shopping cart featuring a loyalty card scanner and a screen. The customer swipes the card and has several options to pick on the screen, including unadvertised specials in the department in which she is standing. The departments have RFID chips to provide the information.
Meanwhile, the IRI data seems to be saying that the traditional price, feature, and display are no longer as effective as they once were. In grocery, 72 percent of categories are experiencing reduced merchandising lift, while the figure for drug is 60 percent. And, says IRI, the percentage of categories reporting merchandising lift on the low end of the spectrum is increasing. The percentage of categories showing less than 50 percent merchandising lift was 28 percent in 2005; in 2007, the proportion has gone to 33 percent.
On the other hand, part of drugstores' recent success in garnering share is based on traditional merchandising activity. For example, at drug stores 51 percent of vitamin volume was supported by some type of merchandising, compared to 41 percent in grocery. In hair color, 43 percent of drug volume was supported by merchandising compared to 29 percent in grocery. Drugstores have been folding such merchandising activity into total health & wellness strategies involving the whole store, based on shopper insights.
Discussion Questions: What is the future for in-store marketing as it pertains to General Merchandise and Health Beauty Wellness, especially in a clutter-free environment? Should the traditional tools be abandoned or severely limited? Do the metrics for measuring success have to be changed? What new technologies can be used to develop retail store sales in the future? How can such technologies be leveraged?