How a product stands out on the store shelf often determines its fate in the marketplace. This article describes survival strategies for the retail battleground and lists resources for services and further information.

OVERVIEW AND DEFINITION

The retail store's shelf is the final battleground for the consumer's dollar. If it's advertising that gets customers into the store, it's merchandising that gets them to select one product over another once they're there. In fact, recent data from the Point-of-Purchase Advertising Institute suggest that 70 percent of supermarket shoppers and 74 percent of mass-merchant shoppers make their purchase decision inside the store. For many marketers, this strengthens the case that in-store merchandising just might be more important than media advertising.

In-store merchandising is a term applied to any method for maximizing sales at the retail level by making a product stand out from competing products or simply stand out from the clutter of messages in the store environment. It applies to making sure that your product is displayed properly and in sufficient quantity, in its allotted space, with the appropriate merchandising materials, and without other products encroaching on your shelf space. In-store merchandising is also the last chance to present shoppers with information about a product's features, benefits, price, and positioning. Thus it has implications for packaging and the complete array of point-of-purchase (POP) materials, such as product displays, posters, banners, shelf-talkers, and danglers.

KEY ISSUES

Just as the retail shelf is the last battleground for the consumer's dollar, in-store merchandising inevitably plays a role in the ongoing war between manufacturers and retailers over a number of issues. For instance, a larger package might attract the customer's eye, but suppose it doesn't work with a retailer's shelving arrangement? Or what happens to your POP display if the retailer's objective is to maintain a less-cluttered store environment? Can you count on the retailer to renew your stock or set up your POP materials? Also, if a manufacturer's merchandising efforts are going to result in an improvement in the store's profit, shouldn't retailers share the cost of those efforts? The answers to these questions will depend largely on the relationship that a company has with its various retailers. Obviously, leading manufacturers with strong brands will have more leverage in this argument.

For a manufacturer, the main issue is clear: how to get consumers to choose your product over another once they get into the store. You have a variety of tools at your disposal, including packaging, displays, POP media, and couponing. Bear in mind that the value of in-store merchandising in enhanced to the degree that it is coordinated with local and mass-media advertising. That's the best guarantee that a consistent message will be conveyed to consumers from the time they are exposed to media advertising to the moment they take a product from the store shelf.

Obviously, the success of any in-store merchandising effort depends on the cooperation of the retailer. Some experts estimate, for instance, that as much as 50 percent of the POP materials for some merchandising programs never gets displayed. One way to improve retailer participation: run an incentive program for the trade.

Among the most important issues that arise in in-store merchandising are the following:

Category management. This is becoming increasingly important to retailers. A manufacturer's merchandising strategy, focused on its specific brands, might be at odds with the retailer's, which is aimed at increasing sales--and profitability--of the merchandise category as a whole. Manufacturers that show how their merchandising efforts will contribute to the retailer's objectives are more likely to win the retailer's in-store support.

Category captains. Many retailers rely on the largest supplier in a particular category to help plan and manage the category as a whole. This tends to squeeze out smaller vendors.

Carrying out the program. Retailers are looking to shift more and more of the burden of putting products on display to manufacturers and their representatives.

Floor-ready merchandise. Larger retailers are trying to eliminate the time and cost involved in ticketing merchandise and otherwise preparing it for display (see Packaging Considerations).

A merchandising services firm can improve the chances that your product gets on the shelves, is displayed properly, and is supported by your POP materials. The typical grocery store carries some 35,000 stock-keeping units (SKUs). Few of them are supported by a manufacturer's sales force, so most manufacturers use a merchandising services firm of one kind or another.

Slotting fees are often an issue for new-product merchandising. Since new products are inherently risky, some retailers will demand an extra payment in exchange for making shelf space available.

Store decor. Upscale retailers may resist displays and POP materials that violate their standards or create a cluttered retail environment.

DISPLAY OPTIONS

Displays come in a variety of shapes and sizes, but what they have in common is that they are designed to perform a specific function for a product or promotion. That function might be to create an appealing environment for the product, facilitate restocking, enhance product image, demonstrate how the product is used, or just grab the attention of shoppers. Following are some of the most popular devices used in in-store merchandising:

assortment display: a display designed to offer the consumer an array of sizes, colors, or types of merchandise

audiovisual display: a display in which audiovisual technology is used to stimulate purchases

case stacking: a display constructed by piling up product in its shipping cases, usually with its top row or front side cut open to display the product

display stock: usually, durable goods that are placed on various display fixtures so they can be examined by consumers

dump bin: a freestanding bin containing merchandise (usually a single item) that appears randomly "dumped"

dump display: goods that are casually collected on a table or in a box to suggest a bargain to customers

end-aisle display or end-cap display: a display placed at the end of a row of shelving to attract attention to a featured item

environmental setting: a display set up, usually with a variety of coordinated merchandise, in a setting that is meant to resemble a shopper's home

floor pyramid: a product display in which the items are stacked in a stepped pyramid

floor stand: a display unit, usually of corrugated cardboard, that elevates products that are too small or too expensive to be stacked in the usual manner

gondola: a display stand with shelves open on all sides both to display goods and provide space for back-up stock

island display: a freestanding display in a store's aisle or other open space that is accessible from all sides

light box: a box-shaped display unit in which a back-lighted transparency forms one face of the box

pallet display: a mass display of product built on a pallet and contained in corrugated boxes or other structural components

shelf-extender: a small tray, designed to fasten on the shelf and project from it, extending the space of the shelf

showcase: a glass display case in which products can be viewed, but not handled unless removed by a salesperson

split rounder: in apparel sales, a display fixture made of two hemispheres, one above the other, for 360-degree visibility

tie-in display: a joint display with a noncompeting product

theme display or setting display: a retail display in which products are presented in a setting or environment having a specific theme

vignette: a display that shows a product in use

wall display: a display of posters and/or product items that are suspended from the store's walls to attract attention and promote sales

wrap-around: a decorative banner that is draped around an in-store product display.

PACKAGING CONSIDERATIONS

How a product is packaged often determines how successfully it can be merchandised and how much support it is likely to get from retailers. Under-packaging is a serious concern for some retailers. This is when the manufacturer's packaging is inadequate for handling at a particular retail site. This can lead to inventory "shrinkage" resulting from wear and tear or breakage. Another issue of growing importance to retailers is that of floor-ready merchandise. Stores want to eliminate the time and cost involved in ticketing merchandise and otherwise preparing it for display. They want manufacturers to help by using bar codes and preticketing and by prehanging goods so they can be put on display as quickly as possible after delivery.

Other packaging considerations that play a role in in-store merchandising include:

aesthetic features: packaging or display features that appeal to the five senses--hearing, sight, touch, taste, and smell.

bonus packages: packaging that gives the consumer increased quantity (six extra tea bags, two free ounces) at the same price as the regular package.

mail-in premium: a sales incentive that requires the consumer to mail in a proof-of-purchase from the packaging to obtain a free gift.

multipacks: several packages banded together and sold at a reduced per-unit price; three units might be packaged together and sold for the price of two; a variation on this is the one-cent sale, where consumers who buy one unit of a product are offered the second for one cent or for half price.

container promotion: a promotion where the type, shape, or function of the container is part of the merchandising plan; one example is the jelly jar that can be reused as a child's drinking glass; another is the growing use of environmentally-friendly packaging that's designed to be refilled and reused.

tray pack: multi-unit packaging in which the top of the package can be folded back to become a display tray that is placed on a shelf or a counter.

trial size: a package smaller than the manufacturer's usual packaging and offered free or at a substantially reduced price to lure first-time buyers.

twin pack: two units of the same product bound together and sold at a lower cost.

OBJECTIVES FOR IN-STORE MERCHANDISING

The more specific your merchandising strategy (and the more retailer-friendly), the more likely it is to be implemented, and the easier it will be to track sales results back to specific merchandising elements. An example of a detailed objective: "Place end-of-aisle displays for a product-line extension in 50 percent of the stores in the Northeast Region during the initial TV advertising campaign scheduled for June." Objectives for your in-store merchandising should also include the following:

• The number of merchandising or POP pieces to be delivered and displayed at each retail location.
  
  
• Geographic objectives. Where will your in-store merchandising program be executed: nationally, in selected states or regions, locally, or at specific stores within a larger market area?
  
  
• Timing. Will there be a tie-in with other marketing elements, including mass-market advertising and local media advertising? If the merchandising plan calls for a change in packaging, what sort of lead time will be necessary? Can POP be timed to go up at the same time as the kickoff of a major advertising campaign? Consider how much time you will need to allow for POP materials to be delivered and set up, particularly if they have to be coordinated with sales visits or visits by merchandising services providers.

DELIVERY AND DISPLAY METHODS

A merchandising strategy should also set out the delivery and display methods that you will be using. For instance, if a strategy depends heavily on POP materials, will they be delivered and set up by your own sales force, by a broker or distributor sales force, or by a merchandising or promotion company brought in for a specific product rollout or promotional event? Or will you depend on store personnel to set up product displays and POP materials? You will also need to spell out the benefits of your merchandising strategy to the retailer to maximize placement of your merchandising elements. Obviously, a merchandising strategy that is reinforced by a discount or other incentive to distributors and/or retailers stands a better chance of meeting your implementation goals.

USING A THIRD-PARTY MERCHANDISER

Major packaged-goods companies might have merchandising sales forces large enough to go into stores twice a week to freshen displays, deliver POP materials, and provide product information and training materials for retail personnel, but they are the exception, not the rule. It's not cost-efficient for the typical manufacturer, so most hire a services company to handle in-store merchandising. Even giant Procter & Gamble reports that, of the more than 3 million hours that it spends in stores every year, one-third are by the 40 merchandising service companies it uses.

Manufacturers and retailers alike favor the use of outside firms for three reasons: Manufacturers can focus on their core competencies and free up resources for other purposes; costs are reduced, and it's easier to control them; there's greater flexibility in deploying personnel to meet variations in demand. A merchandising firm can also perform some of the functions of a direct sales force, such as training retail personnel on the features and benefits of your product, signing up store personnel for your promotional programs, handing out literature or marketing materials to store personnel, and conducting marketing surveys or questionnaires with store personnel. Some service firms have specialties in important merchandising subcategories, including couponing, in-store event marketing, special promotions, in-store sampling, and continuity promotions.

Among the services that a typical merchandising services firm can provide are:

• Set up and maintain permanent merchandising displays such as end-caps, and other specialized fixtures for limited-period displays. (Permanent displays are usually defined as those meant to last for six months or more. Temporary displays are designed for less than six months.)
  
  
• Make product presentations to retail customers and run sampling stations or demo machines for grand openings or other in-store events.
  
  
• Monitor inventory and pricing of your products.
  
  
• Check on and improve the number of facings and placement of your products.
  
  
• Verify store compliance on paid-for merchandising display (such as end- caps) and merchandising materials (such as shelf-talkers or danglers).
  
  
• Conduct on-site surveys of store customers.

CHOOSING A MERCHANDISING SERVICES FIRM

To find a merchandising services firm, contact one or more of the leading trade organizations for their membership directory (see Associations).

In selecting an in-store services firm, there are a number of factors you should consider, including:

Capacity. Does the company have the resources to manage the project that you're putting in front of them? In-store merchandising is labor-intensive. Does the firm have the manpower and locations to get people into the stores with the frequency you need?

Track record. Can the firm demonstrate its ability to understand the channel and the product that it will be working with? Convenience stores are not like chain drug stores, and neither of them are like supermarkets. There are some similarities, of course, and there are some merchandising firms that can cross over easily to another channel.

Reputation. Ask for references, and look into the company's history for evidence of the type of merchandising efforts you're looking for.

Speed and flexibility. Occasionally, there is a need for manufacturers to get something out to the marketplace quickly. For example, when the American Heart Association issued a report on how oats help to lower cholesterol, such companies as General Mills and Quaker Oats looked for ways to get that information into the stores as soon as possible. Some merchandising firms have the manpower and coverage to accomplish that type of quick merchandising, others don't.

Special skills. Some firms have strengths in specific areas, such as event marketing or in-store sampling. Others specialize in different levels of implementation. They will pick up only those functions that the manufacturer and the retailer don't want to perform.

CASE STUDIES

Absolut Vodka tries to be as creative with in-store merchandising as it is with its advertising. For example, one summer  it created a program, called "Absolut Scorcher," built around a two-pole display with a battery-operated table fan sitting on an extended shelf. The blades of the fan, of course, are shaped like Absolut bottles. The rear of the display is a window looking out on a view of the beach, and the ceiling dangler is a ceiling fan, again with those distinctively-shaped blades. The theme is repeated on a pole-topper and a shelf-talker. Retailers can also opt to include a customized oscillating table fan in their displays.

A.1. Steak Sauce regularly runs joint merchandising programs with restaurants as a way to boost A.1.'s out-of-home sales along with sales of the restaurants' steaks. A recent program, called "A.1. Chef's Recommended Cuts," includes table tents, coasters, and buttons for the wait staff. Table tents are designed to appeal to the eye and the appetite by displaying a variety of steak cuts, all topped with A.1. The intent is that, by "branding" their steaks with A.1., restaurants can enhance the perceived value of their steak offerings. The merchandising package includes menu stickers, door decals, and recipes.

ASSOCIATIONS

Click here for a listing of industry associations.

TRADE SHOWS

For a list of Industry Events, go to #9510, Calendar of Industry Events.

RESEARCH

Limited research on in-store merchandising and related areas is available from trade organizations (see Associations).

BOOKS

Applied Visual Merchandising (Third Edition), by Kenneth Mills, Judith Paul, and Kay Moormann, offers trends, practices, and procedures in the world of display merchandising. A thorough look at the sales-support activity that deals with all types of retail displays. Prentice Hall. $72.85; through Amazon.com, $72.85.

Dictionary of Retailing and Merchandising, by Jerry M. Rosenberg, is the definitive reference for the terminology used in in-store merchandising, display, retail advertising, and related fields. 261 pp. John Wiley & Sons. $27.95; through Amazon.com, $19.57.

How to Write a Successful Marketing Plan (Second Edition), by Roman G. Hiebing Jr. and Scott W. Cooper, puts packaging, promotion, and merchandising issues in the larger context of creating a winning marketing strategy. NTC Business Books. $79.95; through Amazon.com, $55.96.

Retailing (Sixth Edition), by Dale M. Lewison, is a basic text on managing the retail environment. Prentice Hall. $81; through Amazon.com, $81.

Marketing Encyclopedia: Issues and Trends Shaping the Future, edited by Jeffrey Heilbrunn, is a compendium of articles dealing with such marketing and merchandising issues as category management, frequency marketing, and integrated marketing. 348 pp. NTC Business Books. $47.95; through Amazon.com, $33.57.

PUBLICATIONS

Click here for a listing of industry publications.

RELATED SMN ARTICLES

For information related to in-store merchandising, see Doc. 3022, How to Structure Dealer Incentives.