Shelf management is more important than promotions in motivating grocery purchases, even though it receives much less attention and funding, according to a new study by Acosta.
The study, “Shelf Management: The Value of Getting the Shelf Right,” states that “on average, manufacturers spend one-third of one percent on shelf management versus trade spending – yet shelf management represents 66 percent of their sales and 85 percent of their profit.”
The study noted that two-thirds of units sold in grocery stores are not promoted, and that “a promotion may bring a short-term gain, but the impact can be difficult to quantify, return on investment is variable and brand equity may potentially erode.” It went on to note that shelf management, defined as strategic placement of packages with the most profitable at eye level, can provide a sales lift of up to 6%.
Other points made in the study:
• Private label gets more shelf space than it deserves, often crowding out branded products – especially category leaders – and leading to out-of-stocks. “In fact, private brands are 11 percent over-spaced on average,” the report says.
• The center store is shrinking, reflecting the increased preference for fresh foods. “Space that was once taken up by frozen foods, canned vegetables and general merchandise has now been reduced to make room for delis, prepared foods, organic foods and fresh produce,” the report says.
• When a desired product is out of stock, shoppers usually switch to another brand or flavor – but not always. The study found that in such situations, 17% of shoppers would delay their purchase, and 11% would go to another store.