Innovative merchandising needed to capture declining shelf space
is set to undergo a significant transformation, resulting in
competition for display and feature ad space intensifying, claims a
new report.
The Times and Trends report from Information Resources Inc (IRI) claims that current merchandising strategies no longer address evolving consumer needs, and merchandising activity is therefore on the decline.
But this change will drive merchandising innovation and increased competition to secure display space, says the report. And in order to stay on top of the game, food manufacturers and marketers need to focus on consumer-centric merchandising efforts that "break through the clutter" and "streamline the shopping experience".
Merchandising- characterized by feature ads, displays and temporary price reductions- has long been one of the most effective tools available to consumer packaged goods (CPG) manufacturers and retailers to influence consumer purchasing.
Indeed, 30 percent or more of CPG products are now sold with merchandising support.
But this merchandising proliferation, together with the increased numbers of packaged goods now available on the market- now nearly one million products- have cluttered up stores and made shopping more complex for consumers, said the report.
"It appears that with consumers balking at the increased complexity of the shopping experience, CPG marketers are recognizing that more is not better with respect to merchandising," said IRI.
"Instead, both manufacturers and retailers are seeking opportunities to enhance merchandising effectiveness and simplify shopping."
An example of innovative, and effective, merchandising is seen in Campbell Soup's recent efforts to pump some life back into the mature condensed segment of the wet soup category.
Working from its research, which revealed that consumers found the soup aisle the second hardest to shop from, the leading soup manufacturer developed its IQ Maximizer shelving system. The system's gravity-feed units organize soup by flavors, which are clearly marked with mini-billboards at the front of the shelf.
The units, which are said to allow consumers to locate the item they want within 6-7 seconds, are now installed in over 15,000 supermarkets. This merchandising effort resulted in the company's condensed soup segment seeing a 4 percent sales increase the year following its introduction, maintaining a 3 percent increase for the following two soup seasons.
According to the report by IRI, products in this year's top ten category achieving the greatest lift through merchandising include breakfast meals, chocolate candy, frankfurters, butter, vegetables and spaghetti sauce.
"Consumers' strong response to merchandising within these categories may reflect the fact that merchandising events are less frequent than in other categories- only chocolate candy and butter are on the ten most active list," said the market researcher.
These categories tend to be relatively high-ticket or stock-up items, said the report, adding that impulse also plays a role in driving merchandising lift.
However, the market researcher states that there is no "magic merchandising mix" , and says that manufacturers need to tailor their merchandising activity to local markets and specific consumer segments.
It also recommends that manufacturers invest in understanding consumer response drivers, brand perceptions and shopping patterns in order to optimize its merchandising mix across brands.
