Why in-store merchandising has to change

Discussion
Feb 09, 2017
Mark Heckman

Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.

At fixture and merchandising plan meetings I attended over thirty-plus years, discussions centered on logistics and space availability, but there was little or no focus on shopper convenience or shopping efficiency. Essentially, this remains the approach of most retailers today.

Let me suggest a few things retailers can do that will yield quick, incremental gains. It simply requires retailers to re-think where they place departments and categories in a more holistic, shopper-centric manner. I have seen this happening in three steps.

  1. Recognize some categories are more important than others and should be readily accessible without your shoppers having to work to find them. Purposely placing the most important categories in the far reaches of stores to manipulate the shopper’s trip is becoming increasingly risky.
  1. Understand there are some areas in every retail store that are more productive than others. Also, distinct, existing traffic patterns in every store are much easier to leverage than to attempt to change. Just know that some areas of your store are frequented less by shoppers than you would like. It is also important to realize that shoppers spend faster and with more efficiency early in their trip. Know that their trip time is inherently short and not easily stretched by “good merchandising” and using placement of “destination categories” as magnets to attract shoppers into parts of the store they are not otherwise interested in going.
  1. Many departments, categories and items have strong affinities with other items on the basis of how the shoppers view and use these categories and items. When possible, data can be used to measure basket level affinity quantitatively (basket analysis) and qualitatively (shopper questionnaires and shop-a-long research) to better understand the strength of these relationships.

Enabling shoppers to quickly and efficiently find what they are looking for in today’s bricks and mortar stores is emerging as a key competitive advantage. As with most things retailer, there will always be an element of “art” in any empirical category placement plan. However, we are no longer operating in a consumer environment in which our stores and merchandising plans accommodate our merchants first and expect the shoppers to adapt.

DISCUSSION QUESTIONS: Which all-too-common merchandising practices work against shopper efficiency and convenience? How would you advise retailers to rethink how they place departments and categories?

Braintrust
"When you make illogical choices just to get the shopper to go to more areas of the store, that's when you start making it harder."
"...wise retailers find out what shoppers like and dislike about their stores and the competition; then make major changes or small tweaks..."
"The attention that is paid to layout planning is better spent on influencing product purchases."

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19 Comments on "Why in-store merchandising has to change"

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Cathy Hotka
BrainTrust

One common theme across segments today is that size matters, and giant stores (and malls) aren’t convenient. Many retailers are experimenting with smaller-footprint stores to make the process of shopping easier. Grab-and-go is more important than ever … look for more of it.

Adrian Weidmann
BrainTrust

First begin by understanding the shopper’s journey — before, during and after they actually visit your store. The long-held understanding that if shoppers enjoy the experience they’ll stay in your store longer, and the longer they’re in your store the more they’ll purchase, may still be true — but beware. Shoppers’ time is valuable and given their ZMOT research and education they are typically on a specific mission when they cross your threshold. They aren’t in the mood to be manipulated. The faster they find what they’re looking for the more they’ll be open for inspirational shopping.

One key caveat — make certain that your in-store inventory is accurate and aligned with what you’ve told your shopper via your website! 100 percent accurate inventory is a mandatory requirement for creating the new seamless shopping environment.

Bob Phibbs
BrainTrust

If you’re talking about grocery that may be true, but I’m still doubtful. Great merchandising can indeed make a difference as I wrote last week How Your Merchandising Can Influence Customers To Increase Retail Sales. Many retailers now think it is in their best interest to get people “in and out quickly.” Sorry, those shoppers are much more likely to look at shopping as work and default to Dash buttons and online delivery.

Many grocery stores have added Starbucks — why? Convenience? No, the more someone lingers in the store, the larger the basket. It is the exact opposite of “get in and out.” Self-service kiosks are still being ripped out because they promised to “get in and get out.”

The stakes are much higher for apparel and other retailers who are turning their stores more into warehouses.

Meaghan Brophy
BrainTrust

The biggest problem is that retailers think of merchandising from a retailer’s perspective instead of a consumer’s perspective. There shouldn’t be this separation of what’s best for the consumer vs. what’s best for the retailer. What’s best for the consumer will ultimately be what’s best for the retailer. For example, placing top-selling or in-demand items at the back of the store to make shoppers walk through the entire space wastes consumers’ time and makes your store a less convenient option than a retailer who merchandises based on consumer demand. Consumers are smart and can see through these efforts. Instead of trying to manipulate the shopper, work with them.

Sterling Hawkins
BrainTrust

And several more advanced retailers are actually applying customer data insights and analytics to merchandising to help understand what is really best for the consumer. Viewing department planning and category assortments thought a lens of customer segmentations enables retailers to tailor the assortment of products — brands, package sizes, placement, etc. — for each individual store. Having the right products in the right places improves the customer experience and, as you say, the retailer’s results.

Lyle Bunn (Ph.D. Hon)
BrainTrust

The attention that is paid to layout planning is better spent on influencing product purchases. Consumers have learned how to get what they want so the challenge in retail is to provide what is most suitable to them. Online commerce has above all accelerated information-based selling so physical retail should take a few pages from that playbook and display product features, benefits, reviews and suggestive selling. Packaging, placement and product labels will continue to be important, but the “why” that pushes the “buy” button in a consumer’s brain is where the rubber meets the road.

Ian Percy
BrainTrust

Thanks for your kind comment, Lyle. My Skype handle includes the word “Why” so your emphasis on the “why” resonates with me. ‘Why’ is the operative word in logic it seems to me. Unfortunately it’s too often ignored in retail thinking.

Ian Percy
BrainTrust

Super article, Mark. I’d like to listen to you explore the relation of “logic” to “efficiency and convenience.” I’d learn a lot. And funny you played on “Who moved my cheese?”

In Costco the other day I was trying to fulfill the assignment of picking up a certain cheese. After a futile and repeated search of the cheese section I finally gave up and asked for directions from a rarely-spotted employee. “Oh, that cheese is on the other side of the store,” he said while pointing high over the ductwork. It’s cheese! It goes in the cheese section! Sweet cheeses … doesn’t simple logic fit in here somewhere?

Lyle Bunn (Ph.D. Hon)
BrainTrust

Great point Ian. Retailers are shooting themselves in the foot by routing customers around the entire store. Respecting a consumer’s time is becoming more important than most physical retailers appreciate.

Ricardo Belmar
BrainTrust

It comes down to format and segment. I’m sure we all have stories of visiting Costco intending to get that “one thing” and aimlessly wandering the store looking for it in frustration because of how Costco frequently changes its layout. Most versions of that story end with “I ended up buying a lot more than that one thing!” Why? Because for certain items, price will overcome convenience. Costco knows that and has made a great success story out of it.

In other formats, not so much. You’re right, consumers have made their voices known — they will be loyal to stores that deliver good product with convenience and are often willing to pay more for that. Retailers that understand this will win in the end.

Dr. Stephen Needel
BrainTrust

I’m not sure that we do many things that reduce shopper efficiency and convenience. To the extent that the layout is logical (produce here, dairy there, meat and seafood over there, etc.) it’s not hard to shop it. When you make illogical choices just to get the shopper to go to more areas of the store, that’s when you start making it harder. For example, putting bottled/can iced tea away from water or carbonated beverages, putting peanut butter far away from jelly, pasta away from pasta sauce. Then you’re making the shopper work for it.

Max Goldberg
BrainTrust

When online shoppers can quickly and efficiently find what they are looking for on Amazon, it is any wonder that they expect the same at brick-and-mortar stores? Retailers should take customer desires into account when planning their stores. Consumers want to save time, so make it easy for them to find what they want. This should include cutting down on seemingly endless line extensions. How much time is wasted by forcing consumers to look through endless variations of toothpaste or laundry detergent or yogurt?

Steve Montgomery
BrainTrust

There are a number of tools that retailers can use that reveal shopper patterns within their stores such as those from VideoMining. This, with market basket and department and/or SKU correlation analysis, can provide a good start in ensuring retailers properly lay out their stores.

The object used to be keeping the shopper in the the store as long as possible. Today the focus should be on customer convenience.

Ralph Jacobson
BrainTrust

Mark’s third point is most often overlooked by merchandisers, and if it is considered in the merchandising execution (either in-store or online, by the way), I believe the tools available today are not employed effectively. We have seen truly amazing affinities of categories and individual products that prove the value of these items to drive incremental revenue growth. We worked with a pet store that was ready to eliminate the live fish category when they discovered this category drove more than $200 million in revenue throughout the store annually.

Also, the visual merchandising of most stores is virtually the same it was more than 50 years ago. Seriously, how different does the center store of a traditional supermarket, or virtually any category of a department store, look today from how it looked a half a century ago?! Sure, there are some fantastic retailer exceptions to this view, however the majority need to at least follow their lead.

Scott Magids
BrainTrust
3 months 18 days ago
In-store merchandising is too often based on logistical considerations, demands of a shop’s largest distributors for prominent space and the whims of stock clerks who are anxious to clock out for the day. Instead, store managers need to take control of in-store merchandising and adopt strategies to respond to the emotional needs of customers rather than approaching in-store merchandising as a purely logistical task. In a Harvard Business Review article we see precisely how effective this strategy can be, with the example of a nationwide apparel retailer reorienting its merchandising to appeal to its most emotionally-connected customer segments — and seeing same-store sales growth accelerating more than threefold. Emotion isn’t just for ad campaigns — quantifying emotional connection and activating it across the total customer experience, including merchandising and product placement, will drive more organic growth. Rather than making decisions based purely on convenience, logistics or distributor requests, making those decisions based on what will resonate with your customers emotionally will drive more sales every time. Every store’s customers will have different emotional motivators. If an upscale store’s customers are motivated by a need to feel successful, then those products which speak to that need should be featured. Are they… Read more »
Dick Seesel
BrainTrust

I would add that great merchandising starts with great merchandise. So, are your assortments clearly relevant to your target customer? And are you staying in-stock on those goods and getting them to the selling floor?

Dan Raftery
BrainTrust

Thoughtful comments by all, especially Mark Heckman’s set-up. Pretty much all of the about points are correct and show the complexity of the challenge for the retail store. Efficient shopping vs. linger awhile. Planned purchase vs. impulse. Top margin items or top sellers at eye level. And on and on.

Building on Heckman’s qualitative recommendation, wise retailers find out what shoppers like and dislike about their stores and the competition; then make major changes or small tweaks with the feedback.

Having delivered several projects like this for supermarket operators, one interesting conclusion was repeatedly drawn. Shopper perception does not always line up with fact. So, relying exclusively on quantitative data may not be the best way to attract new shoppers and keep the old ones.

Doug Garnett
BrainTrust
This is all good discussion. And I thoroughly agree with the author’s concern about hyper focus on space availability and fixtures. I’d suggest going a step further — back to the over-arching goal: The only way your store can thrive is if consumers like the store, like shopping there, and like the merchandise they get there. So for example, despite incredible hype about “brand love,” Apple stores are vibrant because people like to be in the store looking at the merchandise. And they like the products that are present. One of the reasons Macy’s is suffering could be that people like me no longer like being in their stores (their merchandise selection has significantly degraded in many areas). Of course, there are a lot of types of “like.” Liking Costco is different than liking the Apple store which is different from liking Dick’s or Target or Macy’s. A long way to say: Fixture and merchandising management should be laser focused on how they contribute to making a world consumers like to shop in. Unfortunately, too many of the trends in retailing distract from this basic concern – either becoming solely cost control opportunity or magical inventions that stand alone without contributing… Read more »
Richard Amari
Guest

Taking this from a really different view, I think there will be experimentation with more “showroom” type of stores versus broad and deep assortments (and the subsequent markdowns they produce). Inventory is expensive and customers now are accepting ordering online and waiting 2 days. Will we see the depth of inventory at the store level shrink such that all colors and sizes are represented, but not in the full combination? Try on your size, pick out your color and create an order to have it at your doorstep the next day (or 2). The inventory productivity would skyrocket while nearly creating a ‘never out’ situation for consumer. But will the customer who took the time to drive to the store be content with not returning home with their choice?

If sales suffer, inventory efficiency won’t save your way out of the problem. But I have to believe there will be tests of this format in apparel, especially in non-core sizes.

wpDiscuz
Braintrust
"When you make illogical choices just to get the shopper to go to more areas of the store, that's when you start making it harder."
"...wise retailers find out what shoppers like and dislike about their stores and the competition; then make major changes or small tweaks..."
"The attention that is paid to layout planning is better spent on influencing product purchases."

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