Why is shelf management getting short shrift in supermarkets?
Through a special arrangement, presented here for discussion is an excerpt of a current article from Frozen & Refrigerated Buyer magazine.
My new favorite statistic comes from Acosta, who figured out there are approximately 14,000 miles of shelf space across 20,000 supermarkets in the U.S. That’s the equivalent of an aisle that stretches from New York to L.A. — five times.
But, according to the report, most grocers aren’t investing nearly enough in one of their biggest, most visible assets.
While manufacturers allocate about $100 billion to trade spending each year, says Acosta, shelf management gets only about $300 million — or about 0.3 percent of the amount given to trade spend. That’s despite the fact only 66 percent of total units sold are not promoted.
More important, those items deliver a disproportionate 85 percent of profits compared to 15 percent from promoted items.
In addition, lifts associated with all promotional tactics continue to decline year after year, falling from 29.8 percent in 2015 to 26.7 percent in 2017. So, “while spending on trade often results in declining returns, ‘fixing the shelf’ achieves a six percent sales lift,” according to the report.
And it gets better.
Although the percentage varies by category, Acosta’s research indicates a whopping 55 percent of grocery buying decisions are made at the shelf, especially in segments like, say, ice cream where consumers might look for the best deal or peruse a set of brands they typically choose from for an interesting or appealing flavor.
The Acosta report also revealed that store brands are getting more shelf space than they deserve — 11 percent more, on average — which can have a negative impact on productivity and lead to out-of-stocks of top-sellers. Indeed, notes the report, 71 percent of category leaders are under-spaced relative to the number of units they drive.
So, why the heck are retailers and manufacturers not reallocating resources toward shelf management? Resistance to change, lack of time, difficulty quantifying the impact, stubborn attachment to old ways of doing things — take your pick. Okay, money probably has something to do with it, too. Although costs have come down, new technologies that support shelf management like video mining, simulated eye tracking and virtual shopping don’t come cheap. But neither does bankruptcy.
- Frozen & Refrigerated Buyer January/February 2019
- Embracing Advancements in Grocery Shelf Management Can Increase Sales for Retailers and Manufacturers, According to New Research from Acosta – Acosta, Inc.
DISCUSSION QUESTIONS: Why do you think grocers spend comparatively small amounts on shelf management? Which technologies hold the most potential when it comes to shelf management?