Content uploaded by Francis Arthur Buttle
Author content
All content in this area was uploaded by Francis Arthur Buttle
Content may be subject to copyright.
Merchandising
by Francis Buttle
104
Overview
The majority of marketing and retailing literature gives only scant attention to mer-
chandising as a means of lifting sales performance. This is a grave injustice when its
power and cost-effectiveness is compared to its promotional kindred—advertising, per-
sonal selling, sales promotion and public relations. This article has been designed to
fill that gap in the literature and promote its more widespread understanding and use.
We
start by putting forward a definition of merchandising and explaining how and
why it works so effectively. Then we discuss its extraordinary power and cost-
effectiveness as a means of ensuring a vital, final pre-purchase exposure of consumers
to persuasive or informative material.
We
then discuss five merchandising techniques—
manipulation of store traffic flow, shelf positioning (location of product categories
and brands), allocation of limited shelf space between competing
claims,
use of point-
of-sale material and the mounting of special displays. We show how these techniques
can be used profitably by both the retailer and the manufacturer.
Merchandising—The Silent Salesman?
A sales volume increase of 400 per cent is just one of many successes attributable
to effective merchandising. Details of this and other merchandising triumphs appear
in a later section of this article. However, this example serves to emphasise the major
point that it can be highly effective. Additionally, merchandising can be cheap and
in some cases can actually cost nothing.
It is worthwhile trying to define the term "merchandising" because a much clearer
picture of its scope will emerge. It is one of a selection of promotional tools available
to both retailer and manufacturer. To communications professionals this selection is
known as the "promotional mix"; it contains advertising, sales promotion, personal
selling, public relations and merchandising.
Where merchandising differs from other tools of the promotional trade is that it
is exercised exclusively at the retail store or other point of sale such as a car yard or
showroom. The definition of merchandising which I prefer—"merchandising is any
form of on-store or in-store promotion other than personal selling which is designed
to trigger purchasing behaviour"—clearly distinguishes our subject matter from all
other forms of promotion. Merchandising has been nicknamed the silent salesman,
Merchandising 105
and, whilst this may appear true, it is equally true of packaging, print advertising
and the vast majority of public relations. Thus, the nickname is not wholly and ex-
clusively appropriate.
Merchandising has come into its own with the advent of self-service and has become
a "scientific art". It is scientific in the sense that universal rules govern merchandis-
ing activity and that shopper behaviour may be modified in predictable ways, but
artistic in the manner in which these rules are implemented.
Some commentators believe that self-service only developed because retailers
recognised the power of merchandising and were prepared to operate with reduced
staffing
levels.
In effect, they claim that merchandising caused self-service rather than
the reverse.
Both manufacturers and retailers are interested in motivating purchase behaviour.
However, whilst manufacturers want to stimulate sales of their own brands and depress
sales of their competitors, retailers are usually more interested in increasing store traffic,
total sales turnover per square metre of floor space (a few retailers calculate sales on
a "volume per cubic metre" basis in the belief that air space should be regarded as
a productive asset), and volume sales per customer.
These two aims may conflict. For example, Brand Z
is
a low-profit line for the retailer
who is therefore not keen to devote much shelf-space to it. The manufacturer, on the
other hand, is likely to press for just that; some manufacturers, realising the impor-
tance of good retail presentation, employ merchandising representatives who not on-
ly sell the product, but, by applying the techniques described later, help to move the
product off the shelves.
The merchandising representative is primarily an educator. His first task must be
to convince the retailer of the value of merchandising by pointing out the lost sales
and profit resulting from sub-optimal stock turns caused by poor merchandising. The
better the stock turn figures, the greater the turnover per square metre of floor space
and the better the retailer's bottom line at the end of the financial year.
The merchandiser's wages are paid by the manufacturer, and, although working
in retailer education, his objective must be to so stimulate stock turn that manufac-
turing and marketing economies are achieved by his employer, thus producing more
profitable trading.
Some multiple stores agree facing (product on display) and stock
levels
with manufac-
turers before each season, and permit merchandisers or sales representatives to main-
tain those levels. Few retailers will allow merchandisers total freedom in their stores.
Above all, merchandisers must not allow their educational role to become instruc-
tive;
the risk of losing customer goodwill is too high.
An American merchandising magazine had this to say about the role of
the
salesman:
"The day of the sales representative as order-taker is gone for ever. In order to
become as sophisticated as other packaged goods industries, where the scientific
principles of marketing and merchandising have become the steadfast rule, new
disciplines must be applied. Today, as well as knowing his product line, the sales
rep.
must be a knowledgeable, if not expert, merchandiser!'[1]
In some industries the sales representative and merchandiser are two different
people. The main advantage of having specialised merchandisers is that expertise can
106 European Journal of Marketing 18,6/7
be nurtured. Further, in cases where sales representatives do a lot of prospecting or
new business selling, they can be freed from shelf-stocking or mounting displays.
However, some retailers are not happy with more than one company representative
calling on them. Many feel that their day is already interrupted too often.
Under the general heading of merchandising come a variety of behaviour-triggering
devices. The list in Table I shows the most common. A full list would be as limitless
as your imagination.
Table I. Merchandising Techniques
Store fronts
Name signs
Dump bins
Open/shut signs
Window stickers
Door stickers
Working models
Stack cards
Leaflets
Price tickets
Paper bags
Store layout
Shelf positioning
Music
Demonstrations
Shelf talkers
Display cards
Crowners
Swing tickets
Packaging outers
Trundler panels
Mobiles
Bottle collars
Brochures
Carrier bags
Posters
Shelf space allocation
Lighting
Balloons
Free standing display units
All these techniques have applications in the non-durable sector of
the
supermarket,
hypermarket and other self-service trade.
Durables are not beyond the scope of merchandising. Televisions can be excitingly
displayed and hi-fis demonstrated; washing machines can be sold with the offer of
free installation and cars can be sold with the assistance of a trial run. Even houses
can be merchandised with a show-home.
Industrial goods are less frequently merchandised, simply because there is more
face-to-face selling. However, exhibitions and warehouse displays, mobile showrooms
and cut-away models do have a role to play in merchandising products like gear boxes
and electric motors.
Most manufacturers of well-known branded consumer goods not only use merchan-
dising. They rely on advertising to pre-sell the product. Occasionally, however, there
are outstanding successes achieved by merchandising alone McVities, the British biscuit
manufacturer, once introduced a range of cakes to the UK market using merchandis-
ing only and achieved sales second to Lyons, which was market leader with 25 per
cent. McVities' share was a highly profitable 15 per cent.
Merchandising 107
How Merchandising Works
There is no accepted body of knowledge about how merchandising influences in-store
behaviour. However, all successful merchandising has two simple factors in common:
visibility and appeal:
• the more visible a product is, the more likely it is to be seen and therefore
bought;
• the more appealing a product is made to appear, the more likely it is to be
purchased.
A manufacturer's salesman may work hard to establish retail shelf domination, but
few retailers are likely to offer just that one brand. Food retailers, unless deliberately
pursuing a limited range policy, generally do stock more than one brand in most pro-
duct categories because they believe that consumers prefer to buy from a selection.
In these circumstances, the manufacturer's merchandising aim must be to increase
the probability that the shopper will buy his brand. He does this by ensuring that
it is more visible and appealing than competitive products. Hence, a customer who
has no brand preference or who chooses from several alternatives will be more likely
to buy that manufacturer's brand.
Why Merchandising Works
The basic reasons why merchandising works have been intimated in the preceding sec-
tion. Some consumers do not have firm product or brand intentions in mind when
they enter a retail outlet, whilst others change their minds after entering the store.
Put another
way,
many purchases are made on impulse. Such shoppers are frequently
highly susceptible to in-store influence.
There is some empirical evidence to support this generalisation. Consumer behaviour
experts, Engel, Blackwell and Kollat, provide figures which suggest that impulse or
unplanned purchasing is commonplace:
"50%
or more purchases are made on this basis in supermarkets, and the unplanned
purchase represents over
33%
of all transactions in variety stores and drugstores"
[2].
As though recognising this phenomenon, many food retailers happily offer and pro-
mote essential everyday purchases like bread, not because of its profit margin which
is relatively low, but because it provides the basis for additional store traffic and subse-
quent impulse buys.
Engel, Blackwell and Kollat also refer to research evidence which shows how 25
per cent to 30 per cent of in-store brand substitution decisions derive from exposure
to merchandising influence. Expert opinion claims that:
"The key to any successful merchandising programme lies in its ability to generate
impulse sales, or sales which the consumer did not plan to make until stimulated
by some point-of-sales material or display. It is stated that between 35% and 70%
of
all
purchases are impulse
sales.
According to POPAI (Point-of-Purchase Adver-
tising Inc.) approximately
67%
of wine and spirit purchases in supermarkets.. .were
unplanned/impulse purchases!'[3]
There seems little reason to doubt that similar figures would apply wherever
sophisticated retail distribution systems have developed. Even the relatively conservative
108 European Journal of Marketing 18,6/7
book trade can benefit from merchandising. In one study,
5000
book purchasers, ques-
tioned immediately after making a purchase, reported their reasons for entering the
bookshop. The results appear in Table II.
Table II. Reasons for Entering a Bookshop[4]
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Reasons
To buy a specific title
To browse
To buy a book on a specific topic
To buy a present
To buy a magazine
Other reasons
Don't know
%
48
23
18
3
3
1
4
100
A total of
31
per cent of book buyers (b),(e),(f),(g) made unplanned purchases. This
is very significant for the book retailer because it shows how buyers are susceptible
to in-store influence. Another
21
per cent of customers (c),(d) were also influenced
within the store to buy the title with which they left. Therefore, a total of 52 per cent
of shoppers were receptive to the influence of merchandising.
To summarise:
(1) Some customers will buy from a category from which they had no prior inten-
tion of making a purchase.
(2) Other customers will have decided, prior to store entry, to buy from a given
product category. They do not make up their minds about brand until they
are in the store. This may be because they have inadequate information about
the alternatives or because they consider several brands to be perfect substitutes.
(3) Some shoppers, having decided before entering the store to buy a particular
brand will purchase a competitive product or will allocate their limited resources
to a brand selected from an entirely different product category.
The Advantages of Merchandising
The two most important advantages of merchandising are as follows:
(1) It is one of the most cost-effective tools of the promotional
mix.
It can generate
surprisingly large sales increases at relatively low cost.
(2) It influences shoppers in the final stages of purchase decision-making—at the
point of sale.
Merchandising 109
Cost-Effectiveness
Merchandising is a very inexpensive tool, particularly if a company is skilled and ex-
perienced in its use. In a company with limited promotional funds, merchandising
can be vital because many of the techniques, such as better shelf positioning and pro-
duct facing control, may involve no additional expenditure. These tasks can be per-
formed by a sales representative whose salary is already being paid. He may have to
reduce his call rate to perform these new tasks, but this is of little consequence if his
overall productivity increases.
Some merchandising does involve a cash expenditure, for instance, shelf
talkers
(pro-
duct information cards attached to the shelf), display backing cards and working
models. However, there is no reason why this expenditure should not be rigorously
controlled. Some of the most effective shelf talkers are not the pre-printed variety,
but blanks upon which messages are hand-printed.
Cost is only one part of the cost-effectiveness equation. Only if merchandising is
effective in producing incremental sales can the claim of cost-effectiveness be upheld.
Evidence concerning the sales impact of the various merchandising techniques is
drawn mostly from the United States. An experiment upon matched sets of super-
markets conducted over a five-month period highlighted the following effects of
merchandising:
(1) Special displays of new health and beauty-aid items achieved between
100
per
cent and 400 per cent more sales than did normal on-shelf locations.
(2) Related-item displays sold as much as
418
per cent more than when the com-
ponent items were displayed separately. A related-item display is one where
logically related products such as cheese and crackers or ice cream and wafers
are displayed together rather than separately.
(3) "As advertised" signs, "cents off signs and product identification signs in-
creased sales by 124 per cent, 23 per cent and 18 per cent respectively.
An experiment to test the effectiveness of end-of-aisle displays in
12
drugstores show-
ed increased sales of between
142
per cent and 217 per cent. End-of-aisle displays are
situated at the end of a row of gondolas where the shopper is normally moving from
one aisle to the next.
Another study audited 734 displays of 360 grocery products in five supermarkets.
Unit sales of items on special display were significantly higher than those in normal
shelf positions.
An experiment
was
conducted in a wide variety of
store
types (supermarkets, grocers,
drug stores, stationers, photographic outlets) on a wide variety of product lines in-
cluding
juice,
cigarettes, liquor, personal care
items,
pens and
cameras.
Special displays
without motion netted a gain of
37
per cent over normal shelf positions; those with
motion netted an average of 83 per cent.
Canned corn which was moved from the bottom shelf to just below eye-level in-
creased its unit sales by 200 per cent.
A macaroni-and-cheese dinner was moved from eye-level to the next-to-bottom shelf
and suffered a 60 per cent sales drop.
A product accustomed to two shelf facings was given four for an experimental period
and experienced a 40 per cent increase in weekly unit sales.
110 European Journal of Marketing 18,6/7
Another product which had four facings and was not moving in sufficient numbers
to warrant the space was reduced to two facings. Whilst sales of that product remain-
ed unchanged, an adjacent product which absorbed the two facings increased 39 per
cent.
The pioneering study into the effectiveness of merchandising was conducted in the
USA in 1959. Five Kansas supermarkets, owned by
J.S.
Dillon
&
Sons were scrutinis-
ed to discover how floor layout and self-service operations could be changed to in-
crease profitability. Amongst the recommendations made were these:
(1) similar products should be located together;
(2) gondolas should use adjustable shelving so that the shopper is not presented
with a visually monotonous rank of merchandise;
(3) space should be allocated to product categories and brands according to their
sales turnover;
(4) the best positions should be offered to the most profitable lines;
(5) gondola ends should be used for displays;
(6) coloured price tickets should be used to help shoppers find product categories.
Influence at the Point of
Sale
Most marketers will do everything possible financially to establish an awareness of,
and preference for, their brands before the shopper enters the store. They try to pre-
sell the consumers so that they will specify their brands at the point of
sale.
Hence,
many firms resort to the advertising and public relations components of the promo-
tional mix to achieve this preference, which is known as consumer franchise. Enlighten-
ed manufacturers are not willing to risk losing the sale in the store but instead supple-
ment their expensive pre-sell with relatively inexpensive merchandising.
This is particularly the case when competition amongst the brands is fierce. The
"Battle of the Brands"
is
just as intense in the store as it is in the media as the follow-
ing quotation about the American canned soup market makes abundantly clear:
"In the beginning there
was
just Campbell's Chicken with Rice
soup.
Today, besides
Chicken with Rice soup, Campbell Soup
Co.
makes Chicken Gumbo, Chicken Noo-
dle,
Chicken Noodle Os, Curly Noodle with Chicken, Cream of Chicken, Creamy
Chicken'n'Mushroom, Chicken Vegetable, Chicken Alphabet, Chicken Stars,
Chicken'n'Dumplings and Chicken Broth. Rather than undercutting one another
on price the manufacturers are locked in a big bucks battle to see which can spew
out most new products, advertise and promote the most heavily, and tie up the
most shelf space!'[5]
But the benefits of merchandising need not be experienced only by the big firms. It
is equally important, if not more
so,
for smaller manufacturers and retailers who can-
not afford to employ heavy media advertising in their promotional strategy. If they
do not merchandise well, then they are placing their commercial destiny almost en-
tirely in the hands of brand loyal shoppers. It is in the store that the Davids can fight
it out on almost equal terms with the Goliaths. The word "almost" has been judiciously
Merchandising 111
used because some heavyweights have been known to apply considerable pressure to
prevent effective merchandising by minor competitors. This is particularly so where
the merchandising equipment is owned by the manufacturer instead of the retailer,
as in the case of freezers and cool cabinets.
The retailing scene is in constant metamorphosis; manufacturers are well advised
to adapt their merchandising techniques to these changes. For example, there is the
recent advent of the discount store which will only display merchandise in the outers
in which it is delivered. In order to keep their costs to a minimum, they will only cut
cases or break open pallets. An appropriate merchandising response would be to
develop easily cut and stacked outers featuring specially designed graphics incorporating
a selling message or product information.
Merchandising Techniques
In this section, we give more detail about the five most powerful forms of
merchandising:
• manipulation of store traffic flow
• shelf positioning
• space allocation
• point-of-sale material
• special displays.
Manipulation of
Store Traffic
Flow
Store traffic is the term used to describe the movement of shoppers in the store bet-
ween the times of entry and departure.
In the USA and, to a lesser extent, Europe, Australasia, Africa and Asia, stores
are specifically designed to guide shoppers though as many areas of the store as possi-
ble.
There are three main reasons behind this:
(1) customers who shop in an entire store buy far more than those who shop in
only selected areas;
(2) the longer a shopper spends in the store, the greater the purchase volume;
(3) traffic tends to concentrate on the store perimeter if not manipulated by the
store.
The following example of store redesign shows the benefits of traffic management
quite dramatically. Before redesign a liquor store was planned as in Figure 1.
Beer and spirits were stocked in the quick service area. Beer was stacked on rollers
and was requested
by
the customer at the quick service checkout. Spirits were stacked
above and alongside the rollers. Liqueurs, table wines, sherries and non-liquor lines
such as nuts and snacks were stocked on gondolas in the self-service area of
the
store.
An analysis of sales dockets and observation of traffic flow revealed that a large
percentage of customers was buying beer and spirits only. Traffic would enter through
the doors in the quick service area, buy the beer and spirits and pay at the quick ser-
vice checkout.
112 European Journal of Marketing 18,6/7
A large number of customers were not being exposed to some 90 per cent of the
floor area and the lines carried, thereby severely reducing the opportunity for impulse
sales.
The required change was simple. The beer fixtures were immobile but the spirits
were moved to the back of the store in order to draw traffic past the other product
categories. The floor layout was changed to that shown in Figure 2 and traffic flow
was also improved by removing one checkout and closing up one door.
The effect of these changes was an upturn of 6 per cent in sales per customer.
The solution of a store layout problem begins with balancing the demands on finite
space of both selling and non-selling areas. Non-selling areas incorporate office,
despatch, storage, checkout, bagging and aisle space although some experts consider
the last three to be integral parts of the selling area.
In starting with a new building, the problems are easier to solve; real skill is needed
by operators in existing premises where modifications to the shop floor are impossi-
ble.
Lighting, power points, pillars, uneven floors, varying ceiling heights, doors and
stairs are all constraints.
Maximisation of selling space means that retailers must rigorously control stock
levels in the store room. Similarly, window backs and counters may need removal. In
Merchandising
113
some stores counters
and the
space behind them occupy
as
much
as 40 per
cent
of
available selling space.
Retailers
who
build their
own
stores
are
well advised
to
plan
the
optimal internal
layout
and
then erect
the
walls around
it.
Ideally, such
a
store could have separate
entry
and
exit doors
so
that shop front congestion, which
can
discourage some shop-
pers from entry,
is
reduced.
The
two-door principle also permits better traffic
circulation.
The two main considerations
in
layout
of
the selling area
are
aisle design
and
mer-
chandise location.
Aisle Design
Aisles must
be
designed
for
maximum exposure
of
the shoppers
to the
merchandise.
Traffic movement studies
can be
used
to
show
how
shoppers move around
the
store.
A "shopper-tracking study"
has
shoppers unobtrusively followed around
the
store
with
an
observer noting
the
route followed
and
where movement stops
for the
pur-
chasing process
to
begin.
The
purchase
may
begin with
the
scanning
of a shelf, or
by picking
up a
product
or
questioning
an
assistant. Studies like these show which
areas
of the
store receive little exposure.
The conventional layout
of a
supermarket is
the
grid pattern. The shopper general-
ly enters
at one
corner
and
moves
up and
down
the
aisles which
run in
parallel.
The
longer
the
store
the
more likely there
are to be
cross aisles. However, these diminish
traffic circulation
and,
therefore, product exposure. Continuous aisles promote
traf-
fic flow, exposure
and
sales.
Figures
3
and 4
show
the
"before-and-after" floor plans
of a
small neighbourhood
supermarket. Before
the
change
in
layout
the
central island gondolas were
not
well
patronised;
the
categories which were located
on the
inside shelving moved very slow-
ly.
Additionally, the entry/exit was often congested
and
the merchandise located behind
the hinged door sold poorly.
114 European Journal of Marketing 18,6/7
With the loss of half a day's sales as the shop closed for alterations, a new gondola
was installed in the central area. This opened up the shop making the merchandise
much more visible from the street. The shop front was altered to induce a clockwise
traffic flow. Two retractable doors were installed and the checkout located between
them. This gave the shop proprietor complete control over the movement of shoppers
once they had entered. The result of these inexpensive alterations was a net gain in
turnover in the first year of 11 per cent. A portion of this was due to increased
patronage; the balance was earned by greater sales per shopper.
A variation of the grid design is the angular layout shown in Figure
5.
Minor aisles
are angled off the main artery.
Where the physical limitations of the store prohibit good traffic flow, the angular
layout enables a shopper passing down the main artery to see more of
the
merchandise.
Merchandising 115
However, in some neighbourhoods where theft (euphemistically included in shrinkage
figures) is a problem, this variant gives the potential thief ample opportunity to exer-
cise his skill.
Aisle widths need not be fixed. Indeed, there are sound reasons for variance. The
seasonality of the merchandise and the height of the gondolas flanking the aisle are
two main considerations. Winter lines such as gloves and Christmas trimmings are
often located alongside wider aisles during the season. Wider aisles are especially im-
portant in waiting
areas,
particularly checkout and bagging areas or when the customer
wishes to compare alternatives, as is the case in butchery departments.
Shoppers do not like to be dominated by stacks of merchandise in tall gondolas.
It makes them feel small and uncomfortable. Wider aisles overcome this problem.
High gondolas also increase security problems; since they obscure vision theft is like-
ly to increase. In any event, lower gondolas let the shopper see more of the store and
encourage impulse
sales.
The minimum width in supermarkets is two trundler widths
plus an allowance for overtaking, about 1.75 metres.
Pillars represent psychological barriers which can stop shoppers passing down an
aisle.
It is better to incorporate them into displays. Where gondolas cannot be used
to direct traffic, barriers may be of value.
Department stores traditionally have not attempted to route shoppers scientifical-
ly. The "department scatter" approach, which is still dominant, may well encourage
browsing, and, providing the merchandise is located according to the principles ex-
plained later, there is no reason why a high level of sales per customer should not
be achieved.
A recent British department store development employed a loop walkway on which
shoppers were routed past the entire stock of merchandise and were assailed
by
displays
on either side. The walkway linked the escalators and staircases so shoppers had no
way of avoiding exposure.
Merchandise
Location
The prime issue in locating merchandise is the amount of pull a line exerts. "Power"
or "demand" lines attract customers to the store. They are often perishables such as
dairy products, or sugar, bacon, biscuits, cheese, flour and cereals which many shop-
pers buy every trip. "Loss leaders", which are sold at below cost and specials such
as temporary price deals are also demand lines.
Strong traffic stimulators such as these should be located so that shoppers must
walk past other lines. The general tendency in supermarkets which are not laid out
according to these principles is for customers to shop in the perimeter. Known as "wall-
shopping", it is encouraged by locating demand lines along the wall, Unfortunately,
this is not helped by equipment maintenance requirements. Cool cabinets, whose con-
tents are often demand lines, are usually located along the walls so that repairs can
be carried out without interrupting traffic. In addition, many cool cabinets are load-
ed from the rear.
Wall shopping was the subject of this remark by a major American liquor retailer.
"Wine is an enormous impulse item for us. If you hide wine it won't sell. In four
separate tests in four different states,
we
found that every time we moved wine from
116 European Journal of Marketing 18,6/7
an interior aisle location to a perimeter aisle location, sales improved materially.
The overall result was a documented sales increase of
93
per cent within a 120-day
period!'[6]
Some items such as silverware and china, which require deliberation before purchase,
are better located away from the main arteries. Otherwise, congestion occurs.
As more and more households acquire freezers, space devoted to frozen foods in
supermarkets will
increase.
Vertical freezers have the same restocking problems as cool
cabinets and are, therefore, generally located along the
walls.
Chest freezers, if located
in central aisle areas can open up a store making adjacent gondolas more visible and
creating a more spacious feeling. They can also be placed along the windows so that
passers-by can see into the store and get a feel for the type of merchandise carried.
Some areas are habitually poor sales producers. Corners are notoriously bad, as
are blind gondola ends (those which the shopper does not pass as turning into a parallel
aisle).
However, these areas, appropriately known as coffin corners and dead ends,
can be used effectively. Demand lines or special displays can be placed there, with
attractive streamers, mobiles or public announcements used to draw shoppers.
Multi-storey stores face special problems. Traffic tends to decrease with altitude.
Merchandise with limited
appeal,
non-impulse
lines
and demand
lines
should
be
located
on the upper floors.
Impulse lines should be where the population is densest, or the lower levels. The
department store development to which we referred on
p.
115
was a three-storey block.
Fashion items, which are huge impulse lines, were located on the ground floor. On
the first floor were home and housewares; in the basement were men's and children's
clothing.
Shelf
Positioning
There are two aspects of shelf positioning which have a bearing on sales. These are:
• positioning of product categories;
• subsequent positioning of brands.
Positioning of Product
Categories
Shelves should be stocked according to some method in which all the brands in a
category are grouped together in order to help shoppers make comparisons. There
are two basic
ways
in which this can be achieved—either by horizontal or vertical posi-
tioning. In horizontal positioning, individual sizes and brands within the category
are positioned along the length of the
shelf.
In vertical positioning, they are stacked
on all levels of the gondola.
Of the two, vertical positioning is certainly the better from the shopper's viewpoint
because he can find the brand he wants without having to walk the length of a gon-
dola. The retailer also benefits from vertical positioning. Firstly, he
is
still able to posi-
tion demand categories in such a way as to draw customers' attention to other lines
and induce impulse
sales.
Secondly, he can position the most profitable sizes and brands
at eye level in order to sell more.
Merchandising 117
Customers tend to look at eye level first and, if they do not see what they want,
they will then scan the shelves above and below. Eye level positions are hotly con-
tested by merchandisers. Retailers often like to put larger or more profitable sizes and
brands at eye level.
What is eye-level for one customer need not be eye level for all. Sweets and toys
aimed at the child do not sell well when stacked five feet above ground level. Super-
market operators will cleverly place chocolate novelties on the lower shelves of gon-
dolas so that children pick them
up.
It
is
axiomatic that touch and sight sell children's
lines.
For this reason, many checkouts, where bored and fractious children wait with
their harrassed parents, have a low-level display selling novelties.
The depth of upper and lower shelves often means that merchandise at the back
is not visible to the passing shopper. Wire racking overcomes this to a degree as does
the use of gondolas which slope away from the shopper. Figures 6 and 7 show designs
for both island and wall gondolas which let the shopper see the merchandise on non-
eye-level shelves.
An alternative is to angle up lower shelves and to angle down upper shelves.
Some retailers prefer to rotate both product categories and brands to encourage
shoppers to search the shop for the items they have on their shopping
lists.
One super-
market operator had this to say:
118 European Journal
of
Marketing 18,6/7
"I believe
in
constant rotation
of
brands
on the shelf. If a
customer buys
the
same
brand every week from
the
same
shelf, he
doesn't
see
anything else
in the
store.
I constantly rotate brands
on the
shelf
so
that
the
customer
has to
look
for his
brand. This increases
the
impulse factor.
I
even rotate entire categories.
I
want
the
customer
to
walk around". [7]
This retailer
is the
exception rather than
the
rule. Most believe that there
are
other
ways
of
persuading shoppers
to
shop through the entire store without presenting them
with this sort
of
frustration. Indeed, most actually flag
or
signpost the main categories
so that they
can be
conveniently located.
Positioning
of
Brands
The fact that some brands
are
more popular than others
can be
used
to
advantage
by both retailer
and
manufacturer.
(1)
The
retailer
who
places
a
sought-after brand
on a
non-eye-level shelf causes
exposure
to
other brands.
The
customer wanting this brand starts
at
eye level
and continues
to
scan
the
shelves until
he
finds
it.
Many retailers, however,
prefer
to
make
hot
brands even hotter
by
stocking them where visible
and at-
tractive.
A
high-margin, popular line
is
undoubtedly better
at eye
level.
(2)
The
retailer
can
place
a
popular brand next
to an
overstocked,
and
therefore
cost-incurring, slower mover. This guarantees
a
higher level
of
consumer
ex-
posure
to
the product. Brand leaders should always be placed by the shopkeeper
next
to
high-margin lines
to
encourage impulse sales.
(3)
The
manufacturer
of a
slow mover will frequently
try to
persuade
the
retailer
to position
his
product next
to a
popular brand
so as to
gain exposure.
Space Allocation
Many manufacturers
and
retailers believe that shelf space should
be
allocated bet-
ween brands
in
proportion
to
their sales.
For
instance,
a
leading preserves manufac-
turer with
a
major share
of
the glass-packed preserves market exhorted retailers thus:
"At least 50%
of
your shelf space should
be
allocated
to
glass pack jams
and
mar-
malades:'
Not only
do
some marketers claim that shelf space should equal market share
but
that forward stocks should also equal market share. This position
is
primarily held
by market leaders,
of
course,
who
want maximum exposure
for
their brand
and as
little exposure
for
pretenders
as
possible.
Brands with lower market share argue, convincingly, that space should be allocated
according
to
future sales potential,
not
according
to
past sales achievements. Future
sales potential
is
generally greater
for new
brands which
are
attacking
the
position
of
the
leader.
However, retailers
do
reap considerable benefits from allocating space according
to market share.
If
they
do not, the
consequences
are:
(1) inefficient use
of
staff
who
spend too much time re-stocking shelves with fast-
moving items instead
of
erecting displays, selling
or
being more productive
elsewhere;
Merchandising
119
(2)
a
lower unit volume sales return
per
metre
of
shelf space because slower mov-
ing lines
are
occupying
too
much space.
However, there
are
valid reasons
why
this principle should
not be
adhered
to.
(1)
A
strict sales criterion
may
prevent
a
product
or
brand from having even
one
facing.
(2) Some shoppers insist
on
being offered
a
selection.
(3)
The
fastest selling lines may
not
produce the best profit
for the
retailer. Slower
movers with higher margins
may be
better.
(4)
For
various reasons
a
retailer
may
want
to
push
a
particular line.
One
way
of
doing this is
to
increase its facings. Although
the
point
of
diminishing returns
is undoubtedly reached
at
some
time,
the
sales
of a
product generally increase
with facings.
The manufacturer's merchandising staff fight
for
increased facings
for
this very reason.
They must convince retailers that there is more profit
in
allocating space
to
their own
brand
at the
expense
of
competitive brands. Many merchandisers capitalise
on a
weakness
of
some retailers who are
not
adept
at
shelf management. Slow-moving lines
tend
to
drive
out
fast-moving lines. This occurs because shop staff tend
to
fill up shelf
space with nearby
products.
If
this
tendency
is
not
carefully policed, then slower moving
lines gradually creep into more
and
more spaces
on the shelf,
causing lost sales.
Merchandisers
who
want increased facings only need
to
identify which lines fall
into this category
and
suggest
to the
retailer that they reorganise
the shelf. The
result
is increased facings
for
their
own
brands
and
reduced facings
for
competitors.
Point
of
Sale
There is huge variety
of
point-of-sale
(POS,
also known as point-of-purchase
or POP)
materials
of
which
the
most popular are shelf talkers (materials attached
to the
shelf
bearing
the
brand), window banners, price tickets
and
posters.
There are three main purposes
of
this
material. First, many marketers use it to restate
their advertising message
in the
store. This extends
the
impact
of the
advertising
to
the store
and may
recall
a
sound
or
visual element
of the
advertisement
to the
mind
of the shopper. Second, POS
is
used
to
attract
the
shopper's attention
to a
particular
item. Bearing
in
mind that
a
shopper may spend only
ten
minutes
in a
store
and
that
there may be over
6,000
lines
on
the
shelves,
POS
needs
to
stand
out
from the sensory
noise level
in the
store.
A
recent innovation
has
retailers offering manufacturers
the
opportunity
to
make announcements over their public address systems. Third,
and
perhaps
the
most important role
for
POS,
is
to
provide
a
motive
for
making
a
purchase.
American researchers have investigated the power
of
signs
at the
point
of
sale.
There
is strong indication that signs advertising
a
price special cause sales
to
increase
by
close to 30
per
cent. The increase
in
sales due
to a
sign stressing
a
benefit is somewhat
less,
at
17
per
cent.
At
regular price, price signs increased sales
by 66 per
cent, while
benefit signs moved them
up by
27
per
cent.
The
research took place
in
department
stores[8].
120 European Journal of Marketing 18,6/7
Signs can only do their job if they are visible. They must stand out from the mass
of visual stimuli. Size, location, colour, movement and illusion help to attract the eye.
Some of the more common abuses of POS are:
(1) leaving the material too long, so that it becomes a fixture and loses visibility;
(2) leaving the material in position when it is torn, soiled, sun-bleached, damp
or mildewed which is hardly good publicity for the product or store;
(3) leaving the material in position when the occasion for which it was used has
passed;
(4) using too much POS so that impact is lost.
Special
Displays
A special display is an arrangement of a quantity of merchandise separate and apart
from its normal location on the
shelf.
The aim of special displays is to attract the
attention of shoppers and to stimulate impulse purchases. According to the American
Point-of-Purchase Advertising Inc.'s survey of 7000 shoppers in mass merchandise
stores,
30 per cent made unplanned purchases. Half of these were caused by exposure
to displays—this is clear evidence of the power of display.
The two most popular types of packaged food display are case stack displays and
bin displays.
•
Case
stack
displays.
The product is left in the outer and the sides of the outer
cut away. A message card is generally placed over the display.
• Bin
displays.
The bin may be cardboard, plastic or metal. It is assembled by
a salesman or shop assistant who loads the bin with product and erects a
message card.
Each type has advantages. The case stack is more versatile and capable of translation
to the needs of differing outlets. A small display of one cut outer might suit a small
outlet. A palletised load may
be
cut in a discount store. The bin display requires more
space as a rule.
Retailers themselves may not be able to install the types of self-selection fixtures
so readily provided by many manufacturers—the L'eggs stocking merchandiser is an
example—simply because of cost. Manufacturers order in economic quantities.
Merchandisers (the same name is used to describe both fixture and person) allow
manufacturers who have attained maximum penetration of retail outlets to obtain
additional off-shelf sales. The L'eggs example is an exception; the merchandiser was
offered to the trade at the product launch. To persuade retailers to use these fixtures,
marketers will often feature them in media advertising.
Despite the fact that they complain of lack of floor space, retailers generally find
merchandisers to be good impulse sales generators because of the heightened visibili-
ty they afford the product.
Four main principles govern the use of special displays.
(1) Displays should be located where most people pass, slow down or stop. Loca-
tion is very important. Normally, displays sell well at gondola ends.
Merchandising 121
(2) The display must attract the shoppers' attention. The same factors which draw
attention to point-of-sale material also work for
displays.
However, three aspects
are worthy of special mention—size, message card and lighting. Big displays
are more successful than small especially if message cards are used to spell
out a selling message.
Lighting is important even in normal circumstances. On wall gondolas, in-
tegral overhead lighting can be used fully to illuminate the merchandise. In
aisle positions gondolas are more often illuminated by strip lighting located
over the aisles. Were the strips placed directly over the merchandise, shadows
would be cast over the lower shelves.
Some stores, especially those carrying up-market
lines,
such as delicatessens
and high-fashion clothing
stores,
use a general low lighting level and subsidiary
lights for interest areas.
(3) The product must be easy to pick up and look as if it is selling well. If the
display
is
full, neat and tidy it is unlikely to move merchandise. This is because
many customers believe the product
is
not selling well or feel reluctant to disturb
the order. Therefore, astute retailers leave a few gaps to give the impression
that the line is popular. These empty spaces are called "starter gaps".
Equally, it is a good idea to tumble the contents of bin displays. Experience
shows that the easier a product is to pick up the better it will sell. The day
of the pyramid of perfectly placed product is past.
(4) Displays should be frequently changed; otherwise they lose their dramatic ap-
peal and become fixtures.
Non-food displays lend themselves to a little more variety.
A vignette, a scene showing the product in use, often with related products, is fre-
quently used to good effect by furniture retailers. A display of kitchen units in a con-
ventional kitchen layout, together with appliances, cupboards filled with dummy packs,
wall-mounted spice racks and dishes on the sink drainer gives added interest to the
display and gives shoppers an idea of how the units might look in their own home.
Self-selection racks, used by clothing retailers, emphasise the choice available to
the shopper and draw attention to the variety of ways in which separates can be
combined.
Related-item displays are frequently used by department stores. Instead of display-
ing men's toiletries only in the cosmetics department, they are also on display in the
menswear department together with shoes, socks, nightwear and so on. It is sometimes
known as the 'shoppe' approach and it is valuable in moving otherwise slow-selling
lines.
Even a supermarket shelf
is
amenable to related-item displays if
use
is made of
shelf
extenders and J-hooks. Small tubs of dye for use in washing machines have been
displayed on narrow racks attached to the front of
shelves
carrying detergents. J-hooks
have been used to associate tin openers with canned fruit, tea strainers with tea leaves
and pets' toys with pet food.
Non-food items also lend themselves more to item and assortment displays. An item
display, where a single specimen of a product is put on isolated display can dramatically
emphasise its uniqueness. Assortment displays, which are often used by luggage and
122 European Journal of Marketing 18,6/7
footwear retailers emphasise breadth and depth of variety. These are important con-
siderations for shoppers who like to choose from an assortment as is normally the
case with shoes.
A variation of the in-store display is the window display. These are the "eyes of
the store" looking out on the shopper. The main objective is to attract pedestrian or
car-carried traffic into the
store,
or "to make the passer
buy".
This
is
commonly achiev-
ed by displaying new products where novelty arouses interest or by posting bills an-
nouncing loss leaders or specials.
Window dressers always attempt to attract the pedestrian's attention and arouse
his curiosity. To do this they need the skills of both lighting technician and stage
designer. They need not regard the shape of the window as a major constraint since
masking tape, paint, drapes or blinds can be used to obscure parts of the glass. The
major item, such as a product on temporary special, should serve as the focal point
and act as a guide for positioning peripherals. The designer should bear in mind the
type of shopper the store
is
targeting, use of colour and movement, harmony of shape,
the symmetry of the display, lighting intensity and location, the depth of the display
area and topicality. For instance, a display could be seasonal or tie in with local events.
Attempts to measure the power of a dressed window can be made. Some retailers
count the number of pedestrians who stop to look; others go further and count the
numbers entering the shop having previously looked in the window.
It is worth noting that not all shops have window displays. As mentioned earlier,
some food retailers prefer to let the passer-by see right into the store. Other retailers
have fully retractable doors. This is most common in fresh fruit and fish retailing,
although some clothing stores have also adopted the idea.
The Merchandising Plan
An organised approach to merchandising calls for a plan. Whilst the contents of each
plan will vary according to the needs of the planner and his organisation, there is
much to be said for adopting the format I suggest below. At least it forces the retailer
to examine his merchandising problems and adopt a systematic approach to their solu-
tion. The plan is a 10-part document.
(1) Fact gathering:
(a) sales performance by product category;
(b) stock turn rates;
(c) traffic flow pattern;
(d) profit contributions by product category.
(2) Identification of merchandising problems.
(3) Objectives for the coming trading period.
(4) Merchandising techniques to be used.
(5) Timing of implementation.
(6) Departments, staff and material suppliers involved.
(7) Training requirements.
(8) Likely competitor reaction.
(9) Budget.
(10) Means of evaluation.
Merchandising
123
Review
(1) Merchandising is
any
form
of
on-store
or
in-store promotion, other than per-
sonal selling, designed
to
trigger purchasing behaviour.
(2) Merchandising works because
it
makes merchandise more attractive
and
visible.
(3) Estimates show that about half the items bought in supermarkets are impulse
buys.
(4) Merchandising has two main advantages—it is cost-effective
and it
influences
the shopper
at the
point
of
sale.
(5)
The
five
main merchandising techniques
are
manipulation
of
store traffic flow,
shelf positioning, space allocation, point-of-sale material
and
special displays.
(6) Store traffic flow should
be
managed
so
that shoppers
are
exposed
to the
largest proportion
of the
selling area
as
possible.
(7)
The two
prime considerations
in
planning store layout
are
aisle design
and
merchandise location.
(8) Demand lines should
be
used
to
draw traffic past impulse merchandise.
(9) There are two forms
of
shelf positioning—horizontal
and
vertical. The latter
is more effective.
(10)
The two
dimensions
of
shelf positioning
are
product category
and
brand
locations.
(11) Many retailers believe that shelf space should
be
allocated
in
proportion
to
market share. This
is not
necessarily
the
most profitable.
(12) Special supermarket displays
are
most frequently
of two
types—case stack
displays
and bin
displays.
(13) Other forms
of
display
are
self-selection racks, item displays, assortment
displays, vignettes
and
window displays.
(14) Displays work well when traffic
is
slow, where
the
product
is
legibly priced,
easy
to
pick
up and
where attention
is
drawn
to the
display.
References
1.
Impact Two,
Vol. 1,
March
1979, p. 1.
2.
Engel,
J.F.,
Blackwell, R.D.
and
Kollat,
D.T.,
Consumer
Behaviour,
Holt, Rinehart, Winston,
3rd
edition, 1978,
p. 483.
3.
Impact
Two,
op. cit., pp. 1-2.
4.
"In-store Survey
of
Book Purchasers", Massey University Market Research Centre,
1978.
5.
"The
American Nightmare:
80
Varieties
on
Every
Shelf",
Dominion,
16 May 1979.
6. Impact
Two,
op. cit., p. 7.
7.
Ibid.
8. "Sales
Go Up
With Signs",
Retail
News, October
1979.
