Shelf space is a retailers biggist asset. Our previous blog was about what brands do to get their products positioned at eye level. It turns out that brands will do almost anything to snatch up prime positioning on shelves and the reason is simple: From our data as well as countless other studies we have found that the eye level shelf makes about one-third of sales from a drop.
In this blog we will be discussing, from a retailers perspective, some of the smart ways which eye level space is used to enhance shopping experiences and support the overall retail strategy. Here are some of the clever ways which retailers use eye level shelf space:
1) Promotional shelf space
Some retailers use eye level shelf space as promotional space which is rented out to suppliers who would like to give a particular product line a boost for a period of time. Retailers don't always rent these shelves out to suppliers and sometimes opt for using the space as promotional space without the rental agreements. Here's why retailers rent promotional space to suppliers:
Consider a retailer which has identified and reserved five eye level shelves as promotional space per store and has a total of 300 stores. If this retailer were to successfully rent out these prime spots for $15 each per day, then the income from the initiative would be significant over a 12 month period. Here's a simple breakdown of how much can be made from selling promotional space to suppliers:
1 year of promotional rental income = [(5 shelves x 300 stores) x $15] x 365 days
1 year of promotional rental income = [(1500 shelves) x $15] x 365 days
1 year of promotional rental income = [$ 22 500 per day] x 365 days
1 year of promotional rental income = $8 212 500
This is not exactly pocket change and it excludes what is made from sales of the actual products. It is enough to fund a host of new initiatives which can add to overall competitive advantage or it could be allocated to the bottom line.
There is a catch, though, executing on this concept is more complicated than what meets the eye and if it's not done efficiently then it may cause damage to your supplier relations. Some of the things which add to the complexity of renting promotional space to suppliers include timely and accurate ordering of additional stock required to run promotions, space management, concluding deals with suppliers, using promotional space according to deals entered into with suppliers and finally invoicing suppliers accurately. Thankfully there is specialised software which can manage the entire process.
2) Push additional sales of house brands
A strong House Brand is seen as just as good regarding quality except they usually cost a little less than other brands. This makes for a good alternative for shoppers while providing retailers with an opportunity to bring more exclusivity into the picture. House brands are always exclusive to the retailer’s store and can’t be found anywhere else. By offering well-priced, trustworthy house brands, the retailer can build customer loyalty because shoppers will end up returning for these exclusive offerings.House brands are positioned alongside other products on the eye level shelf. This gives shoppers a convenient alternative to the product which is being promoted while allowing the retailer to drive additional sales and awareness of its house brands.
3) Drive profitability
When retailers want to boost profitability, they merchandise products which have higher profit margins at eye level to encourage additional purchases of these products. This simple but effective tactic is worthwhile when it's done in a way that it doesn't take from the shopping experience. For example, you wouldn't want to merchandise the brand leader (the product which shoppers are really after) at the bottom of the shelf while pushing an overpriced product at eye level - this would make for a frustrating shopping experience.
4) Highlight cross-merchandising
Cross-merchandising is one of my personal favourites, and we blog about it often. Retailers combine eye level with smart cross merchandising to offer shoppers a solution as opposed to a product while increasing basket sizes. You can read up on cross-merchandising examples here or why you should be cross merchandising here.
5) Showcase new product introductions
People love new products. But new products won't generate any excitement or additional purchases if nobody sees them which is why merchandising new product at eye level can be so useful. Retailers use prime positioning including eye level shelves to show off new product introductions.
Retailers are using data-driven space planning to improve shopping experiences and their return on shelf space. Learn more about our solution here.