As you can tell, this is a KPI most applicable to brick & mortar stores. Where the brand/SKU can be located in a store has an outsized impact on sales.
There are 3 components to this:
- The aisle (where on the shop floor) where your brand can be found
- The arrangement on shelf
- Share of shelf
When consumers walk into the store, they usually have a list of brands/SKUs they’d like to buy. Based on previous in-store experience or based on aisle labels, consumers can then locate the shelves on which these brands/SKUs are stacked. It is key that brands and SKUs are placed in the most intuitive aisle/shelves as it maybe hard for consumers to find it otherwise. If this happens, it is likely that the store/brand may lose the sale.
It is equally important to also place your brands/SKUs on shelves adjacent to complementary products, to encourage impulse sales. For example, the consumer who walks in to buy baking powder to bake a cake, may end up buying cocoa or icing sugar which is placed adjacent to the baking powder. Another example is the instance when a customer buys a dip that’s placed in the crisps(chips)/snacks aisle.
The arrangement on shelf
Important shelf arrangement KPIs are:
- eye-level product placement,
- sequence of products,
- point of sale materials,
- adjacencies (which we touched on in the previous section),
- planogram compliance and
- category separation
In a store, shelf space allotted to a brand is limited. Eye level shelf space is prime real estate in this context as this encourages trial and impulse buys.
Also, given the space constraints, sequence of placement becomes important as this can have a major influence on sales. Many brand owners prefer to place associated products near their ‘hero SKUs’. Eg: placing conditioner right next to their hero SKU, a shampoo. This encourages impulse buying and may encourage a consumer to switch brands eventually.
Point of sale (POS) materials are perhaps the most under-utilised levers. POS materials are usually present on or near shelves in the form of posters or shelf talkers. They may also be free standing display units like the ones seen at at the end of an aisle, close to the entrance of the store or near the tills, where people are likely to make an impulse purchase while waiting to pay. They often introduce a new launch, a promotion, or the value proposition of the hero SKU. Challenger brands usually are great at this.
A Planogram is a detailed schematic about how products will be placed on shelf. There are 3KPIs that relate to this:
- Placement in the right area and with the right sides facing the consumer
- Sequence of placement (i.e. sequence in which the brands’ various SKUs will be placed on the shelf)
Category separation becomes important when there is a key differentiating factor between other brands on the same shelf and yours and even between your own brands. Eg: you may want to place your biodegradable toothbrushes separate from your regular toothbrush SKU.
Share of shelf
This refers to the space allotted to your brand/SKU on the shelf, by the store. While this is part of the planogram, it is important to address this separately. Enough shelf space needs to be bought or negotiated for your brand, so that your product is displayed practically and advantageously.
You may have heard others referring to facings as a key metric here. This is a key part of shelf space and refers to how many products in your SKU face the customer.
As with the ‘P’ from last week’s blog, Product, today’s ‘P’, Placement also assumes availability of the brand/SKUs in store. Here, we are not just referring to presence but also having enough stock in store to meet consumer demand.
If you’d like to get more information on any of these KPIs, discuss this in more detail or understand how availability can be solved for, especially within the context of today’s fast changing world, email me on email@example.com