Hello again, in this article we will talk about is about shelf optimization and the two different -general- point of views existing about it.

You see, the thing is that for the retailer running a business now a days the shelf is the one making the sales and that is why there is so much attention put into it.

1. The shelf is where the customer takes the buying decision, there is less of work for a sales person, now through the knowledge of the customer behavior and psychology the design of the entire store and the product’s organization in it responds to this information to make every inch profitable.
2. The shelf projects and responds to the sales strategy and other features of the store:

* Showing the products selection and the amount of brands and sku’s (store keeping units)
* Showing how deep does every category goes
* Showing the quality of the products selected
* Showing the price strategy and so understanding the target the store has
* etcetera

To have a better understanding of the shelf I will give you some proven facts:

* Products at the head level gets the 9% of the attention from the customer
* Products at the sight or eye level gets the 52% of the attention from the customer
* Products at the hands level gets the26% of the attention from the customer
* Products at the feet level gets the 13% of the attention from the customer

More facts:

* The amount of facings influence the attention of the customer, and that is because he can perceive the uniformity of the particular block of products
* Vertical disposition has the same effect described above

Another fact is that because of the traveling of the customer into the alleys, products placed more into the center get more attention, while products to each end of the alley get less attention.

There are two very general points of view to the shelf, one is of course the point of view of the store owner, which is the retailer, and the other is the point of view of the supplier or the person who sales to the retailer.

Each one of them have a different agenda. To illustrate this very quickly I am going to give you an example:

This are the facts:

1. The market of product “X” has a leader brand.
2. This leader brand has a low profit margin for the retailer, lets say of a 18%
3. This leader brand sell 60% more units of the product than the next selling competing brand and owns the 65% of the market share
4. The second selling brand has a bigger profit margin for the retailer, lets say of a 28%

Now, what is the interest of the supplier:

* He sales more, he wants to be at the center of the alley
* He sales more, he wants to be at the eye level of the shelf
* He sales more, his products should have more facings

And now, what is the interest of the retailer:

* Product “B” gives him more profitability, he wants to sell more of it
* Product “B” gives him more profitability, he wants to give it more of the shelf space
* Product leader “A” sells more but gives him less profit, he wants it to sell less and
* The retailer would like customers to prefer brand “B”

Now lets say you are the supplier and you are making an prepacked offer containing one main product and a second one free. Say the customer is going to save $15.00 buying this offer for $50.00, you are negotiating this offer with your client which is the retailer, and you are telling him you would like it to be placed at the hottest place of the shelf…and what does the retailer says…no it is going to go on the feet level…you are like shocked, you are making an investment to attract new customers, you want to sell.

At the other hand, the retailer is thinking an other way..this is a good product offer, has a great value, it is going to strongly attract the customers attention so it does not need to go on the level of more attention, I am going to place a product that is not selling too well at the eye level so I get to sell that low attractive product and also this great products offer.

How about it!, big contradiction and big negotiation issue. It is the situation of an every day negotiation and the situation that a leader product’s merchandising faces every day. The employees of each side is looking for a different result. One of them wants to sell the other is protecting and looking to get more profit from every inch of the store.

If you have any questions or have a specific issue would like to discuss, please don’t hesitate to contact.

Have great sales.