CATEGORY MANAGEMENT
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How Are Shoppers Reacting to Endcap Displays?
In-store marketing is more important than ever. New research tools are
providing extraordinary new insights into the effect and the value of endcap
displays on the path to purchase.
In the larger sense, as the in-store shopping experience has grown in importance, so has the imperative to understand the manufacturer’s ROI on the dollars being spent within the store. Most manufacturers have been able to measure certain aspects of their in store expenditure from Nielsen and IRI reports on sales lifts from features and displays. But they have lacked a more granular understanding of various merchandising options at retail.
The retailers themselves have lacked a holistic understanding of the relative effectiveness of specific merchandising techniques on the overall shopping experience and most importantly the effect on market basket size. More recently as center store sales have declined, retailers have become much more concerned about understanding how they may merchandise brands and categories to drive overall market basket value. Often this means finding ways to drive shoppers down more aisles into the center of the store.
Until now, manufacturers and retailers have lacked a holistic understanding of the complex interaction between brands and categories and various in-store merchandising alternatives. Which brands or categories to merchandise where in the store can generate the optimal market basket value?
New research suppliers have arisen to address these issues. Among the most advanced of these research suppliers is VideoMining. Its technology captures the actions of every shopper in the store during the shopper’s entire trip by multiple high tech digital cameras placed unobtrusively in the ceiling of the store. The cameras are not part of the store’s security system and the shopper behavior is in no way affected by the cameras themselves. The activities of each shopper are analyzed by patented digital analytics enabling the system to accumulate enormous masses of behavior and reduce it to metrics discussed below.
The shopper response and therefore the likely ROI of endcap displays varies dramatically across several key variables. Manufacturers need to understand the relative effect of these variables on their brand endcap displays in order to maximize the return on their in-store expenditures.
For their part, retailers need to understand the overall effect on market basket and total store GM$ based on the multiple options they have in the brands, categories and in-store placement of end caps. At this point, no one understands precisely how much money retailers are leaving on the table because they do not understand all of the response variables. What we can conclude is that the retailer would have to make no additional capital investment or incremental operating expense to realize the upside from an optimized endcap display strategy. All it requires is an investment in research to establish response variations relevant to the retailer.
Here are the major findings that drive the conclusions outlined above:
Endcap response varies dramatically by location in the store quadrant. Back right/back left versus front right/front left. Manufacturers who do not reflect this understanding in their merchandising negotiations with retailers will probably not optimize their shopper marketing investment. Conversely, retailers who undervalue the prime endcap locations or sub-optimize numerous locations will not generate the highest return on their available space. Today everyone is making judgments based on years of unquantified experience rather than hard data.
Endcap response varies dramatically by category and of course by brand and offer. In some categories the extra movement generated by the brand off the endcap display itself simply cannibalizes the main aisle sale of the total category. This suggests manufacturers should review which of their categories they seek to invest their in-store shopper marketing dollars. From a retailer standpoint, this finding suggests that some categories should almost never be put on endcap display because other categories will generate a larger ROI from this valuable space.
The placement of the endcap display relative to the main aisle of the item on display has varying effects by category. In some instances, it appears the endcap reminds shoppers to go down the upcoming main aisle. In other cases, placing the display after the main aisle seems to generate a subpar response. This is a critical issue for both manufacturers and retailers because of its implications for center store visitation and center store volume which has been in decline in the grocery channel.
Taken as a whole, these findings and conclusions suggest retailers need a mathematical model of endcap financial effectiveness and efficiency (ROI per sq. ft. of display space). This model would seek to establish at a minimum the effect on total category revenues from an endcap on various categories/brands/offers/locations in the store.
This essay was adapted from the white paper, Revolutionary In-Store Insights: Endcap Displays and the Shopper, from the Category Management Association.
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