Every day, across the retail sector, a battle for customers’ attention unfolds on every shelf in every store. It’s a widely recognized fact that 70% of purchasing decisions of the customers are made in-store. Whether it’s an impulse buy, opting for a substitute product, or choosing a specific brand, customers only consider your product when they’re actively shopping.

Retailers are well aware of this, which is why shelf space is a critical battleground where the strongest brands prevail. But how do you stand out in such a competitive environment?

Merchandising plays a crucial role in this fight. It involves the strategic display of products in stores, with CPG manufacturers and distributors using various tactics to attract customers and drive sales. These tactics include organizing racks, arranging products on shelves, and utilizing point-of-sale (POS) materials like price tags, promotional stickers, and wobblers.

However, effectively managing the merchandising process can be challenging. In the following sections, we’ll discuss common merchandising mistakes that can lead to declining sales and a tarnished brand image.

Impact of Planogram Non-Compliance

Brands carefully design planograms to optimize product placement, ensuring that lesser-known products are strategically positioned alongside popular brands, and complementary items are displayed together. However, when stores fail to follow these planograms, it results in inaccurate reporting and misguided conclusions. This can hinder their ability to create effective marketing strategies in the future.

For example, if a shelf is meant to highlight a new product alongside a popular one but is instead misarranged, with an unrelated competitor’s product taking up space, the impact can be significant. Brands might be unaware of this issue and misinterpret lower sales as a failure of their original strategy. This could lead them to shift their focus to other marketing efforts, such as promotions or incentives, requiring different approaches and budgets.

Empty Shelves, Empty Sales

Missing products on the shelf directly results in lost sales. CPG products are quickly purchased, and consumers are unlikely to switch stores just for one product of a brand. If it’s not available at their convenience store, they’ll choose a different brand. For manufacturers and distributors, products must be consistently stocked on shelves.

There are two primary reasons a product might be missing from the shelf:

• Store employees or merchandisers did not restock the product, even though it was available in the store.
• The product is completely out of stock.

Each of these issues requires a unique approach. In the first scenario, incentive programs for employees and merchandisers can help ensure timely restocking. Second, it’s necessary to identify and address bottlenecks in the logistics process.

Analytics Failures

Analytics forms the foundation for all management decisions by addressing many crucial questions. It enables CPG companies to pinpoint the causes behind fluctuations in sales and assess the impact of marketing activities.

Effective analytics hinges on well-managed processes that ensure the brand receives current, accurate, and comprehensive data.

For instance, managers often receive numerous photos and other data from merchandisers. They need to review these materials thoroughly to objectively and accurately evaluate the work performed and consolidate the information. Brands aim to understand how well layouts perform and gauge the market positions of both their company and competitors.

However, manual analysis of these photos for KPI compliance can be labor-intensive and subjective. This often results in delayed or incomplete analytical reports, making it challenging to discern the reasons behind the success or failure of promotions and layout changes.

Inconsistent Merchandising Execution

Consistent execution of merchandising plans across all retail locations is essential for maintaining brand integrity and driving sales. When merchandising execution varies from store to store, it can lead to a disjointed customer experience, diminished brand recognition, and missed sales opportunities. Ensuring that displays, promotions, and product placements are uniformly executed across all locations helps maintain a strong, cohesive brand presence that resonates with customers and maximizes sales potential.

Consider the below scenario,

• Store A follows the planogram perfectly, placing the new product at eye level next to the best-selling item, with promotional signage that draws attention to the new launch.
• Store B places the new product on a lower shelf, away from the best-seller, and forgets to put up the promotional signage.
• Store C has the product in stock but doesn’t display it prominently, leaving it in a less trafficked aisle without any of the planned promotional materials.

As a result:

• Store A sees a significant increase in sales of the new product due to the strategic placement and effective use of promotional materials.
• Store B experiences moderate sales, but far below potential, as the product is not in the optimal position.
• Store C struggles to move the product, with sales barely registering because customers don’t notice it.

Poor POS Placement

POS materials encompass promotional stickers, stoppers, stands, flags, footprints, and other directional signs designed to attract customers’ attention. Often, purchasing decisions are made spontaneously when shoppers encounter an appealing promotion or a product that stands out on the shelf.

For CPG companies, POS materials must be displayed in their intended format. This is similar to planogram compliance, without monitoring the presence and proper placement of advertising materials, brands cannot accurately assess their effectiveness.

Price Tag Blunders

Incorrect price tags are a major frustration for customers and often lead to unpleasant experiences at the checkout. To prevent such issues, it’s crucial to ensure price tags are accurate. Customers need to see the cost of a product to decide if they’re willing to purchase it. Accurate pricing not only helps avoid confusion but also attracts the attention of the target audience.

Addressing these challenges requires different approaches. Incentive programs for employees and merchandisers can be implemented, and bottlenecks in the logistics process should be identified and analyzed.

Conclusion

Getting the merchandising process right can be challenging. Effective management requires a robust setup, oversight of field employees, and continuous analysis of performance.

To streamline this process and avoid common pitfalls, CPG companies turn to advanced solutions. Ivy Eye is a powerful retail management tool with state-of-the-art image recognition technology. This comprehensive tool offers Intelligent On-Shelf Analytics, that can track on-shelf metrics like shelf share and availability in real-time for a 12% boost in assortment availability, enhancing sales opportunities. The solution also features Real-Time Insights, which helps you gain actionable data in minutes with 97% accuracy. Take advantage of critical metrics like availability, planogram compliance, and share of shelf for more intelligent decisions. providing seamless integration into your retail strategy.

With Ivy Eye, merchandisers simply take a photo of the shelf, and the system automatically compares it to the planogram, highlighting correctly placed products, identifying items that need rearrangement, and detecting any gaps on the shelf. The app generates detailed analytical reports based on these images, delivering timely and comprehensive data in near real-time. The analytics feature includes breakdown data and pinpoint bottlenecks, provides high-quality, up-to-date data for better management decisions, and supports increased sales performance. Talk to our expert team and book a demo today.