Mastering the Shopper Experience
In the dynamic realm of retail, an unchanging truth persists: the act of shopping extends beyond mere transactions. Shopping the store is a series of experiences. Like a personalized narrative that unfolds with each step down the aisle. And just as a masterfully woven novel captivates readers, product presentation in-store possesses the power to craft a compelling tale that resonates deeply with shoppers.
Working with our customers, not only do we recognize the importance of the total store experience, but we see time and time again how a well-designed retail shelf can captivate attention, spark curiosity, and ultimately drive greater sales when done right. And much like popular authors meticulously sculpt relatable characters and immersive settings through continuous research, so too can effective shelf design be cultivated through studying the shopper experience over time.
With that said, I would be remiss not to address one central question that remains regarding shelf design: Should design be informed by research conducted at the shelves themselves, or should brands rely on visionary ideas to truly influence behavior?
Grocery’s Current Challenge
This dilemma of either relying on gut intuition or research is a common crossroad brands face when building growth plans. Typically, this confluence evokes Henry Ford’s famous words, “If I had asked people what they wanted, they would have said faster horses”. Yet, as argued in this Harvard Business Review article, Ford’s dismissal of customer feedback turned out to be the Achilles’ heel against rival manufacturer General Motors in the end.
So, what’s a brand to do?
Here’s the exciting revelation: The discourse between visionary shelf design and research-driven shopper insights need not be an either-or scenario anymore. We can now see and study the historical and real-time blind spot of how shelves are truly executed week over week, day by day. More importantly, the natural experimentation that comes with observing real-world scenarios gives us insight into the pros and cons of how particular shopper shelf experiences do or do not drive growth.
That’s why Pensa Systems pioneered a bridge with our leading customers, harmonizing these much-debated approaches with a system that melds real-world evidence with test and control methodologies. Though there are many needs from brands looking for new insights into the shelf, the top three most common shelf design challenges our customers ask us to tackle are:
- Competitive and new item shelf placement monitoring
Why? The inability to accurately assess how owned products stack up against rival offerings at scale hampers a brand’s ability to make informed decisions that could lead to increased sales, market share, and sustained growth for years to come.
- Balancing long-lasting brand impact with limited to no influence over the shelf
Why? Without timely insights, brands might miss crucial real-time shelf signals indicating whether their products, or the competitive set, resonate with consumers and what adjustments are needed to ensure their long-term viability, if any.
- Enhancing retailer relationships as a strong shelf-thought-leader
Why? Retailers expect brands to contribute to the success of their stores by sharing insights and developing product assortment recommendations that feel personalized to the shopper. Without mastery of what works on the shelf, brands risk appearing less invested in the success of their retail partners, but most importantly, this can lead to missed business opportunities.
Real value for real customers
In fact, one of the world’s largest food manufacturers helped us understand that the top three shelf design concerns brands repeatedly face were not necessarily mutually exclusive challenges. By studying challenges 1. and 2., challenge 3 was a tertiary gain.
Initially, we sought to validate the positioning of top brands within a high-turn grocery category across key retail customers. This involved tracking shelf observations over time using Pensa Systems’ positional data. The goal was to identify where high-performing brands with significant influence over sales were situated on the shelf. See Figure 1 for example output.
We also aimed to track where new item innovation was launching over time to help feed the evaluation of category-wide product launch strategies. After reviewing placement strategies across brands and key customers, we also gained insights into retailers and stores that diverged from the average shelf picture. Such deviations helped us pinpoint opportunities or risks, offering a much broader perspective into the overall flow and design of the shelf in execution.
Secondly, we grabbed thousands of historical unique shelf observations and modeled them together with on-shelf-availability (OSA) to help the team understand how many facings different velocity segments needed to maintain best practice levels of 90-95% OSA – meeting real demand when the shopper reached the shelf. See Figure 2 for an example output of modeled results. Getting a fully maximized shelf is the foundation that good design can be built from, after all.
Through this method, we also pulled out SKU-facing recommendations that may even change the long-standing order of product velocity rank between the top two category products. Unfortunately, we see this a lot where sales velocity ranks perpetuate themselves year over year because demand has been based on consumption sales alone. And consumption sales do not include potential or missed sales due to out-of-stocks (OOS).
And lastly, using evidence of what worked in-store and what did not, from a shelf design and holding power perspective, a top tier grocery customer embarked on a 20+ store test with the brand team. When presented with insights supporting an opportunity to reduce OSA volatility coupled with the right design, they resoundingly said, “Let’s test it!”
Eight weeks after the test launch, the test cluster of stores showed only a +/-6.6pt variation in brand performance OSA levels versus a stretch of +/-13.7pts when compared to control stores. This is a reduction in brand OSA volatility by – 48.2% in the test stores when compared to the control set of stores. All top brands are also at or reaching above 90% OSA respectively. Additionally, overall aggregated branded OSA for top brands combined increased by +.5pts in the same eight-week time frame.
As Pensa has learned over time, a positive +.5pt increase in OSA can lead to, at a minimum, an equal amount of acceleration in sales for high-velocity products. We have also seen 7-10X the return in sales by increasing +1pt of OSA for fast-moving products. For a destination food category with multiple fully dedicated aisles, a positive +.5pts in sales translates into millions.
The Path Forward
If you have read this far, you are probably interested in developing plans that boost growth for categories and brands with a clearer path and picture of success. Or you are simply intrigued by more modern ways to drive sales, expand market share, and drive your own product shipments by augmenting legacy approaches. The same approaches overlook the importance of well-positioned products and product-on-shelf availability.
Let me emphasize that while there is certainly an element of artistry that comes with building engaging shelf design, the days of relying on guesswork or simulations that could lead to unexpected outcomes are behind us. By working alongside real-time, syndicated shelf intelligence data, we gain valuable insights that help us create well-informed growth plans for categories and brands. These new methods take the FMCG insights industry to a whole new level, one that’s incredibly effective and transformative.
If you are interested in learning more about how we can help you grow your brands, please contact us.