How grocery stores are swaying shoppers

 

Up and down supermarket aisles, tranquil rows of perfectly placed products reflect calculated deliberations aimed at getting shoppers to spend more.

Take cereal. Research published in the Journal of Environment and Behavior found kids’ cereals tended to be placed on lower shelves where they are more eye-level with children. It’s just one example of the tactics food companies and supermarkets use to sway what people put in their carts.

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Here are some others:

Migrating candy

The perimeter of the supermarket is considered prime real estate, with health experts regularly urging people to stick to the sections where they can find fresh produce, meat and dairy products. Now, candy and cake mixes are migrating to the outer loop as well.

American grocery chain Winn-Dixie experimented in late 2014 with revamping the candy aisle to address declining sales for those items and others generally located in the centre aisles. The project was developed with Hershey and shifted bags of candy and chocolate in colorful displays to the front of the store by the checkout, where they would be harder to avoid and could tempt impulse buying.

Winn-Dixie has since ended that program, but its parent company Southeastern Grocers didn’t give up on the concept. After a test earlier this year, the company started putting “buy one, get one free” bins in highly trafficked areas to showcase products often found in the centre of store, like cake mixes and dinner kits.

Hershey also said other stores had adopted elements of the Winn-Dixie test. The chocolate maker said standalone displays with its Reese’s and Kisses products were in nearly 900 U.S. stores across a variety of retailers including supermarkets, with plans to introduce similar concepts later this year in additional stores.

It’s not just chocolate that’s migrating. Earlier this year, Kellogg ran a program with Meijer supermarkets to place cereal in the produce section. The company said it is “evaluating opportunities” following the test.

Art of the sale

If there’s a tower of cookie packages on sale, it’s unlikely to be because the supermarket miscalculated the demand for Chips Ahoy that week. Promotional displays and discounting in stores are often funded by suppliers like Oreo cookie-maker Mondelez or PepsiCo’s Frito-Lay.

General Mills, which makes Cheerios and Nature Valley granola bars, said last month its sales were hurt by Walmart’s decision to scale back on in-store displays in the U.S.. ConAgra, which makes Banquet and Healthy Choice frozen meals, also said its sales were pinched by its decision to tighten “trade spending,” the industry term for such in-store promotions.

Manufacturers can have tortured relationships with trade spending. Some say it’s an unhealthy way to goose sales because it trains shoppers to buy only when products are discounted. Marketers worry that constant sales may cheapen the brand images they work so hard to cultivate.

Yet the numbers suggest the tactics are tough to quit.

Kroger, America’s largest traditional supermarket operator, last year reported $7.3 billion in “vendor allowances,” which the company said was primarily from trade spending. That’s up from $6.9 billion in 2014, and $6.2 billion the previous year.

Shelf strategy

Even in the less-popular centre aisles, the way items are positioned is carefully choreographed.

Companies like Coca-Cola invest considerable resources in studying how to boost sales, and are eager to offer advice to help their supermarket clients optimize shelf arrangements. The idea is their suggestions help lift the entire category’s sales — but companies obviously have an interest in prominently featuring their own products.

Smaller grocers might rely heavily on major suppliers for such guidance, while bigger retailers tend to have plenty of their own research. Ahold, the parent company of Stop & Shop supermarkets, said the final determination for a product’s spot on a shelf was made by its own category managers, who consider recommendations from vendors.

TABS Analytics, a consulting firm, said it had recommended Sam’s Club cluster products regularly used by senior citizens, like incontinence and digestive products. The firm’s research suggested doing so could boost sales.

Sam’s Club said it wasn’t aware of having incorporated any of those suggestions, which TABS Analytics CEO Kurt Jetta said were part of its consulting for the health and beauty category more broadly and provided on behalf of Unilever, a Sam’s Club supplier.

Of course, products have to get onto the shelf in the first place. To introduce a new frozen item at a national chain, a company might pay a “slotting fee” of around $100,000, Jetta said.

Kroger said it “moved away” from charging slotting fees, and they represented a “negligible” part of the vendor allowances it reports.

While slotting fees seem to stack the deck against smaller companies trying to break into an industry, Jetta thinks they are generally fair because of the potential payoff that comes with being sold at a major retailer.

Source: Marketing Mag


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