Optimizing point-of-sale product placement leads to increased sales

We all understand the importance of psychology when it comes to the arrangement of stores. As customers entering a grocery store, we’re hit with the sensory experience immediately – fresh produce, smells from the bakery, the bright colors and fragrance of fresh flowers, they’re all siren songs luring us in deeper into the store.

The last thing on our minds, however, is the science behind those perfectly placed confectionery items on the shelves as you wait your turn at the checkout (affectionately known as “point of sale” in retail). We just know that we want some.

In this blog, I’d like to share some key insights and results that CFP Brands—a German distributor for such famous confections as: Mentos, Chupa Chups, Fisherman’s Friend, and Smint—has obtained through innovative thinking, use of technology and the resulting analytic insights, and enhanced collaboration with its retailer accounts.

Top placement for the strongest brands

CFP Brands know that, despite the brand equity and quality of their brands, optimal placement within the assortment and on the fixture of the retailer is of quintessential importance. Confections often fall within the “impulse buy” realm, and so placement for these items can be particularly critical. For example, as noted by Lukas Schultens, Category Manager at CFP:
“It really makes a difference to sales if consumers near the till notice items behind the counter first and only then enticing, sweet, chewy products, like our Mentos.”

Category Management operates product groups strategically

CFP Brands soon spotted the potential of product groups, placement, and sales, as well as the interaction between them. It decided to intensively focus on Category Management, making it a top strategic priority. The focus was to leverage abilities in category planning and join forces with CFP’s retail partners to handle product groups strategically, to boost customer benefits and sales, and ensuring optimal product placement at the checkout.

Technology enables category insight and process innovation

Of course, if you’re in retail, you know that current market conditions are challenging retailers to consolidate their resources.  This consolidation is true in terms of both personnel and technology. To deal with these challenges, the CFP Trade Marketing team, which supports retail partners with merchandising recommendations, chose Symphony RetailAI’s Category Management solutions. Schultens, who has been with CFP Brands since 2011 and has a broad experience of software, methods, and processes, notes:

“For us, Symphony technology is a must, since it lets us analyze comprehensive data, develop partner-specific placement rules and ultimately draft store and customer centric planograms that deliver significant impact.” 

The team has garnered a wealth of experience over the years, developed best practices, and was even honored with the ECR Award for a project with EDEKA Minden.

A “neutral” advisor helps maximize growth of the entire category

Whilst it’s true retailers own the focus on inventory routinely answering questions such as: How is the assortment oriented? Which products are on offer? How is available space being utilized? What level of sale performance is being achieved? There is a symbiosis in the merging of retail and manufacturer data. This is where a competitive advantage happens.

In a typical scenario, the relevant team in the manufacturer receives data on the entire category from the retailer, the Category Manager then combines this data with external and in-house market figures. This is where key conclusions are drawn. For example, does the assortment lack any key revenue drivers? Or, are sales of a tried-and-tested product flat or in decline (likely due to incorrect placement). In this scenario, the manufacturer team sees its role as a neutral advisor of the retail partner and refrains from any unilateral product recommendations of its own. For Schultens, what matters most is making assortment recommendations that promote growth across the entire product group; because this is likely to deliver overall category growth for each retailer.

Simulation on screen, success in store

Once CFP has analyzed all of the data, the next step is optimization. This is where Symphony Retail software solutions provide the Category Manager the option of visualizing the shelf on screen. The category manager can review each product at a given price and evaluate sales performance by store. In addition, to keep it realistic, competitor products from all manufacturers represented in the category are in view.

The Category Manager can also view alternative category fixture configurations and item placements, and given the non-merchandisable spaces are also recorded, they can also get an individual planogram with each relevant point-of-sale material.

“This is particularly important at check-out areas, which are one of the most highly impulse sensitive locations for the confectionery category in the store.”

There is significant potential to maximize sales, provided the store shelves include a balanced and compelling assortment, which corresponds to the surroundings.

Test, roll out, and deliver double-digit outcome

With many years of experience in mastering shelf balance and appeal, CFP’s category team finalizes the planograms, including details of optimized shelf layouts, and efficiently shares them with it retail partners. If required, the retailer can also then modify the product placement.

For retailers with multiple outlets, the typical approach is a shelf test lasting three to four months in a selected store. This is followed by another assessment and finally, where applicable, the assortments and layouts are reconfigured.

Once the optimal result has been achieved, the retailer rolls out the new assortment and implements the new shelf layout in the remaining outlets. For independent gas station operators, however, this testing phase is waived, as shelves are generally only optimized for a single site.

“For gas station operators, which are often operated independently, we often have ample scope to help with tried and tested concepts, but when it comes to meeting specific requirements, we tend to scrutinize the PoS in more detail,” explains Schultens.

This strategic focus on Category Management has paid off for CFP Brands:

  • The team is in demand and handles multiple major projects each year which typically grow double digit overall category growth
  • They also have the capacity and agility to support numerous smaller projects, many that come from direct retailer requests

The results for retailers?

Schultens keeps the precise figures under wraps, but concedes:

“When we examine and optimize the shelves of our retail partners, sales generally experience a double-digit increase.” 

Interested to learn how you can optimize your shelf space? Watch this video >>

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