Merchandising Health: Part One

April 10, 2013
Retail Industry Insights

By Annette Maggi, MS, RD, LD, FADA
RDBA Executive Director

In the weeks before a holiday or a major sporting event (Final Four!), it’s not surprising to be hit with a large display of soda and snacks when you first enter a grocery store.  Retailers know their customers, know what they’re looking for during different seasons of the year and for varying events, and cater to these shopper needs.  This is the power of merchandising.

The way products are merchandised has definite impacts on their sales.  The method of merchandising is well studied as it can vary by product category, by geographic market, and by store size.  An effective way for retail dietitians to broaden their reach to more shoppers on a daily basis and truly impact behavior change is by leveraging the power of merchandising with better-for-you products.  

The first step to effectively using merchandising in your health and wellness programs is to understand the key elements, which include:

• Promotional Space.  The front entrance of the store, endcaps and gondolas in various departments of the store are often considered promotional space.  The product assortment may change six to ten times a year, based on popular holidays, seasons and national events.  Product placement in these featured spaces comes at an added cost to vendors, but they’re willing to pay it as the sales lift can be significant.  Some promotional space may be owned across the store format and some by individual departments.  It’s essential to understand who makes decision around promotional space and the factors that contribute to product placement on these high visibility shelves.
• Merchandising Basics.  Even within the main aisles of the grocery store, there are placement tactics that impact product sales.  For example, products in the first four feet of any aisle tend to sell more as do products placed at eye level.  After all, the shopper won’t often bend down just to look at what products are on the lowest shelf unless they’re struggling to find something.  The number of facings of a product can also impact its sales.  Finding the balance between the number of facings vs. the variety of flavors offered in a brand line is an ongoing process in the retail space.
• Slotting Fees.  The manufacturer pays this fee to the retailer simply to have the product placed on the shelf.  In some cases, retailers may make more money off the slotting fee than the actual sale of the product.  Slotting fees are quite controversial, but retailers contend it helps them to allocate the scarce retail shelf space and protects them from failures with new products.  Companies offering healthy options can sometimes be start-ups and small companies who may not be able to pay these fees.  
• Integrated vs. Segregated Merchandising.  When it comes to healthier options, both merchandising methods are common in today’s marketplace.  Some retailers choose to segregate better-for-you choices in a “store within a store” department, section, or aisle while others believe sales of these products are higher when integrated into the traditional assortment space.  It may be possible that the method is more effective with some healthier options than others.  For example, the gluten-free shopper may benefit from having one place in the store where she can find all her choices.  The heart-health shopper, however, may prefer to have low saturated fat and high fiber options positioned next to the traditional alternatives.  Dual merchandising is also an option.

Leveraging merchandising tactics provides an exciting opportunity for the retail dietitian to positively impact consumer behavior change and drive sales of healthier options.  Next week, we’ll explore how to effectively leverage merchandising tactics as a part of health and wellness initiatives in Merchandising Health:  Part Two.