Turbocharge sales through effective visual merchandising

by Rituparna Nath

August 9, 2021 | 02 min read

Research suggests 60-70% of purchase decisions are made at the retail store! Yes, almost 2 out of 3 purchase decisions are made when consumers are interacting with your products in the retail environment.

With this data, I don’t have to overemphasize the fact that effective merchandising plays an important role in driving sales for a brand. Availability of the products on the retailer’s shelf drives higher intentional & impulsive sales of the product. The primary objective of effective visual merchandising is to attract, nudge, and motivate potential consumers to make the purchase decision.

Additionally, a well-stocked product on the shelf reduces the potential availability of a competing brand on the shelf, helping the brand gain a competitive advantage at the outlet. For all these reasons, brands spend substantially to acquire shelf space & hot zones, incentivizing retailers to ensure compliance with the agreed merchandising commitments.

While excellent merchandising execution seems intuitive for every brand, Bizom research suggests that most brands don’t have a defined merchandising execution strategy. We see the following gaps in the brands’ retail execution:

Traditional Trade focus is missing: Traditional trade (Kirana, grocery, Stand Alone Modern Trade (SAMT), etc.) channel remains the major driver of sales in retail. In fact, as per Bizom data, SAMT is quickly becoming the fastest-growing sub-segment in the market. Unfortunately, most brands today focus only on the Modern Trade channel for merchandising and promotion activities. In general, trade dominated markets (India has an 85%+ share of GT), brands need to have a traditional trade focus in order to drive substantial competitive advantage.
Unclear outcomes: Brands need to clearly understand and define the outcomes they need to achieve from merchandising initiatives. These metrics depend on the product features and their positioning in the market. Brands should steer clear of a blanket approach to merchandising execution and should look at a customized approach aligning with the business needs.
Lack of real-time and actionable insights: Perfect retail execution requires a clear understanding of the organizational objectives and it is critical to disseminate them across the hierarchy. Unfortunately, most merchandising initiatives end up becoming post hoc reporting tools and don’t have an explicit call to action for the merchandiser. Brands need to empower the field force with real-time, actionable insights to improve in-store merchandising execution.
Manual & Error-prone systems: Most brands depend on the merchandisers’ skill and will to audit in-store merchandising execution. This makes the visibility measurements error-prone and inaccurate. We have found that automating KPI calculations using Image recognition models has helped brands significantly improve data integrity and consistency.

Keeping these in mind, brands should approach their visual merchandising strategy using a three-fold approach of definition, process creation, and execution.

Define: Identify the right hotspots (Countertops, brand shelf display, brand windows, area behind the retailer, entrance, endcap, chiller, danglers, etc.) for your products in each and every sales environment. Carefully understand the purchasing behaviour of the consumers for your product to define the merchandising process across the organization.
Process: Identify KPIs that are aligned with the merchandising process. These KPIs should depend on the different types of merchandising execution carried out in the store to drive consumer behaviour. It is imperative to ensure these KPIs are properly communicated to all the merchandisers.
Execution & tools: Brands should strategically enable the merchandising field force with real-time and actionable insights while they are working in the market. The solution needs to leverage AI/ML-enabled Image recognition models to ensure real-time, automated visibility compliance. Additionally, brands should ensure the system is flexible enough to help merchandisers drive brand KPIs while operating in the market. Last but not least, the tool needs to provide consumable, actionable insights and recommendations to the merchandiser.

Bizom’s Smart Merchandising solution creates customized retail merchandising strategies using this three-fold approach. This along with augmented reality, makes this solution a game-changer for FMCG brands for ensuring the effective execution of their retail merchandising strategies.

To know more, connect with our team at marketing@mobisy.com and schedule a free demo.