I.R.I. says targeted consumer merchandising best
October 10, 2008
by FoodBusinessNews.net Staff
CHICAGO — In tough economic times and as consumers tighten their spending, consumer packaged goods manufacturers have worked to re-invigorate merchandising activity in order to boost sales volume. However, sometimes these strategies rely too heavily on price reductions, according to market researcher Information Resources, Inc. in its latest "Times & Trends: Merchandising Trends 2008" report.
"Simply lowering prices doesn’t fit with a product’s complete value proposition," said Thom Blischok, president of innovation and consulting. "In fact, just 1% of product categories that utilized price reductions as the sole merchandising tactic earned a sales lift of 100% or more. Contrast this with 86% of product categories that enjoyed a sales lift of 100% or more with a feature and display combined strategy — a merchandising tactic that allows the manufacturer and retailer to define that product, tell a story and create an experience."
I.R.I. emphasized new merchandising approaches being especially important as consumers reduce the number of store trips they make. Successful innovators understand the store is more than a step in the distribution chain from manufacturer to shopper, but rather it is a stage where manufacturers and retailers can define products, tell stories and create new experiences, according to I.R.I.
I.R.I. recommends merchandisers explore opportunities to reduce reliance on price reductions by focusing on an affordable product mix and positioning as well as solution merchandising, adopt broader and more innovative merchandising programs, and develop regional and store-specific targeted merchandising strategies. In addition, I.R.I. recommends driving private label trial and adoption with merchandising strategies that feature products and solutions relevant to the stores’ key consumer segments.
"As merchandising is re-born, the key to success is balance — too little merchandising is opportunity lost while too much leads to clutter and a high probability that shoppers will completely tune out the noise," Mr. Blischok said. "Total merchandising levels may be less than in days gone by, but moving forward it is the quality of merchandising and targeting, no quantity, that will define the most effective players."