In retail settings, eye-level is buy level. We’re more likely to notice and purchase products that catch our gaze. So it should not come as a surprise that retailers do not place products haphazardly. Product placement, whether on a shelf or on your favorite TV show, is the result of constant negotiation, pay-to-play fees, and marketing tactics.
Read on for your guide to effective retail product placement.
Why is retail product placement important?
Retail product placement matters because it can increase sales and boost brand recognition. A product needs to be visible for a consumer to consider purchasing it. Therefore, retailers must be strategic when deciding where to place items in a store.
Retailers consider everything from color psychology (what emotions different colors evoke in a shopper) to the shelf life of an item (for example, giving more visibility to a seasonal product) to lighting in order to encourage customers to make a purchase.
How does retail product placement affect wholesalers?
As a wholesaler, you are competing with other brands and businesses for finite space and attention. You’ll have to negotiate with retailers that may charge you for access to their customers. Those charges, called slotting fees or shelf placement fees, determine how much shelf space your product has and where in the store it appears.
Retailers may also charge wholesalers to keep their spot (“pay to stay”) or for promotions such as store displays. This is because in-store product placement can mean the difference between selling a few units and a couple hundred units, and therefore, the success or failure of a product line.
Not all stores charge slotting fees, but many do, making it challenging for smaller brands to compete against established ones with deeper pockets.
How wholesalers can create a retail product placement strategy
- Consider context
- Think shelf-level and store level
- Play to your strengths
- Use a data-driven approach
- Work with a broker
As a wholesaler supplying products to a retail store, you must have a multifaceted and agile product placement strategy. Here’s what to keep in mind when vying for space on the shelves:
1. Consider context
Not all stores will be a good fit for your product or brand, so target retailers who closely align with your business. For example, if the retailer you’re targeting carries goods from local producers but you don’t fit into this category, then you should look for a better match. But if you are a woman pitching a retailer that highlights female founders, you can emphasize the contribution your brand could make to its offerings.
2. Think shelf level and store level
There are two realms to consider in retail product placement: shelf level and store level.
Shelf level deals with shelf placement—a matrix influenced by cost, available space, and profit margins. Not everyone can occupy key eye-level shelves, and the top shelf and the bottom shelf come with challenges. Top shelves might be too tall for buyers to reach or easily browse, while bottom shelves require bending down, which may eliminate some customers.
If you do secure space in one of these areas, consider how to make the most of it. For example, use eye-catching design or blocking—the practice of shelving multiple facings of a product together to create a branded color block.
Store level consideration depends on the store layout. To maximize purchases, retailers build a layout strategy with traffic patterns and customer behavior in mind. For wholesalers, this is an opportunity to understand how the store flows and what areas can draw more attention to your products.
3. Play to your strengths
If you’re new to the space, it’s unlikely you’ll wind up with prime real estate retail product displays like eye-level shelves or an endcap. But better shelf placement is something you can negotiate, especially if your brand has an established following with high customer engagement or proven success in smaller shops you can leverage.
This is increasingly the case for direct-to-consumer brands with a loyal customer base. If there’s a proven population who is eager to buy your favorite products in-store, you may be more likely to secure a spot in high-traffic areas.
Not only does social media offer more of an opportunity to tell your brand story and build customer relationships, it can bring legitimate bargaining power in securing retail placement. This is effective if you back it up with data: A large, engaged following can reveal the popularity of your brand.
4. Use a data-driven approach
Tracking consumer behavior trends with real-time data can inform your product placement plan. In retail, there are three kinds of data to include:
- Observational data. Observational dataconcerns the qualitative information gathered by field teams about factors like customer behavior and store layouts.
- Activity data.This type of datareflects store visits and the actions consumers take.
- Sales data. Thistracks quantitative results, like how much product you’ve sold in a given period.
An ability to speak to these metrics may result in a better shelf space, especially if you can show your sales are stronger than a failing competitor.
5. Work with a broker
For smaller businesses without the resources to book meetings with hundreds of retailers, a broker can be a way to work smarter. Look for brokers with good connections to buyers in your target market and who only receive payment when they’ve successfully placed your product.
Grouping is the practice of shelving complementary products together, making it more likely consumers will purchase an array of products to complete a set. If your product fits into a theme or niche with other brands, mention this in your conversations with retailers: It may help them feel confident that your products sell.
Retail product placement FAQ
Why is product placement important in retail?
For consumer packaged goods (CPG) businesses, smart product placement in physical stores is a way to maximize sales and develop brand recognition among your target audience. Product shelving that taps into customer psychology and foot traffic patterns can boost sales, which is why retailers strive to place the right products in the right spots.
How are products placed in a store?
There’s an intentional design at play in most retail spaces, whether convenience stores or big box stores. This involves a spatial analysis of the store’s shelf space with a planogram, a visual mock-up of product shelving to help merchandisers maximize capacity. In-demand products with high profit margins are more likely to occupy prime real estate in the middle, while low-margin products with high rotation might end up along the bottom. Companies looking to claim space often pay retailers a slotting fee, or “shelf placement fee.”
What is considered the best shelf placement of items?
Eye-level shelf placement, the register, or endcap displays are the best placement locations in retail spaces, thanks to their ability to drive sales and impulse purchases. On a store level, you will occasionally find bestselling products toward the back of the store to prompt customers to increase their basket size while browsing.