Merchandising is a key component of any successful food and beverage brand’s marketing strategy. In this guide, we’ll dive into the importance of merchandising for consumer packaged goods (CPG) brands, discuss how to create a compelling merchandising strategy, explore when to work with third-party merchandisers, and share tips and tricks for optimizing your in-store presence.
What is Merchandising and Why CPG Brands Need to Do It
Merchandising refers to the strategic presentation and promotion of products in a retail setting to drive sales and increase brand visibility. Effective merchandising not only attracts customers but also makes it easy for them to find and purchase your products.
Merchandizing activities include:
- Coordinating New Retailer Launches.
- Checking inventory levels at the store and making sure these are well displayed on shelf.
- Verifying promotions
- Adding shelf talkers and other promotional displays in store.
- Setting up off-shelf displays.
For CPG brands, merchandising is crucial for several reasons:
- It creates brand awareness: Eye-catching product displays and in-store promotions can help introduce your brand to new customers and keep it top-of-mind for existing ones.
- It increases sales: Well-executed merchandising can boost sales by showcasing your products effectively, making it easier for customers to find them, and encouraging impulse purchases.
- It differentiates your brand: With so many food and beverage products competing for shelf space, effective merchandising can help your brand stand out from the competition.
Who is responsible for merchandizing?
Founders – At early-stage companies, the founders are often responsible for store visits and ensuring everything goes according to plan. An added benefit of this is that founders can get direct product feedback from store owners.
DSD Distributors – These specialized distributors often also conduct in-store merchandising activities. This can be efficient because one company takes care of taking orders, stocking products, and merchandising.
Merchandising Companies – Services can include simple options like taking photos of stores or more advanced services like setting up displays. Brands can choose to do “spot checks” at a few stores, which can be more economical or full coverage.
Merchandising Drives Customers to Your Brand
Merchandising can attract new customers to the category and to your brand. There are three main types of shopper awareness in the store. Shoppers who:
- Don’t shop the category —> Awareness Goal.
- Shop the category but don’t shop your brand —> Consideration + Purchase Goal.
- Shop for your brand —> Repeat Goal.
Shoppers who don’t shop the category. Out of Aisle placement can help consumers discover not only your product but the category itself. This can be accomplished with end-cap displays and stand-alone displays in other parts of the store. This way your products may catch the eye of shoppers who don’t normally purchase products like yours and entice them to buy.
As an example, for our drinks, we always try and get a second location close to the BBQ section in summer.
Shoppers who shop the category but don’t shop your brand. Again, this is where an end-cap or stand-alone display can help your brand stand out. Work with retailers to create an in-aisle display that highlights your products and catches the attention of shoppers.
Use shelf-talkers to literally stand out from the aisle. These can display a photo of you the founder, have product benefits, or offer a discount code.
Not only can you drive new trial, but you can also collect customer information for future offers and build them into your community.
Shoppers who Shop for your brand. It takes customers at least 3 purchases before your products become a regular habit, and even then, you need to remind them to continue buying.
Temporary Price Reductions (TPRs) can help you achieve this goal. TPRs are a great tactic to reward current customers and encourage volume buying. While it may feel like you’re losing margin, you are gaining loyal customers. Just make sure you’re careful about your promotional schedule or else you can train consumers to only buy on discount.
Creating a Merchandising Strategy for Your Brand
To create a winning merchandising strategy, follow these steps:
- Identify your target audience: Understand who your ideal customers are, and create merchandising that appeals to their preferences and needs.
- Define your brand identity: Ensure your merchandising reflects your brand’s unique personality, values, and visual identity, creating a consistent experience across all touchpoints.
- Determine product placement: Work with retailers to secure optimal shelf space for your products, considering factors like store layout, customer traffic patterns, and product adjacencies.
- Design eye-catching displays: Create visually appealing displays that showcase your products and convey your brand’s story. This can include in-store signage, endcap displays, and special promotional materials.
- Promote your products: Collaborate with retailers to develop in-store promotions, such as discounts, sampling events, or loyalty programs, to drive sales and build customer loyalty.
- Measure and optimize: Monitor your merchandising efforts, analyze sales data, and make adjustments as needed to improve performance.
When to Work with Third-Party Merchandisers
In some cases, working with a third-party merchandising service can be beneficial for CPG brands. Consider partnering with a third-party merchandiser if:
- You lack in-house resources: If your team is small or already stretched thin, a third-party merchandiser can provide the expertise and manpower needed to execute your merchandising strategy effectively.
- You want to scale: As your brand grows and expands into new markets, third-party merchandisers can help ensure consistent execution of your merchandising strategy across multiple retail locations.
- You need specialized expertise: Third-party merchandisers often have experience working with a wide range of products and retailers, providing valuable insights and best practices that can enhance your merchandising efforts.
Tips and Tricks for Successful Merchandising
Here are some tips and tricks to help you maximize the impact of your merchandising efforts:
- Stay current: Keep up with industry trends and consumer preferences to ensure your merchandising remains relevant and appealing.
- Collaborate with retailers: Build strong relationships with retailers and work together on merchandising strategies, promotions, and in-store events to secure prime shelf space and increase brand visibility.
- Be adaptable: Be prepared to adapt your merchandising strategy based on retailer requirements, store layout, and customer feedback.
- Train your team: Ensure your sales team and any third-party merchandisers are well-versed in your brand’s values, product features, and merchandising goals. This will help maintain consistency and quality across all retail locations.
- Leverage technology: Use tools like planogram software to help visualize and optimize your product displays, and inventory management software to ensure your products are always in stock and readily available to customers.
- Monitor your competition: Stay informed about your competitors’ merchandising strategies and learn from their successes and mistakes.
- Test and learn: Experiment with different merchandising tactics, such as varying product displays, promotions, and pricing strategies, to find the most effective approaches for your brand.
- Collect and analyze data: Gather sales data, customer feedback, and other relevant metrics to evaluate the success of your merchandising efforts and make data-driven decisions for future improvements.
- Be realistic. Stores can only accommodate a limited amount of promotions, so work with store owners to achieve the best results.
In conclusion, effective store merchandising is crucial for food and drinks brands looking to increase sales and brand awareness. By creating a comprehensive merchandising strategy, collaborating with retailers, leveraging third-party merchandisers when needed, and continually optimizing your efforts, you can position your brand for success in today’s competitive marketplace.