Take Back Your Shelves

Many retailers have been losing more sleep than usual over the ongoing changes in consumer behavior, and how those changes affect business. As we slowly claw our way out of the worst recession in modern times, collectively were wondering what the world is going to look like once the economy does finally fully recover. Orscarier stillmaybe it has fully recovered and this is the new normal."

What we know is that the vast majority of shoppers (72 percent, according to a recent PWC/Kantar Retail study) have significantly changed their behavior. Only 7 percent of shoppers have made no changes in how they shop. On top of that, the consumer is changing, with Baby Boomers taking a back seat to the Gen X cohort for the first time. Both groups are better informed than ever through easy access to information via the Internet.

Getting to the Internet is easier as well, with more and more people going online via a mobile device, which means, in many cases, shoppers are researching products in real-time, while standing at the shelf edge in the store. And thanks to a bevy of mobile apps, shoppers can find everything from product details to the best price in town in less time than it takes to walk out to the car and drive to your competitor.

The upshot of all these changes is this: the world has changed, and retailers need to change with it. In case there was any doubt before, let there be no mistaking the fact that the shopper is absolutely in charge. This means that in-store tactics that may have worked for years are no longer effective, assuming they ever were.

SKU rationalization is getting a lot of press lately, as retailers look for ways to cut inventory costs and reduce out-of-stocks. But retailers got themselves into this situation over many years, accepting up-front payment for products that often sat on the shelf.  A recent Symphony IRI stat declares that 88 percent of center store items dont sell one SKU per day. In a business based on razor-thin margins, that is not an acceptable turn rate. And a new Heinz/Kantar Retail white paper makes the case that every dollar brought in through slotting fees and other allowances goes back out in the form of increased inventory costs, not to mention the lost sales due to out-of-stocks for those items that do sell.

In another effort to put dollars to the bottom line, nearly every retailer has leased out the shelf edge of its stores over the past 20 years or so. The net result of these programs has been cluttered and over-signed stores that are visually generic and unappealing to shop. In many cases, retailers have entered into exclusive agreements that forbid any shelf-edge communication that isnt paid for, no matter that the stores brand isnt supported and the same ad/coupon/sign is in every other store across the street and across the country.

Both of these tactics were designed to bring in much-needed revenue, but the revenue came in through the back door and gave manufacturers control of the retailers stores. But consumers are being courted in more sophisticated ways today: e-mail and online initiatives are targeted to specific behavior, and provide measurable return on investment. As TV and radio advertising continues to decline in effectiveness (Nielsen reports that most people learn about new products in-store as opposed to from traditional" media), ad dollars are shifting to the shelf edge.

Retailers now have the opportunity to take back their shelves and control how those dollars are used in the store, ensuring that the messages presented at the shelf edge are relevant to each stores shopper. Its a brave new world, and were all going to be a little uncomfortable for a while. Its time to demand more than the status quo; your shoppers certainly are.

Jeff Weidauer is vice president of marketing for Vestcom International Inc., a provider of technological retail solutions based in Little Rock, AK.  He can be reached at [email protected] .