Here’s an article that is really beneficial to micro market operators everywhere! Although this article is from the Summer of 2014 it’s still relevant to your process. Take a look!
By Brad Bachtelle
Here Are Some Great Take Aways:
Operator questions continually arise as to how to merchandise and planogram micro markets. What are the difficulties in creating a planogram for a micro market? How do I assign shelf space to new products when I still have older products that haven’t sold? How often should I change my market planogram? Should I have visible prices?
- Don’t apply “heritage merchandising” from vending to micro markets. Micro market open shelving allows for a much greater set of product options. A major operator miss-step in micro market merchandising and product selection is to rely upon vending experience as the primary basis.
- Planogram development is a two-step process: 1) shelf space allocation based on a space-to-sales calculation and 2) selection of category products, including core and variety/rotational products.
- Allocation by shelving type:
Shelf space allocation is straightforward and begins by analyzing and totaling micro market sales by both major product categories (food, beverages, snacks, etc.) and sub-categories (soft drinks, energy drinks, juices, etc. within beverages; cookies, salty snacks, candy, etc. within snacks). As most product sub-categories have common temperature requirements for all sub-category products (juices are always refrigerated; chips are always at ambient temperature), the second step is to group sub-category sales by the type of shelves (ambient, refrigerated, etc.) on which they are presented to consumers. We now have a total dollar sales level for each shelf type.
- For Example, Salty snacks represented 33 percent of total snack sales and candy 28 percent. Accordingly, an appropriate planogram for these markets should initially allocate one-third of the snack shelf space to salty snacks and, similarly, a 28 percent portion of candy.
- It is very important to ease consumer shopping by grouping same-category products together. Examples: The smaller footprint and space between shelves for bar goods will enable better consumer access by moving their category positions onto higher shelves. Larger graphic items can be easily identified by consumers regardless of their shelf positions, so lower shelf placement makes sense without losing consumer visibility. Gum and mint items are generally impulse purchases, so placement high on shelving units or near the checkout kiosk makes sense to gain that incremental purchase.
- Products should always include a combination of core products that are leading, proven items, plus new or variety products that present consumers with options within a category. The general rule of thumb is that core products should represent 70 to 80 percent of category SKUs to ensure strong consistent sales.
- It is also important to understand that every top selling product at some point was “new” and that every retailer has at some time added products that have underperformed versus expectations. “New” is okay!
- Rotating second-tier brands within a micro market product set will often deliver a sales spike and also make the micro market look “fresh” to consumers.
- Draw attention to new products with signage: As operators add new products to their micro markets, there are two options for their location – a separate “new item” shelf area just for such items, or the placement of the new products within their general category shelf space. Whichever approach is taken, new products need to be clearly identified as such to draw attention.
- It is important that the slow sellers are identified and “moved out” to allow that shelf space to be used for better selling items. The worst thing is to leave poor sellers in a market to just “sell through.” Once a decision has been made to discontinue an item, do something to eliminate the item from the micro-market within a short time period.
- Micro-market planograms need to be adjusted or “refreshed” for two reasons: 1) to keep market product sets looking new and interesting to consumers and 2) to tweak individual location shelf space allocations according to the specific sales and consumer demand at the account.
- After about six weeks following a micro market installation, it is important to do an initial planogram review. A category sales analysis on the new market will show the specific consumption pattern for that location. Category shelf space adjustments and elimination of slow moving products can then occur to better offer the location a product set that best matches demand.
- It is best to routinely and relatively frequently change the micro market product set to keep the overall micro market and its appearance from getting “old” or “stale” from the consumer’s perspective.
- Market planograms should be refreshed at least every four months to let consumers know their micro market operator is on top of product selection and merchandising.