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Traditional Merchandising in the Age of Self-ServiceWith retailers becoming increasingly dependent on self-service in their stores, traditional merchandising is as important as ever. Merchandising displays are a critical component of giving consumers the information they need to make a buying decision.

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2© 2014 Networld Media Group

Page 3 Introduction | The Changing Retail Environment

Page 5 Chapter 1 | Merchandising in 2014

Providing the right information

Retail display checklist: 10 questions that define requirements and budget

Page 9 Chapter 2 | Influencing the Buying Decision

The power of the hands-on experience

Opening the package

5 steps to personalizing the in-store experience

Page 14 Chapter 3 | Digital Technology in POP

Incorporating technology

Mondelez plans to roll out smart shelves by 2015

Page 17 Chapter 4 | Best Practices in Merchandising

Planning for theft-deterrent merchandising

3 Conclusion | Choosing the Right Partner

CONTENTS

Traditional Merchandising in the Age of Self-Service

Published by Networld Media Group © 2014 Networld Media GroupWritten and edited by Richard Slawsky, Contributing writer, Retail Customer ExperienceTom Harper, president and CEOKathy Doyle, executive vice president and publisherJames Bickers, senior editorTiffany Smith, custom content editor


Much has been made in recent years of the role the internet plays in the shopping experience. Many shoppers, conventional wisdom says, visit a re-tail location already having done most of the research on a purchase. All they do is drop into the store, pay for their item and leave.

But as is often the case, conventional wisdom and reality can be two different things.

It is true that many consumers research large purchases — those cost-ing $500 or more — before visiting a store. According to GE Capital Retail Bank’s second annual Major Purchase Shopper Study released in June 2013, 80 percent of consumers start the process of making a major purchase by spending time at the computer.

But what about the vast majority of purchases that do not rise to that $500 level or those customers who do not use the internet to assist with their buying decision? There are still plenty of occasions where customers visit a retailer with only a vague idea of what they need or depend on the retailer to provide the information they seek about a potential purchase.

In those cases, tried-and-true merchandising can be key to driving that buy-ing decision.

Take, for example, the weekend handyman who plans to freshen up the living room with a new coat of paint. A visit to the local home improvement store reveals a choice of at least four kinds of paint and literally dozens of types of paintbrushes. And that blue painter’s tape necessary to ensure clean, sharp edges along the baseboards and ceiling? One of the largest home improve-ment retailers in the country carries 47 different types. Its main competitor carries 52 different types.

INTRODUCTION


Richard Slawsky has been working in business journalism for more than 15 years, covering industries rang-ing from oil and gas to advertising to technology. He got his start with the weekly business journal New Orleans CityBusiness and was part of a team that covered the aftermath of Hur-ricane Katrina. Slawsky now resides in Louisville, Ky., where he teaches in the Communication department at the University of Louisville in addition to contributing to a number of NetWorld Media Group publications.

By Richard SlawskyContributing writer, RetailCustomerExperience.com

The Changing Retail Environment


Of course, there’s always the chance that the sales clerk will be an expert in house painting and will be able to recommend the right one of the 47 or 52 possibilities. There’s also a chance that shopper will win the lottery and be able to hire someone to handle the painting chores. While the latter possibility admittedly is more remote than finding the knowledgeable salesperson, most of the time neither outcome will present itself.

In the end, merchandising and point-of-purchase displays are critical to build-ing a brand and providing customers with the information they need to make an educated purchase.

In this guide, “Traditional Merchandising in the Age of Self-Service,” we’ll look at the ways in which merchandising can help drive a purchase, and offer some tips to help retailers make effective merchandising decisions. We’ll also take a look at some of the technology that is enabling retailers to leverage the power of the mobile devices consumers are carrying.

INTRODUCTION


CHAPTER 1


For many people, the act of making an everyday purchase follows a similar pattern. They’ll visit their favorite store, find the section carrying the product they are searching for, compare it to the two or three others at the same price point, make a decision and head for the register.

If the lines at the register are a few customers deep, they’ll head for the self-service checkout to complete the transaction. In fact, many purchases these days occur without any contact between the customer and a store employee.

“People, generally speaking, tend to avoid human interaction in stores,” said Marcie Merriman, an adviser in digital strategy and retail innovation for global professional services firm Ernst & Young. EY counts 160 retailers and consumer products companies among its clients.

“Customers don’t want to have to deal with someone to ask questions,” Merriman said. “They want to do it themselves, and if they have a question they want to have it answered easily.”

Whatever the reason may be, ranging from increasing cost pressures to a labor market where retail jobs can be somewhat lacking in prestige, the perception is growing that many sales associates are somewhat lacking in the knowledge they need to answer customers’ questions. In many cases, it may be difficult even to find an associate able to provide assistance.

“Because so many consumers are doing research before buying a product, by the time they get to the store they feel like they’re somewhat an expert themselves,” Merriman said. “If they find themselves in a situation where they are asking questions of someone who may not have as much knowl-edge as they do, they can walk away feeling disappointed in the store.”

Of course, many retailers are testing technological tools such as kiosks and interactive digital signage that can guide a consumer through his or her questions. While many of those tools show promise, traditional displays are still one of the best ways to capture a shopper’s attention.

Merchandising in 2014


“While out shopping and trying to find out more about a product, consum-ers will interact with a kiosk or interactive digital sign to gather additional information,” said David Anzia, SVP of Sales of Grafton, Wis.-based Frank Mayer and Associates, Inc. Frank Mayer and Associates, Inc. specializes in creating in-store merchandising solutions including point-of-purchase mate-rial, custom fixtures, interactive kiosks and retail-ready displays.

“The information garnered from kiosks definitely plays a role in determining what I’m going to buy,” Anzia said. “still, I’m not immune to traditional dis-plays. If there is something that is really intriguing, I’m going to take a look. The items that are displayed more prominently in the store are the ones that are going to get my attention first.”

Providing the right informationIn the days before nearly everyone had a computer on a desk and a smart-phone in a pocket, one of the key goals of merchandising was to provide as much information as possible about a particular product and attempt to answer whatever questions might occur in the customer’s mind.

Today, it’s safe to assume that in many cases shoppers already have a fair amount of information before they even enter the store. If they don’t know details about the product itself, at least they know what task they are trying to accomplish.

Consider a hypothetical example of the shopper seeking to buy painter’s tape mentioned in the introduction. While that shopper knows that the goal is to end up with a professional-looking paint job, he or she might need an-swers to a few questions to make the choice between the 47 types offered at the local big-box home improvement retailer.

“With a product like that, you try to grab the consumer and make it easy for them to know the right thing to buy,” Merriman said. “Without knowing what that is, there’s a good chance the customer just might walk out without get-ting anything because they’re afraid of getting the wrong thing.”

So what makes an effective display, and what are the right things to incor-porate into that display? The right answer to that question is that there is no right answer. It depends on the product, the retailer’s brand, the space available and a host of other factors.

In general, though, it often comes down to doing something that attracts the attention of the buyer. Working with an experienced professional to develop an effective merchandising program may be the best option.

“Because so many consumers are doing research before buying a product, by the time they get to the store they feel like they’re somewhat an expert themselves” — Marcie Merriman, adviser in digital strategy and retail innovation, Ernst & Young

CHAPTER 1 Merchandising in 2014


“People get bombarded with signage, and sometimes it’s what is unique or a little bit of a surprise that can be most effective,” said Linda Hofflander, director of vertical marketing with the enterprise business division of South Korea-based electronics giant Samsung.

“I live near New York City and often go into Times Square, which is so filled with signage that people are bombarded by it,” Hofflander said. “One of them, though, is static signage, and I find that that’s the one I look at.”

In today’s world, less is more, retailers say. Put too much information on displays and signage, then it all becomes white noise.

“With customers already armed with so much pre-purchase information, retailers have the ability to utilize less copy on their displays,” Anzia said. “The marketer is able to simply their message and content copy and photos to distract the customer.”

Some experts suggest identifying the two or three things that are most relevant to the target customer and focusing on those.

“A customer wants to know the most important ways the product will help them, not just everything it does or can do,” said Kevin Lyons, senior vice president of e-commerce with home appliance and consumer electronics retailer h.h. gregg.

“For example, a ‘super radiant heating element’ on a stovetop means noth-ing to the average consumer, but ‘boils water in 60 seconds’ does!” Lyons said. “Traditional signage takes on a new role in today’s retail environment as it relates to supporting the mobile customer, those that are researching as well as comparing/reinforcing their purchases.”


“People get bombarded with signage, and sometimes it’s what is unique or a little bit of a surprise that can be most effective”

— Linda Hofflander, director of vertical marketing, Samsung



1) What are the primary objectives of your project? Key benefits for the brand Key benefits for the retailer What the consumer should be able to accomplish

2) Who is the target user? Physical characteristics or limitations that should

be accounted for in the design The expectations of connected consumers

3) What look and feel do you want your display to have? How the brand image should be incorporated into

the design The kind of impression the solution should convey

(whimsical, stylish, streamlined, etc.)

4) Where will the unit be placed? Environmental considerations that would affect the

design and components The amount of traffic a unit will receive

5) How many units will be deployed? In a test phase, if applicable In full rollout In one run or in split production runs

6) What are the size requirements? Parameters differ for floor-standing versus counter units The necessary footprint must be defined

7) How long will the display be in the field? May affect materials used May affect planning for spare parts if a project has

a long life

8) What products and how many of each will be displayed or merchandised?

Sample products should be made available to test size, weight and ability to be displayed

9) What are the packing and shipping requirements? Can ship with client-supplied product or empty Can be designed to ship knocked down (in some

cases) or assembled Can ship all at once on a pallet or be drop shipped Can roll out all at once or require warehousing

10) What are the installation and support requirements of the unit?

Necessity for installation assistance Necessity for parts reordering website

Retail display checklist: 10 questions that define requirements and budget

You need to come up with a blockbuster display to showcase your new product, or maybe you feel you need a new partner to revise an existing one after time on the retail floor has revealed the need for improvements. How do you start the planning process so that you make the most efficient use of your time and everyone else’s and achieve the results you need to stay competitive in the physical retail realm?

Ideally, brands and retailers embarking on a display or merchandising project have gone through some linear process to define objectives, requirements and a budget, but that isn’t always the norm. Many clients know most of what they want but have a hard time defining what it is they need. This 10-point checklist is designed to ensure that clients give adequate consideration to all dimensions of a project at the start.


CHAPTER 2


There’s no doubt that the online channel has taken a bite out of brick-and-mortar retailing. The U.S. Census Bureau estimates online retail sales in the fourth quarter of 2013 in the United States topped $69 billion, a 3.4 percent increase over the third quarter of 2013 and a 16 percent increase over the 2012 fourth quarter. Overall retail sales increased just 3.4 percent year over year.

Still, there’s plenty of retail pie to go around. The Census Bureau estimated overall U.S. retail sales in the 2013 fourth quarter to be $1.15 trillion, meaning online still is just about 6 percent of total retail transactions in the United States.

No matter how easy it becomes to shop online, and even if Amazon moves to delivering packages by unmanned drones, brick-and-mortar stores will always have a clear advantage over online: the ability to deliver a hands- on experience.

“As much online shopping as I’ve done lately, if the product I’m looking for is available in the store I’m going to buy from the store,” said Anzia, of Frank Mayer and Associates, Inc. “Not only do I have the ability to touch it and try it before I buy, I’ll have somewhere to take it if there is a problem.”

The power of the hands-on experienceA clean, well-organized display will enhance the customer’s perception of the product and the experience that the consumer likely will have with the brand, said Dean Cole, brand support manager for Norcross, Ga.-based sports equipment and apparel provider Mizuno USA. If the display can help communicate the benefits of the product and help the consumer visualize how those benefits will improve their experience, the odds of that product being chosen are improved greatly.

“My opinion is that a lot of industries get caught up in making the display the centerpiece, rather than the product,” Cole said. “The display should showcase the product and educate the consumer on benefits. While the

Influencing the Buying Decision


display needs to be eye-catching, the consumer is buying the product; they aren’t taking the display home.”

One of the challenges product manufacturers face is that many retailers are practicing category management, with several brands of a particular product grouped together. The makers of those products, then, can find it increasingly difficult to differentiate themselves from other products on the same shelf. Creating a hands-on experience can serve as a way to set themselves apart.

“Having the ability to touch a product and make a connection with it can beat nearly any other way of selling,” Ryan Lepianka, Creative Director at Frank Mayer and Associates, Inc. said, “and some of the most effective displays the company has designed are those that encourage that physical contact.”

Ernst & Young’s Merriman cited cosmetics retailer Sephora as a brand that has done a particularly good job of creating that hands-on experience in its retail locations. The French company operates more than 1,700 stores in 30 countries around the world, with 2013 revenues topping $4 billion.

“In many department stores, if you were shopping for cosmetics you would need to go to the counter, where someone would help you try on makeup,” Merriman said. “That was nice, but people want to be able to try differ-ent things without feeling the guilt or obligation to buy something because someone helped you.”

Instead of requiring shoppers to try products with the assistance of a sales-person, Sephora locations have cosmetics samples on the counters that al-low people to wander through the store at their leisure, trying products at will.

Another brand doing a good job with hands-on retailing is Columbus, Ohio-based shoe retailer DSW, Merriman said.

“If you’ve shopped for shoes at a department store, you generally have to ask for help so a clerk could get the shoes from the back,” Merriman said. “With DSW, they opened it up to allow people to be able to move through the store quickly and try what they wanted, without having to wait for some-one to go get the item for them. It made the process more self-service, but it also created a more hands-on experience.”

Opening the packageIt’s not just the rare shopper who at some point has passed on a purchase simply because the retailer wasn’t able to summon the individual with the key to that locked display case. While efforts to control inventory shrink, sadly, stores may make locked displays a necessity. This can make things

CHAPTER 2 Influencing the Buying Decision

“People want to be able to try different things without feeling the guilt or obligation to buy something because someone helped you” — Marcie Merriman, adviser in digital strategy and retail innovation, Ernst & Young


difficult as one of the main reasons people go to brick-and-mortar stores is to touch, feel and demo the products.

“There has been so much innovation in security hardware and software in this space that allows for more freedom,” h.h. gregg’s Lyons said.

“There are always people trying to out-clever the most clever measures when it comes to loss prevention,” he said. “The important thing is that you not ruin the experience for the many based on the cruel intentions of the few.”

In some cases, the merchandising display can perform double duty as a theft-prevention device. Frank Mayer and Associates, Inc., for instance, developed a merchandising display for the Nintendo Wii U that encases the console in plastic but still allows potential buyers to interact with the game and try it before they buy.

“That custom display is what sets the product apart and helps influence the buying decision, by giving the potential buyer the opportunity to try out the device, to touch it and make judgments about it,”Anzia said. “You just can’t beat a live demo.”


“That custom display is what sets the product apart and helps influence the buying decision” — Kevin Lyons, senior vice president of e-commerce, h.h. gregg

5 steps to personalizing the in-store experience

Facing fierce competition and high operating expens-es, today’s retailers must develop new strategies for attracting consumers and building brand recognition. Many are realizing the power of in-store merchandis-ing and interactive kiosks to enhance customer loyalty and create a compelling consumer experience. Like silent salespeople, these visual merchandising tech-niques can foster brand awareness, impart product knowledge and inspire consumer interaction.

“In-store merchandising, kiosks and displays are ap-pealing and can be real attention-getters when a con-sumer is looking for a specific product,” said Joe Hol-ley, Vice President of Business Development for Frank Mayer and Associates, Inc. “The right display can eas-ily focus the consumer’s attention on a single product category. That’s hard to do in today’s competitive marketplace, but if you create the right in-store experi-ence it can be a slam dunk.”

Given the three-second window of opportunity dis-plays and kiosks have to compete for consumers’ at-tention, many retailers are recognizing the importance of creating a personalized experience for consumers the moment they walk through the door. By catering to shoppers’ varying preferences and personalities, re-



5 steps to personalizing the in-store experience (continued)

tailers can increase profit margins, enhance customer loyalty, build brand awareness and level the playing field with online competitors.

Here are five steps to display project success.

1. Evaluate the effectiveness of current in- store displays

Retailers who rely on the same old in-store merchan-dising and POS displays risk falling into a rut. Today, sweeping changes in merchandising tools and tech-nologies are under way. Staid stands gradually are be-ing replaced with tablet PC displays, self-service ki-osks and digital signage. Failure to keep up with these changes can result in lost sales, customer attrition and a tarnished brand.

That is why it is essential that retailers carefully assess the effectiveness of their current in-store displays. Are the displays customizable? Do they offer personaliza-tion? Are they delivering an effective return on invest-ment? Only by posing these questions, and measuring the performance of existing merchandising and POS strategies, can retailers continue to keep shoppers engaged in today’s highly competitive marketplace.

2. Research new display options: POP displays, mer-chandising displays, digital signage, interactive kiosks

Like it or not, the rise of mobile and online commerce is presenting brick-and-mortar retailers with their fair share of challenges. Yet shoppers continue to seek out retail stores that have a diversified product assort-ment and offer a superior customer experience.

In fact, according to a recent Retail Industry Solutions/Cognizant survey, four out of five purchases still are made in a physical store. The trick, however, is making sure that store is yours and not your competitors’.

To do so, retailers must research carefully today’s growing assortment of display options. POP displays, store fixtures, digital signage and interactive kiosks are solutions that offer differing advantages.

Many of these choices provide a window into other sales channels, such as the Internet and social media, allowing shoppers to access outside resources while in-store.

3. Learn from success stories

Nothing speaks louder about the effectiveness of in-store merchandising and display so-lutions than success stories like Mizuno. The sporting goods manufacturer turned to Frank Mayer and Associates, Inc. to find a unique way to display its wide assort-ment of sporting goods. The result: innova-tive, two-sided displays featuring modular components that merchandise multiple products and updatable graphic panels to accommodate a variety of golf wedges, baseball bats and running shoes.

For Mizuno, the modular rack not only showcased the retailer’s products in an interactive fashion, but also “unified the Mizuno brand across all of our divisions,” Cole said. “The solution was universally designed to accommodate any Mizuno product to ensure consistency of look and feel across all sports.”

4. Ask questions of potential display providers

Behind every groundbreaking display solution is a transparent consultative partnership between a dis-play provider and a retailer. While many retailers know what they want, they have a hard time defining what they need. Asking a provider these 10 questions can help clarify goals and lead to the best retail merchan-dising provider possible.

1. With the primary objectives of my project in mind, how can you help?

2. What look and feel can you create for the display? (Review options, materials and installation requirements.)



5 steps to personalizing the in-store experience (continued)

3. What strategic decisions can you help me make in terms of where the unit will be placed, including envi-ronmental considerations and in-store traffic patterns?

4. How many units will be deployed and how quickly can you deploy them?

5. What size requirements can you recommend? (En-list a provider who is willing to measure the necessary footprint and varying parameters.)

6. How long will the display be in the field? (Quality of materials differs among providers, so choose carefully.)

7. What products and how many of each will be displayed or merchandised? (Sample a provider’s offerings and how they can support varying weight and size requirements.)

8. What are the packing and shipping requirements? (Some providers may insist on quick rollouts, while others encourage warehousing and shipping over a period of time.)

9. What are the installation and support requirements of the units? (Inquire whether installation assistance will be required and at what cost.)

10. What experience do you have in the retail space? Do you have an understanding of how various media screens and shopping tools converge at retail?

5. Implement and evaluate a new display strategy

There’s no such thing as simply flipping a switch when it comes to establishing a successful merchandising or display program. Rather, the first step often involves creating a timeline that maps out the process of selecting a solution through implementing a full-fledged deployment.

“A timeline is critical to success,” Holley said. “At first, a retailer might be concerned with store operations or marketing. But the reality is there are still set store dates that you have to hit. With a lot of big retailers, that’s a huge challenge. Setting a realistic timeline for installation and deployment can establish a solid foundation for a project.”

Once a timeline is established, retailers need to decide between a test phase or a full rollout and whether a dis-play will be set up in one run or in split production runs.


CHAPTER 3


A recent study by technology research firm eMarketer estimated that 44 percent of the U.S. population owned a smartphone at the beginning of 2014, with that figure projected to rise to more than 63 percent by the end of 2017. Other studies are more generous, speculating that nearly three-fourths of the U.S. population owns or uses a smartphone.

Smartphones offer features such as Web browsing, GPS navigation, a digital camera and the ability to incorporate third-party apps in addition to cellular and text functionality. Today’s midrange smartphone devices have computing power thousands of times greater than what was used in the capsule of the Apollo space missions in the late 1960s and early 1970s.

In addition, the prevalence of tablet computers means shoppers are com-fortable with touchscreen interfaces and interactive digital signage. If any-thing, consumers today are likely to be disappointed if they touch a digital screen and don’t get a response.

It’s natural, then, that retailers are looking for ways to leverage the power shoppers carry in their pockets, incorporating digital technology into their merchandising efforts via QR codes, smart shelves, interactive kiosks and digital signage networks.

Imagine, for example, standing in front of a video screen as it displays clothes or shoes for a customer to virtually try on or mix and match to get a feel for various color combinations. Perhaps a customer can tap an interac-tive shelf display or snap a picture of a QR code to access more information about a particular product and have that information sent to a cell phone or email address.

A customer might even pick up a tablet computer as she walks into a store and have that device suggest products based on her past purchases, while the store’s background music is interspersed with messages about current offers.

“Digital technologies can really enhance the retail experience for customers and extend the retail experience beyond just the store,” said Bart Foster, CEO of Duluth, Ga.-based health-care technology provider SoloHealth. The company’s HIPAA-compliant SoloHealth stations are located in more

Digital Technology in POP


than 3,500 retail locations around the country, including Walmart, Safeway, Sam’s Club, Schnuck Markets, Vons, Tom Thumb and Randalls stores. The kiosks allow users to perform health screenings, including for vision, blood pressure, weight and body mass index.

“For instance, our SoloHealth station not only provides health and wellness services at the kiosk but also across mobile technologies,” Foster said. “That capability allows users to access their data from their smartphones and computers and even integrate their data with other health applications.”

Incorporating technologyAlthough technology clearly offers the opportunity to expand merchandising efforts, one mistake many retailers make is deploying technology for its own sake, without a clear idea of the goal.

“I think so many of these things are the technology looking for a place ver-sus a real understanding of the consumer, about their needs, their unmet needs, what they want, what’s missing and what frustrates them,” Ernst & Young’s Merriman said. “That should be your starting point.”

The jury is still out on the effectiveness of QR codes and what their value may be in retail merchandising. According to the 2012 Omnibus survey conducted by Farmington Hills, Mich.-based research firm Morpace, while the awareness of QR codes has risen dramatically, their use has not kept pace. A total of 83 percent of consumers had seen a QR code in 2012, an increase of 20 percent over 2011, while only 30 percent of consumers said they have used a QR code, compared to 25 percent the previous year.

And RFID-based smart shelves, where digital screens play content in response to a shopper having picked up a particular item, are still in their infancy, although Retail Customer Experience cited the technology as one of its “Ten Trends to Watch in 2014.”

“Part of the problem is that a lot of companies developing these applica-tions are organized in silos, so they are not working together to find out how to create an overall consumer experience,” Merriman said. “Some retailers, then, just put out the solution without considering the end goal and how the technology integrates with the other solutions you are offering.”

While things such as QR codes and smart shelves may be a merchandising solution, they are simply a part of an overall merchandising plan.

“The No. 1 issue plaguing most of retail today is getting customers in your door, so just having content inside the four walls won’t do much if you can’t attract them to walk inside those walls,” h.h. gregg’s Lyons said.

CHAPTER 3 Digital Technology in POP

“Digital technologies can really enhance the retail experience for customers and extend the retail experience beyond just the store” — Bart Foster, CEO of SoloHealth


Still, he sees the potential for digital technology, particularly screen-based technology, to open a host of new opportunities for retailers. Using mobile, tablets, smart POS and digital signage is a way not only to get a message across to customers, but also to extend a retailer’s brand and more specifi-cally its aisles.

“In a brick-and-mortar store, I may only have room or access physically to a small set of items, but by offering more choice — breadth and depth of product assortment — I give the associate the power to say yes to a customer as well as customers the ability to determine if it’s worth waiting a couple of days for the product or to drive to a competitor or another store in that brand to get what they want,” Lyons said. “If you combine that with a value proposition of free or low-cost shipping/delivery to their doorstep, then you have a better chance of keeping that customer.”

CHAPTER 3 Digital Technology in POP

Mondelez plans to roll out smart shelves by 2015

Mondelez International, the global food giant that recently was spun off from Kraft Foods, plans to intro-duce smart shelves by 2015. Mondelez markets snack brands including Cadbury, Certs, Oreo and Trident.

The shelves the company plans to deploy incorporate sensors that are designed to detect the gender and approximate age of nearby consumers. The technol-ogy will use that information to trigger a video display that will show ads geared for those consumers.

The company will be seeking to place the shelves near checkout counters to help spur impulse purchases.

“When people walk by, it’s a missed opportunity,” Mark Dajani, CIO of Mondelez, told the Wall Street Journal. “We must know how the consumer behaves in the store. ... Knowing that a consumer is showing interest in the product gives us the opportunity to en-gage with them in real time.”

The company’s smart shelves incorporate sensors that will analyze facial structure, while analytics will segment customers by age and gender. Additional sensors will detect when a consumer picks up a par-ticular product, prompting the video display to take

actions such as displaying electronic coupons to spur purchases.

Mondelez will use the information it gathers to identify which consumer groups are purchasing which brands. “Knowing that 500 people picked up the product helps determine if the smart shelf placement in-store is optimal to drive traffic,” Dajani said.

The company assures privacy advocates that the data it collects is completely anonymous and will be used only to track overall purchasing behavior.

“People’s images are not saved,” company officials said. “We only track gestures to pick up products or what products have actually been picked up.”


CHAPTER 4


While merchandising efforts will be determined largely by the type of prod-uct on display, a few tips cover a wide variety of scenarios. Jazmin Hupp, director of marketing for the New York independent Apple store Tekserve, outlined a number of merchandising best practices on her blog.

Great merchandising, she says, is simple and logical, slows down a cus-tomer’s eyes, is coherent and groups together products a certain type of consumer (e.g., seniors, parents, teenagers) is likely to buy. Bad displays either are crammed with too many product choices or are understocked, so the display stands out more than the product.

To achieve great merchandising, retailers need to begin at the front door, creating a front-facing display that creates the appearance of something new. They should look for a theme or purpose that ties everything together and ensure they have enough inventory to support whatever promotion they feature. Stores should include potential add-on items and encourage customers to touch the product.

In addition, Hupp says, retailers should monitor sales to track the effective-ness of a display, moving it to different spots in the store every few weeks to assess the results. And prices should be marked clearly, preventing shoppers from guessing what the items cost.

Planning for theft-deterrent merchandisingOne of the major concerns retailers face today is inventory shrinkage, so any merchandising plan has to have loss prevention as an integral component. Planning for theft-deterrent merchandising focuses on three key areas:• Presentation of the product• Hardware components that provide the secure solution• Time and attention required for installation and maintenance

Every brand manager who has engaged in painstaking product and pack-aging development is focused on ensuring the product is as available to the consumer as possible. From a marketing and merchandising perspective,

Best Practices in Merchandising

To achieve great merchandising, retailers need to begin at the front door, creating a front-facing display that creates the appearance of something new.


the product should be easy to touch and view, so accessibility and sight lines are on the list of criteria.

The retailer may be particularly concerned about the small, easily shoplifted video games and how they can be merchandised securely. It will focus on the type of hardware with a view toward how easy a secure cabinet is to open and close and how durable it is. Hardware considerations include:• Glass versus plastic• Sliding versus roll-top doors• Durability of sliding tracks• Locking mechanisms• Availability of replacement parts• Compatibility with existing gondola systems

The store manager is interested in how easy a cabinet is to install and use. The ability to maintain a fixture with easily replaceable parts is also a consideration.

In the above example, secure in-store merchandising walks a line between attracting the consumer, thwarting the criminal and ensuring physical practicality. Planning for theft-deterrent merchandising displays focuses on the presentation of the product, the hardware used to secure it and ease of installation, use and maintenance.

PRODUCT-FOCUSED PLANNING

Product presentationIt is important to present displayed items in as realistic a fashion as pos-sible, because customers want to experience products in authentic ways. Many of the principles of creating good theft deterrent merchandising also applies to creating effective displays in general. Rules of thumb are:• Make the product as accessible as possible.• Alter the product as little as possible in the course of securing it.• Secure the product used for demonstration in the most unobtrusive

and purposeful way.

Use the features of the product to help secure it. For example, use the product’s power cord to anchor the machine to the merchandiser.

VisibilityHow much product is on display and how visible it should be can lead to different decisions about design and materials.

CHAPTER 4 Best Practices in Merchandising


• Some designs will maximize facings. A game cabinet in a mass merchan-diser can be as tall as six feet to show as many facings as possible. This kind of objective goes into the realm of store fixtures and centers on mak-ing all SKUs as visible as possible.

• Some designs will serve more of a display role than a merchandiser func-tion. Product selection may be arrayed across a countertop, but product for sale may be locked below in a secure cabinet. This type of display often is used for high-end products such as jewelry.

• Visibility from multiple sides may dictate certain materials such as clear vacuum form cases. For example, LEGO used a vacuum form case to dis-play a fully assembled toy that is sold as individual building blocks in a box.

InteractivityWhether product for sale is locked in a secure cabinet or available for self-service, retailers need to display items in a format that allows the customer to interact with them. After all, this is one of the reasons the overwhelming majority of shopping still takes place in brick-and-mortar stores.

First, a decision must be made about the form of sample product; options include:• Dummy product• Powered-off actual product• Product that is live or runs a demonstration loop

The desired level of interactivity will dictate design.• One class of tether may be used for dummy product. Product can be

secured by a retractable cable, a stand with a rotating mount or a mecha-nism that combines those two features.

• Displays may use dummy product so customers can experience the weight and feel of an item and the way controls and touchpads are manipulated. Notably, shoplifters may not realize that displayed product is not fully func-tional. Dummy product can be labeled as such to minimize tampering.

• For realistic product display, cables may serve the dual purpose of tether and power source, ensuring an always-on demonstrator.

• Customers may be allowed to engage with one part of the product — for instance, a controller on a game system — while other parts are encased in plastic.



HARDWARE-FOCUSED PLANNING

LocksThe discussion of locking systems can be an “aha” moment, because they are not always the first element a customer considers in developing a new merchandiser.• If retailers have a system in place, locks should be selected with the re-

tailer’s requirements in mind. Does the retailer have a specific system and lock it uses? How is this system used at the store level?

• Retailers who do not already have a locking system in place will want to decide, at the store level, if they want one key code or multiple key codes.

• In a scenario with multiple codes, it is advisable to have a merchandising partner who knows how to coordinate with a lock manufacturer to assign individual codes and service stores’ needs for replacement keys.

• A programmable radio frequency (RF) card is a solution that can replace traditional locks.

Cabinets and doorsDoor panels can be constructed of glass, plastic or wire grid. The type of door can be dictated by the design of the cabinet.

We may think of thick glass as impenetrable, but overlapping glass doors can be spread apart to gain entry to a “secure” cabinet. This kind of experi-ence encourages retailers either to:• add strengthening material to the edge of the glass, or• completely enclose the edge with rigid extrusions.The construction of doors can have an impact on the performance of the cabinet. Doors that are hung from the top of the cabinet instead of riding on a bottom rail have a longer life because they don’t roll over the dust and debris that collects in a bottom rail.

Plastic doors offer an alternative to glass that can satisfy various retail constituencies. Consider how they work in a roll-top security cabinet. Dur-ing peak times when stores are fully staffed, the top can be rolled up and products displayed openly.

During hours when there is less staffing, the PETG doors can be rolled down and locked, but product is still visible. Although plastic panels are framed by a steel structure, the structure can be minimized to keep sight lines open.



Tags and alarmsThe decision to budget for tags and alarms, an added expense, generally is dictated by the value of the product, the importance of accessibility and, sometimes, the individual security risk by outlet.• The most basic solution is usually a wired alarm or flashing sensor that is

triggered when someone tries to remove displayed product. A single cable may serve as tether and alarm.

• Magnetic electronic article surveillance tags may be applied to products and work in conjunction with store entry security systems. Tags come in a variety of configurations to accommodate different types of products and may be hard tags or adhesive labels. Tags for golf clubs, for example, are designed to fit on the shaft of the club without significantly altering the club’s weight for customers trying to evaluate equipment.

• Integrated systems that allow central monitoring to be combined with physical security devices can enable live displays and perform a range of functions. These systems allow products to be merchandised in a custom, branded fashion while securing product, keeping electronics charged, col-lecting data and incorporating interactive digital signage.

TethersCables offer a simple yet effective form of theft deterrence that satisfies the objective of allowing customers to touch and try before they buy.• Retractable tethers are an option that allows the shopper to handle a prod-

uct within a specified distance and return product to its original position.• Tethers can be alarmed or unalarmed.

Lower-profile shelvingShelf height works hand-in-hand with other loss-prevention measures to decrease the perception of opportunity by the shoplifter. As statistics from the NASP illustrate, shoplifting is often a crime of impulse. An opportun-ist may assess the physical qualities of the store environment in deciding whether to act.• Retailers who redesign their stores to use shelving that is 60 inches or less

take away some of the potential shoplifter’s perception of low personal risk.• Lower height facilitates natural surveillance.• Lower shelving height has the added benefit of allowing honest customers

to scan the store more easily for the items they need and of making items more accessible.



Shoplifting is a retail threat that can be mitigated if attention and resources are directed properly. Planning for secure merchandising must take into account the customer and satisfy a number of parties’ interests within brand and retail organizations. It involves both product-focused and hardware-focused planning that is enhanced by the expertise of an in-store merchan-dising company with experience across a range of environments.

Source: Frank Mayer and Associates, Inc.



CONCLUSION


Obviously, retailers have dozens if not hundreds of considerations when it comes to planning a merchandising program. Most retailers are experts at their own segments, but likely few are experts at the design and planning of a merchandising program.

As technology becomes increasingly advanced and retailers are tasked with creating an omnichannel experience for their customers, the compo-nents of a merchandising program are becoming more complex. While 20 years ago displays were largely print based, today’s displays incorporate features ranging from interactivity with mobile phones to digital touch-screens that allow shoppers to interact with a retailer’s website and order products for home delivery.

We at Retail Customer Experience urge anyone contemplating a merchan-dising program to avail themselves of the resources we have to offer, exam-ine the strengths and weaknesses of a variety of partners and choose the one that best meets their needs.

Choosing the Right Partner

traditional merchandising in the age of self-service€¦ · traditional merchandising in the age...

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