Over the last several decades, larger brick-and-mortar stores haven't fundamentally changed their layouts and merchandising approach. Ask just about any big-box retailer what their goal is today, and the answer would be about the same as it would have been in 1960: to serve as a one-stop shop for customers to meet all of their retail needs. Shoppers today, however, have many more customized options to meet their needs, from always-available e-tailers to smaller stores that enable more “fill in” than “stock up” trips. As a result, today’s shoppers must be marketed to in a much different way. In short, much of the retail landscape needs to catch up.
In order to respond to the changing retail landscape, retailers should implement new rules of in-store merchandising, both by considering the shelf as a display and by leveraging three new factors: promotional intensity, customization, and digitization when building merchandising displays. Because they're pressured to attract, engage, inform, and sell both products and services in ways that offer compelling differentiation vs. their online competitors, the shelf is the first place to start. With square footage at a premium, shelves must work harder to grab attention, often unaided by promotion. Shoppers, in turn, want more out of stores and will gravitate to retailers that leverage the shelf as more than a holding place for products.
The Value of Product Packaging
The single most important way retailers and suppliers can affect change at the shelf is through product packaging. Product packaging becomes an important marketing tool to help items stand out on the shelf and attract shoppers to the point of sale. Engaging packaging drives shelf visibility through more engaging colors, substrates and premium packaging, while giving brands an opportunity to drive conversion and create affinity with shoppers.
In fact, visually appealing branding paired with a functional, clean package design leads to a stronger brand statement, and can even drive impulse buying. According to WestRock Packaging Matters Pulse research, 65 percent of consumers have tried something new because of packaging. Shoppers are looking to retailers to reimagine the store as a place to discover, a place for sensory engagement, for ideas, even a place to solve problems. Whether the goal is bigger baskets, increased loyalty or becoming a destination for a particular product category, in-store merchandising today must leverage three key factors to drive differentiation:
- Promotional Intensity: In the past, retailers have relied on endcaps to promote brands. Today, as 37 percent of supermarket shoppers primarily or exclusively shop the perimeter of stores, retailers must use packaging and displays to sell the entire aisle or, ideally, the entire store’s market proposition. When displays provide entertainment and engagement representative of the store itself, consumers will stop and think, “This is why I shop here.”
- Customization: Retailers must leverage uniqueness in their display systems in ways that extend beyond signage and color. For instance, retailers can provide shoppers with targeted solution centers by cross-merchandising categories in a single display in ways that uniquely accent the banner’s strategies (e.g., pet care, cultural outreach, meal kits). Other customization may leverage the store’s services, such as accenting quick-care services at the pharmacy as part of an endcap during cold and flu season. In these ways, the shopper is more likely to say that the store “gets me” compared to feeling that it’s her job to “get” the store.
- Digitization: In this evolving retail landscape, most shoppers walk into stores with a mobile device. These devices enable retailers to turn an interaction with a product or display into a media channel to conduct a conversation and commerce, all customized to that customer's profile. In this way, offering audio and visual interactions, touchscreens and barcode scanners will drive engagement with shoppers in ways that personalize the otherwise “mass” experience of the store. The dynamic nature of these interactions also enables retailers and suppliers to change messaging over time and customize content for new vs. repeat shoppers. Merging the digital with the physical is a new mandate in retail to advance your brand, enticing shoppers to return to the store to see “what’s new?” in a way that’s customized for them, by way of their devices.
Leon Nicholas is the vice president of retail insights and solutions at WestRock, a supplier of paper and packaging designs.
Related story: Prime Day Spotlights Grocers’ ‘New Normal’