A broad shelf does not generate a bigger shopping basket than a small shelf

Regardless of the width of a particular category’s display, people go shopping with their regular consumption needs in mind. Owing to that fact, a broader choice of products is not likely to induce them to purchase a greater number of products.

CONSEQUENCES FOR BUSINESS

Customers’ purchasing power in a particular category is relatively constant, while a broader choice on the shelf means only lower likelihood for the producer that their products would be selected. From the business point of view, with a product which has no visible competitive advantage, it is easier to build its sales on a smaller shelf in traditional trade than – even with a greater customer traffic – on an enormous shelf in a hypermarket.

CASE STUDY

A producer of breakfast cereal compared the situation of basket shopping between sales channels in traditional and modern trade (supermarkets/hypermarkets). It turned out that regardless of the store type, people buy a very similar number of products: on average 1.2 items. Data revealed that the size of the shopping basket is not conditional upon the width of the display or the type of the channel. The average number of products in the basket per customer remains very similar, regardless of the sales conditions.

BUSINESS RESULTS

What should be taken into account while managing planograms in various points of distribution is the relationship between the customer traffic, the number of competing products and the share in the shelf. The customer traffic in the category with an average popularity differs from 10 to 15 times between a traditional store and modern trade store. In order to level the playing field for sales in both channels (except for the side costs, e.g. those connected with the presence on the shelf), chances for purchase in modern trade should be 10–15 times smaller than in traditional trade. In reality, however, the scope of the offer in superstores impairs chances of choosing a particular „typical product” on the shelf much more. As a consequence, it is very difficult for smaller producers/brands to achieve satisfactory results in hypermarkets, and large customer traffic is usually beneficial for huge brands (chances to be chosen do not plummet as dramatically in their case). Smaller producers or brands tend to build customer base/range more easily in smaller stores.

TIPS BEFORE APPLICATION:

  • Ask yourself: In which channels the display is worthy of investments due to the customer traffic and chances of products being selected from the shelf?
  • Ask yourself: Is the brand so big/well-known that we can expect it to be chosen in a superstore among a wide range of competing products?