Maximizing Your Merchandising ROI

Venture beyond ‘price-only’ merchandising for a greater payoff

CHICAGO -- In 2012, marketers and their retailer-partners expressed one overwhelming sentiment about how they approach in-store merchandising programs: “Show us the results.”

With 90% of trade promotions producing a negative return on investment, skeptical marketers are treading conservatively—and often one-dimensionally—in deciding how, when and where to invest store-level merchandising dollars.

Cautious conservatism was just one idea offered during a recent Webinar—“Merchandising Trends: Supporting the Value Proposition”—hosted by Chicago-based Symphony/IRI Group.  Susan Viamari, Editor of Times and Trends for the retail trend and consulting group, provided three key takeaways for marketers and retailers to ponder:

  • After subsiding briefly in 2011, merchandising activity picked up across a majority of CPG channels in 2012;
  • On average, merchandising activity within the drug channel decelerated for the second consecutive year, yet support across key health and beauty-care (HBC) categories intensified more quickly in drug versus the grocery channel;
  • Despite the fact that lift from price-only merchandising is generally much lower versus lift achieved by other tactics, reliance on this tactic increased across more than half of CPG categories in 2012.

Viamari discussed the latest trends encompassing the four core merchandising strategies: Price-Only, Feature, Display-Only and Feature/Display strategies. She stressed that there’s often a need to deploy multiple strategies to achieve maximum category lift, but many retailers place too much emphasis on price-only strategies: Over this past year, price-only merchandising occasions shot up 51 % from 31%, while display-only rose to 59% from 46%, reflecting the top 10 CPG categories within multi-outlet and convenience channels. 

However, Viamari said retailers cannot live by price-only merchandising tactics alone to achieve category lift. “Price-only tactics are not the be-all and end-all as drivers—retailers need the other drivers to succeed.” She added that overuse of price-only actions can hurt brand equity because people get accustomed to a discounted price, and resist it when prices rise to their natural price point.

She added that “we are in a conservative marketplace,” which reflects this price-only trend. But it’s surprising, she observed, that marketers would lean heavily on price-only tendencies given the fact that “pre-planned shopping among consumers is so pervasive.” With pre-planned shopping, consumers are more focused, know what they want and are educated on price points prior to arriving at the store.

Viamari pointed out that changes to price-only actions are key drivers of merchandising trends across many CPG categories, “with all of the categories that experienced the largest merchandising activity increases seeing price-only actions escalate and most of the categories where merchandising activity decreased most sharply seeing price-only actions decline.”

Where is the payoff?

As for achieving ROI through merchandising, Viamari said marketers can ensure success through sophisticated analytics, “running scenarios to predict ROI on a campaign before it actually starts, so ideally they can eliminate negative ROI results,” she explained.

For example, Viamari said that “home-based food rituals” have grown, and that savvy marketers have capitalized on product categories that cater to this trend. In looking at the Top 10 categories by merchandising activity level—multi-outlet plus c-stores—ice cream/sherbet rose 2.4% from the prior year, chocolate candy was up 1.6%, frankfurters grew 2.3% and frozen pizza increased 1.2%. Carbonated soft drinks (CSDs) and crackers were the biggest merchandising-support losers, both falling 2.4% each.

Concerning ice cream/sherbet, Viamari said this product is aligned with home-based eating rituals, and people are buying treats for home-based enjoyment. “So why not leverage trends in this area to grow the frozen foods department?” she suggested. “I think that with ice cream/sherbet, marketers are getting it right with a price-only approach.”

The actual “lift” from merchandising support has declined across a strong majority of categories and, today, nearly half of categories achieve lift of less than 50% from merchandising programs, she revealed. And while private label is growing with the economy being down, the merchandising support behind private label is regarded as a weakness.

Regardless of the merchandising method, Viamari said messages need to be better personalized. “Technology is helping as most marketers said they expect to increase spend on digital media this year, so the shifts that are happening across different media, marketers are making adjustments and realigning to have relevant conversation with their consumers.”

For a replay of this Webinar, visit