By: Jennifer Childers | Data Analyst
Below are highlights from Mars and Hershey on their respective recommended flows.
Mars: Shopper Based Merchandising
Mars Wrigley’s Immediate Consumption (IC) shopper-based merchandising is rooted in shopper and category insights validated with in-market results. The foundation of shopper-based merchandising is a confectionery purchase decision tree study conducted by Nielsen that analyzed how consumers shop the category and make decisions. Additionally, shopper-based merchandising is based on insights gained from multiple virtual shelving studies conducted by Kantar that tested different shelving strategies and identified optimal shelving to maximize sales and enhance findability/shelf navigation for the shopper. The Mars Wrigley convenience category team is diligent about tracking and measuring the impact of shelving changes in the market. They conducted multiple tests and learns and have consistently seen that shopper-based merchandising can drive 4-6% sales growth in dollars for the category, and benefit all sub-categories. A c-store retailer recently saw their category increase by 9% after converting to shopper-based merchandising!
Shopper-based merchandising is made up of insight-based shelving principles:
- Start by organizing the aisle into distinct sub-category sections. The first decision shoppers are making is sub-category. Customers may buy multiple sub-categories, but they do not substitute them for each other.
- Lead with gum over chocolate, anchor with mint over fruity. Chocolate is the top performing sub-category with the highest HH reach. Gum is almost four times larger than mints and has double the household reach. Leading with these two categories will help draw the most shoppers into the aisle. Mint is the smallest sub-category, has the least amount of household penetration and purchase frequency, and it is the most planned category in confectionery at 45%. Shoppers will find this category no matter where it is and placing it above fruity confections can help build baskets. There is a higher interaction between mint and fruity (510 basket affinity index) than mint and chocolate (323 basket affinity index).
- Lead with power brands in all sub-categories on both sides of the set. Power brands are high share, high HH penetration and high loyalty brands. These brands should be used as signposts for the category. Power brands by subcategory are Reese’s, M&Ms and Snickers for chocolate, Extra for gum, Skittles for fruity, and Icebreakers and Mentos for mint.
- Create vertical brand blocks in chocolate and fruity, placing share size on top (and most visible) shelves over single. Brand is the number one decision consumers make when shopping for chocolate and fruity. Organizing product into vertical brand blocks creates one, easy-to-find location for shoppers to navigate and enhances findability. Virtual testing showed that vertical brand blocks resulted in shoppers finding items 7.6 seconds faster than when brands were placed in various locations on the shelf. Placing share size on the top shelves that are most visible to shoppers results in greater overall category sales that favors share size and helps drive trade up. Trade up to share size ultimately delivers more topline sales and more bottom-line penny profit.
- Lead gum with trade up packs, placing bottles on the top shelf and mega packs on the second shelf. Trade up packs are driving 73% of gum growth, with mega packs growing more than 75% compared to YAGO.
Hershey: Strike Zone
Evolution
- In 2020 standard bars were on a steady decline. As the second largest pack type in IC (+$1.3B), it presented an opportunity to look at the way traditional sets are merchandised.
- A third-party company, Integrated Research Associates, tested three different merchandising strategies against the control (traditional king over standard).
- Horizontally ribboned (king, standard, king, standard, etc.)
- Vertically king and standard
- Vertically king, standard, and non-chocolate
- The first two tested approaches integrated non-chocolate with chocolate, whereas the third was segmented from chocolate. The test ran for 12 weeks and stores were selected by a software program that identified similar stores based on market development of the category, stores with similar volume, and similar sales trends over time. The stores were monitored weekly by a team of merchandisers for changes in merchandising conditions, out of stocks, etc. that could potentially impact results.
- The second phase of testing merchandising strategies involved video mining, tracking the shoppers’ visual path, and their decision-making process. Over 10,000 customers were surveyed and reported that shoppers spent less than two minutes in stores, and 30 seconds in the candy aisle.
What is the Strike Zone?
- The Strike Zone is located 15-30 degrees below direct eye level and has a 95% visual penetration rate. It’s where shoppers first search for brands and items of choice. With the top 15 high velocity items accounting for 40% of everyday IC sales, strike zone placement can translate into a 4-6% increase in IC sales.
King & Standard
- The traditional king over standard approach pushes high velocity standard bars down to the bottom shelves in favor of king. This impacts IC growth because standard bars that outperform some king (innovation and everyday items) are hard to locate during the seconds it takes a shopper to make a decision. It’s proven that standard bars have their own fan base, 25-29% of IC consumers will not trade up to king. As traditional merchandising reduces standard bar visibility, it negatively impacts sales and slows category growth.
- Planograms built around vertical merchandising and optimized strike zones have proven their value in organizing by velocity and intuition. Vertical merchandising:
- executes top performing brands and items on strike zone shelves.
- positions remaining items within power brands, descending by velocity; and
- positions remaining brands and items based upon velocity, while retaining brand blocking. This allows for top items to be lined up waiting where nearly every shopper looks first. The vertical format makes it easier for shoppers to navigate the shelves and find their desired item more quickly.
Refreshment
- In order to fully financially optimize the planogram, refreshment shelves should lead the aisle with gum bottle packs over mints. This allows customers to have both offerings within the first four feet of the set. Mega packs shouldn’t lead under bottle packs since mints outperform mega packs from a dollar and unit perspective, despite having a lower retail price. Therefore, they warrant the placement.
Results
- Retailers who merchandised vertically and optimized their strike zone shelves have experienced category growth and standard and king size growth. By moving lower velocity king items down and high velocity standard bars up, there was an increase in dollar sales and no cannibalism to king size. This strategy continues to prove longevity year-over-year. Retailers implementing strike zone are experiencing a five-year CAGR of +4.4% in king and +7.1% in standard bars. Within king size, strike zone retailers grew in chocolate king size versus non-strike zone retailers because customers found what they wanted with ease.
View the most recent Candy/Gum/Mint 12ft Strike Zone POG.
View the most recent Candy/Gum/Mint 12ft Over-Under POG.
