In-Store Grocery Merchandising: More Changes on Display

By Jim Danielson and William Ilaria, In-Store Solutions Group, IRI


Even with all of us now masked at the store, the grocery shopping experience is starting to feel more like it used to, especially as we increase our visits to stores. Yet closer inspection of the data tells a different story, particularly when it comes to in-store display. One of the most impactful elements of merchandising in grocery, display has undergone significant changes this year – many of which may stay with us in the long run.

The Incredible Shrinking Display

Efforts to accommodate social distancing have significantly cut into retailers’ display space. Since enacting the six-feet-of-space protocols, retailers now provide an average of five fewer displays compared to the previous year, with both perimeter and in-aisle displays taking a hit.

Moreover, the displays that do remain feature fewer items: a typical endcap in 2019 had 13.5 UPCs compared to 12 in 2020. Those 1.5 fewer items add up quickly when multiplied across the entire store, according to a recently published report by IRI, “Reignite In-store Merchandising Effectiveness in the Grocery Channel.”  

With space at a premium, what earns a place on display is shifting too. Not surprisingly, sanitizing products such as bleach, cleaning wipes and soap have enjoyed greater visibility, but so have categories uniquely suited to quarantine. These range from at-home iterations of professional services such as hair coloring kits, as well as stress-busting activities like baking — displays featuring refrigerated dough or biscuits have jumped 16% since last year — and imbibing: pre-mixed cocktails are up 22%. However, traditional display-dominating categories such as snacks and beverages feature far less prominently.

Several factors have contributed to the assortment shake-up. Supply chain challenges have impacted merchandising for high-demand items such as paper towels, leaving manufacturers wary to invest in display if they can’t meet demand. Additionally, retailers are allocating prime real estate only to the ‘home run’ items that promise dividends on every inch of display.

Less Must Do More

Despite changes to the amount and type of items featured, display remains a solid sales-booster, with its impact decreasing only slightly compared to this time last year (by contrast, feature sales have softened significantly, losing 2.5 share points in the seven weeks ending Sept. 26, 2020, compared to pre-pandemic levels).

As demand for precious display space grows, so do expectations for performance. In this pandemic era, retailers are taking a hard look at which manufacturers will be awarded display space. If you’re a CPG, you need to be ready.

This means that it’s more essential than ever to develop a merchandising strategy reflective of your customers’ shopping patterns and preferences. Traditional metrics used to track sales don’t always translate to the best approach for driving volume and share.

The industry must get better at leveraging in-store activities to fulfill merchandising needs. For example, does it make more sense to have one big ‘showstopper’ or several displays around the store to make sure you’re reaching consumers in the right place and at the right time with the right product?

Looking Ahead

As we enter the holiday season, expect continued emphasis on cleaning and home care products. And in keeping with this year’s ‘make at home’ ethos, items geared towards cooking, celebrating or relaxing stand to steal space from traditional holiday display categories such as candy — which lost space even on the most treat-based holiday, Halloween.

Looking further into the future for manufacturers and retailers, we foresee parallel trends of collaboration and competition. Retailers and CPG manufacturers are working together better than ever. Everything is becoming a partnership, and that is one of the true silver linings of the pandemic.

At the same time, fierce competition remains a reality of the industry. Elbow-to-elbow shopping may be done for the long-run, reducing display space while increasing ROI expectations for months or even years to come. This signals that we’re heading into a true era of SKU rationalizing, which will lead to closer scrutiny of tertiary items.

And, as retailers cede square footage to social distancing protocols, they will simultaneously need more space to accommodate delivery and click and collect. Besides affecting store design, these services will continue to re-shape what consumers expect from their grocery shopping experiences — which means increased competition not only within but between stores.

If 2020 has taught us anything, it’s that change is the one thing all of us can count on. Staying competitive requires staying nimble. Using the latest data-backed insights will ensure that your merchandising strategies reflect the ongoing shifts in CPG shopper behavior and consumer demand and set you up for a more profitable future.



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