Retail Shelf Space Optimization: Strategies for Maximizing Sales and Profits

In today’s ahead-of-the-crowd retail area, adopting retail shelf space optimization is the metric for assessing the value of growth. With an increasing number of products being launched by different companies, brands leave no stone unturned to draw the attention of their primary customers or consumers.

So if you really think about it, every retailer needs to adopt strategies to use their limited shelf space to lift sales and gain profits. In this research report, we will understand real meaning from shelf space optimization, which remains the important principle to follow, and how technology can allow retailers to make analytics based decisions about their broad spectrum of product layouts. 

What is Shelf Optimization?

When it comes to defining retail shelf space optimization it is a process of organizing and allocating different products on store shelves in such a way that it boosts up the sales and revenue. If you are able to utilize shelf space effectively, retailers can easily boost sales along with improving product visibility and creating a good shopping experience for the consumers. It offers several benefits, which include the following: 

• Increased sales
• Chiefly improved level of customer experience
• Better inventory management
• Perfected use of space

Strategies for Retail Shelf Space Optimization

There are two important strategies for fine-tuning the retail shelf space effectively; let’s check them out as under: 

1. Vertical Merchandising

One of the basic rules of this retail shelf space strategy, vertical merchandising, is that ‘eye level is only the buy level’. According to several studies, consumers mostly target shelves that fall on their eye and hand levels before they proceed to look below or above. This kind of customer behavior is found in both adults and children.

So, in any kid’s corner, you can find their products placed at their eye level, and similar is the case with adults. Every shelf level has its importance, and each can be optimally placed, filled, and made accessible to the concerned primary customers. 

There are three rules for vertical merchandising:

• Upper Shelves: These are usually employed for premium or quality products or niche offers, as customers tend to associate the higher shelf levels with exclusivity and sophistication. 
• Middle Shelves: These are perfect for high-rotation and best-selling products, which offer maximum level visibility and easy access. 
• Lower Shelves: This is suitable for high-rotation, fast-moving consumer goods (FMCG) and private label products. Customers get down to get these products they want for which they end up saving good money. 

Here’s a table that clearly defines how can you use the different stratas of retail shelf space: 

So, the main focus needs to be the middle shelves, and the rest of the items can go in the lower and top shelves. 

1. Perfected Space Allocation

Allocate space to each category and product derived from its sales performance, gross profit margin, and inventory turnover. High-performing categories needs to be allocated more space and needs to be placed in prime locations, although low-performing categories can be offered less space in less prime locations.

1. Create Planograms Compliance

Planograms are visual representations of product placement on the shelves, and they can help ensure consistent product placement across multiple stores (if your retail store has multiple outlets). Creating and implementing planograms requires regular observing advancement and adjustments derived from sales data and customer feedback.

1. Part the Products

Product segmentation is important to understand what products customers usually prefer to buy. You can categorize products derived from different factors like price, popularity, and product type. It will help you identify the popular products so you can know which need to be placed in prime locations and which can be shifted to upper or lower shelves. 

Wiring up 

Retail shelf space optimization is critical to remaining competitive in the market. It helps boost sales and garner higher profits in these tough market conditions. Implementing these strategies, as discussed above, can help retailers offer an enjoyable shopping experience as they make the most of their available space.

Also, with the emergence of analytics based technology improvements, it may be time to introduce and carry out such platforms in your retail shelf space optimization as well. These platforms include cutting-edge analytics and image recognition features, which give discoveries about product performance, consumer interactions with shelving displays, and winning sales trajectories. So, visit Intelligence Node today to get reliable and reliable software that maximizes the possible of your retail shelf space.