FMCG Merchandising: Performance Driven Retail Strategies.

We understand that fast-moving consumer goods (FMCG) are products consumers frequently use. Due to the speed at which they travel from facility to checkout, food, beverages, personal care, and household items can take much work, and companies need an FMCG merchandising plan to support their brand strategy.

Due to their short shelf life, these products are in high demand, leading to intense competition in this business. Therefore, FMCG companies must prioritize sales and customer satisfaction to stay ahead of their competition.

Here is where strategic FMCG merchandising comes into play, helping FMCG brands stay ahead of their competitors and build a solid and consistent brand presence.

FMCG merchandising is the data-driven art of product placement and store promotion that help catch the consumer’s attention. However, it is easier said than done because many factors are involved when devising an effective merchandising strategy to support your FMCG marketing and FMCG sales departments.

In this article, we will go through a detailed FMCG merchandising process and learn how to develop an effective strategy to stay ahead of the competition.

How Retail Merchandising Works

As mentioned earlier, retail merchandising presents the products in an eye-catching way to grab the customer’s attention. There are multiple tactics to make it work, ranging from product placement to visual merchandising.

Using these tactics, retailers create an environment that encourages customers to purchase products.

An Effective merchandising strategy starts with a complete understanding of the target customers, their shopping behavior, and their preferences. For this purpose, retailers use data analysis and FMCG market research to gain insights into their customers’ purchasing habits.

Other factors, such as industry trends and seasonal fluctuations, are also considered. After understanding the target customers and market trends, FMCG companies focus on optimizing their store layout and product placement.

In-House Team Management

Your in-house team management’s quality (and quantity) plays a vital role in retail merchandising. In the FMCG industry, the in-house team is responsible for creating, executing, and monitoring merchandising strategies that ensure effective promotion and sale of products.

Well-trained in-house teams also help merchandisers to optimize and maintain retail store compliance. Partner compliance involves confirming that retailers display the products according to the company’s guidelines and correctly implementing the promotions.

Compliance with these guidelines correctly implemented is essential for maintaining the brand’s image and maximizing sales. Sales reps are another critical aspect of the FMCG merchandising process. They work directly with retailers to negotiate shelf space, promotional activities, and product placement.

Partnering With A Merchandising Company

Merchandising companies provide expert services that help retailers stay ahead of market trends and generate more sales by keeping stocks full and where they should be.

One of the key benefits when partnering with merchandising companies is access to their experienced sales team, who know how to engage target customers.

These professionals deeply understand the retail industry and can offer valuable insights into the latest market trends and consumer behavior. They work closely with retailers to provide merchandising solutions tailored to their unique needs and goals.

Merchandising services provided by companies can help the sales team by saving time and reducing efforts. Apart from that, it also helps in making informed decisions about product selection, pricing, and merchandising strategies.

Performing Store Audits

Performing store audits can help not only provide insight into what’s going on within the store but it also provides an opportunity to engage with store personnel. With the help of store audits, companies can ensure that their products are being displayed and promoted in an attractive way for shoppers to drive sales.

Conduct Market Research

Companies must conduct detailed FMCG market research before developing a merchandising strategy, including the store audit. During this research, brand analysts collect market trends and store layout datasets. Apart from that, competitor strategies are also studied thoroughly during market research.

This collected dataset helps companies to determine the best assortment of products to offer, which brands to promote, and how to position their products in the market.

After the development of the merchandising strategy, specialists carry out store audits to verify its correct implementation. Through store audits, FMCG representatives assess the store layout to determine if the retailers display the products in prominent locations.

For example, there might be a high demand for specific products in a particular season that we must display in the front of the store. Central location comes at a cost, so consider this part of your FMCG brand strategy.

Also read: Learn the difference between CPG and FMCG and their marketing strategies.

The Challenges FMCG Brands Face

While running a successful business, companies face many challenges as they navigate the constantly evolving FMCG retail landscape. Here are some of the common challenges:

Limited Shelf Space

Shelves are essential for sales (of course) and an effective way to further your FMCG branding. It can quickly grab the consumer’s attention toward a specific product and help drive a purchasing decision.

Sometimes, the number of products available may exceed the open shelf space, making it difficult to display them all. Under such conditions, display products wisely to attract consumers’ attention.

A good way is to prioritize products based on their sales volume so that a retail store can generate more sales even in limited shelf space.

Stock Rotation and Management

Besides the limited shelf space, stock rotation, and management are other significant challenges for many FMCG companies.

FMCG brands must ensure that their products are properly rotated and managed in stores to minimize waste and increase sales.

Although it may appear simple, the successful execution of this task demands seamless collaboration with retailers and a robust inventory management system.

Retailer Compliance

FMCG companies must follow the rules and regulations set by retailers to sell their products. These rules and regulations may include adhering to the packaging requirements, ensuring product availability, and maintaining pricing consistency. Not following these rules can lead to delisting costing your precious time, revenues, and resources to correct the problem.

At times, following specific rules can pose a challenge. An instance of this could be when the cost of procuring raw materials for production unexpectedly increases due to an economic downturn.

Companies may also face logistic issues such as delayed delivery due to route blockage. Retailers may have multiple FMCG brands competing for shelf space and consumer attention. When you are out of stock for logistical reasons, it opens the door for your competitive neighbors to come in and steal your loyal consumers.

Brands that can’t meet retailer compliance requirements risk losing out to competitors who can, which can result in lost sales and market share.

Consumer Demand Forecasting

Another major challenge that most new and established businesses face within the FMCG sector is the forecasting of consumer demands.

Although modern techniques like artificial intelligence and machine learning can assist in making somewhat accurate predictions, traditional methods are ineffective.

It is because multiple variables are involved, such as changing consumer preferences with time. For example, a sudden trend in a particular product category can result in a surge in demand. Not only this, but consumer demand forecasting can also help optimize your FMCG pricing strategy.

Technological Advancements

Abrupt technological advancements can also be a challenge for the FMCG retail market. It is because it changes consumer behavior rapidly.

Thus an FMCG brand development company must keep up with the latest FMCG trends and find innovative methods to engage with consumers.

The FMCG brand strategy company needs to be agile and adaptable in its approach to branding to stay relevant and effective in a rapidly changing landscape.

Moreover, technology can also lead to an oversaturation of products in the market. It leads to increased competition, and brands must develop innovative strategies to stay ahead.

FMCG Merchandising Strategies

Intelligent and reliable FMCG merchandising strategies can skyrocket sales. However, developing and executing a successful merchandising strategy can take time for many people.

Let’s look at some critical factors in creating a successful merchandising strategy for increased profitability.

Corporate Block

Corporate block means the company’s specific merchandising strategies to optimize product placement and maximize sales within the retail store environment.

The corporate block involves product grouping and bundling for the same company or a brand in a designated area inside the store. For example, you might have seen a section dedicated to “Red Bull” or any other drink inside a supermarket.

Product grouping is done based on various factors. It includes product category, brand affiliation, and, most importantly, promotional campaigns. Corporate blocks allow companies to attract more consumers, increase brand visibility, and ultimately drive more sales.

Besides that, here are some key aspects and benefits of incorporating a corporate block in FMCG merchandising strategies:

1. Brand cohesion
2. Cross-selling
3. Enhanced shopper experience
4. Promotional impact
5. Retailer Collaboration
6. Data and insights

Multiple Touchpoints

Multiple touchpoints mean utilizing various channels and locations to engage with consumers and promote products. It helps FMCG companies to gain more reach and generate more sales.

Besides that, these multiple touchpoints are the key to interacting with the consumer and learning more about them.

Regarding FMCG merchandising, there are three main touchpoints: point-of-sale displays, displays, and promotions.

Point of Sale Displays: The strategic placement of products within the retail environment. Usually, point-of-sale displays are near retail counters where products are displayed attractively to generate that last-minute sale. For instance, retailers usually place chocolates, chewing gums, and cigarette packs near counters.

Displays: Displays play an essential role in FMCG merchandising. Companies can engage more customers by simply appealingly showcasing products. These displays can be in various forms, from end caps and aisle displays to freestanding units strategically placed throughout the store.

Promotions: Running a successful Company means relying heavily on FMCG advertisements. It can aid in acquiring customers and establishing lasting brand recognition. Partnering with a trustworthy FMCG packaging design company can handle up to 50% of the promotion and branding aspect.

Cross Merchandising

Cross merchandising is a retail strategy that an FMCG brand development company usually implements when building brand awareness. It is the display of complementary products together.

Cross merchandising can help increase overall sales instead of just a single product line. It is because, in this technique, products from different FMCG categories are usually grouped together and placed near each other.

An excellent example of cross-merchandising is the display of salsa near tortilla chips or batteries near electronic devices.

Ecommerce Merchandising

The internet has shaped the world entirely in the recent few decades. People are not only buying clothes online, but they are also using ecommerce platforms to purchase groceries.

Especially after the covid-19, people are becoming more used to online shopping, which has further increased the importance of ecommerce in the FMCG sector. Retailers operating in an omnichannel environment must adopt effective strategies to optimize the online shopping experience.

Apart from that, one key aspect of e-commerce merchandising is managing inventory levels. As the demand for the product grows, tracking and maintaining inventory is necessary to avoid stockouts and overstocking.

Merchandising Reports

An FMCG brand strategy company can derive useful information from merchandising reports throughout the year. Based on this derived information, it can optimize strategies and make new plans.

Brands can obtain merchandising reports through various methods, such as eye tracking and analytics. It can tell about consumer behavior and optimize merchandising initiatives.

Moreover, eye-tracking technology is also helpful in learning how customers engage with product displays and store layouts. Thus, retailers can determine which areas attract the most attention and assess the effectiveness of visual merchandising techniques.

Optimized execution is a crucial objective of merchandising reports. By reviewing and analyzing the data and insights provided in these reports, retailers can identify areas of improvement and implement changes to enhance their merchandising strategies.

This may involve adjusting product assortments, improving store layouts, refining visual merchandising techniques, or implementing targeted promotional campaigns.

By continuously evaluating and optimizing execution based on merchandising reports, retailers can stay competitive, drive sales growth, and enhance the overall shopping experience for customers.

Data-Driven Brand Development

Want a best-selling brand? SmashBrand is a brand development agency for FMCG and CPG companies. From brand strategy to packaging design testing, our Path To Performance™ process guarantees a retail performance lift. Book a time to discuss your project with our team.