Archive for February, 2011

Promotional Displays – Do they work?

February 17, 2011

Many vendors use displays at retail customers to drive higher visibility and increased sales. A floor pallet or wing stack with product is a popular display program. These programs are often offered to the retailer at a discounted price and usually require the vendor to absorb both the discount and the cost of preparing the display. The objective is a short term boost in sales that hopefully creates long term repeat buyers. The question is do displays work?

We have been studying this exact question for a number of clients who sell at Home Depot, Wal-Mart, and Lowe’s. Unfortunately the impact of displays can be very difficult to analyze for the following reasons.

· The SKU’s on a display are usually the exact SKU’s that are available on the shelf and as a result it is not possible to uniquely track a display sale vs a regular on shelf sale. You can look at the sales before the display shipped and after it shipped and calculate the change in sales, but it’s not an exact science.

· Shipping of products is increasingly going through a distribution center and not directly to the store. As a result the exact store and delivery date of displays can be difficult to track without significant extra effort and coordination with the retailer.

· The retailer often exerts a significant amount of influence on store selection and the timing of when the display will be shipped. While this is understandable it can be detrimental to the vendor and unfortunately sales. Not all stores warrant a display and for many products the timing can have a large impact on sales.

· The execution of the display can be uneven across stores since many store managers have a great deal of latitude on where the display will be located. In addition store managers have latitude on the length of time a display will be available and when the display is broken down and the inventory put into the regular shelf position.

What can be done to increase the measurability and effectiveness of displays?

· The most important action a vendor can take is to use a display SKU that is different from regular on shelf items. This is the ideal solution, but in reality this is very hard to do because retailers do not like to have new SKU’s and most especially if the item is a short term sale.

· Work with the retailer to design display programs that can be accurately tested. There are several variables you can work to control: store quality, location, timing, display type. The key is to create test programs which have these variables controlled so you can track their success. For example you might choose 50 grade A (high sales) stores in two geographically similar markets and ship a display to them in the spring. Then ship the same display to the same stores in the fall. This provides the ability to understand if time of year impacts the rate of sales. You can then create a program that changes a different variable and test its impact. Operationally this can be challenging because often the retailer must approve the display store list and timing but working together there is an opportunity to explain the benefits of testing and the cost realities born by the vendor that make the test essential.

Rainmaker will be positing additional thoughts on displays in the future and welcomes your feedback and insights.