CPG MERCHANDISING TRENDS 2007: NEW STRATEGIES FOR A NEW RETAIL ENVIRONMENT
EXECUTIVE OVERVIEW
AUGUST 2007

IRI's Times & Trends highlights new developments and critical events across all major CPG categories and channels, providing powerful benchmarking data to help guide your strategic decisions. This issue provides insights into trends in CPG merchandising activity and effectiveness.
This free summary is also accessible via the GMA/FPA Web site at  http://www.gmabrands.com/publications/gmairi.cfm

INTRODUCTION
The collision of two conflicting trends is ushering in a new era of merchandising.

As retailers increasingly seek to brand the shopping experience and provide a clutter-free shopping environment, many are dramatically reducing displays and store signage. At the same time, manufacturers are increasingly turning to in-store marketing as media fragmentation drives down the efficacy of traditional advertising vehicles.

Where does that leave us? Both merchandising activity and effectiveness are down, despite growing manufacturer demand, and new approaches to merchandising have yet to take hold on a broad scale.

This report provides insight into current and emerging merchandising trends to provide CPG manufacturers and retailers a framework in which to develop new merchandising strategies for a new retail environment.


 KEY FINDINGS

Merchandising activity is down across CPG categories. Merchandising (displays, feature ads and price reductions) remains a critical tool in driving sales – 30 percent or more volume was sold with merchandising support in over two-thirds of CPG categories last year. However, across a majority of categories, merchandising activity decreased last year, driven in large part by declining display availability. Both private label and branded products have been impacted by this trend.

The number of grocery displays continues to decline. Retailer efforts to enhance the shopping experience have led to “clean floor” policies that restrict the number, size and characteristics of displays; indicative of this general trend, the number of grocery store displays is down nearly 10 percent in just two years.

 

Average merchandising lift is eroding. Nearly three-quarters of CPG categories experienced a reduction in the average lift achieved through merchandising as “prime” merchandising opportunities become more limited; manufacturers will more actively experiment with new in-store vehicles, such as digital signage and in-store TV and will step up merchandising testing and monitoring to counter this trend.

Collaboration to become even more critical to successful merchandising. Merchandising will evolve to become more strategic than tactical and will require closer collaboration between manufacturers and retailers; expect to see more sophisticated trip-based merchandising, multi-category solutions merchandising (e.g., meal solutions, spring cleaning) and merchandising that educates consumers on product attributes such as health or sustainability benefits.


 

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Source: IRI's Times & Trends Reports
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