What is Commercial Merchandising? Understanding Its Role for CPG Brands
In the competitive retail landscape, consumer packaged goods (CPG) brands must do more than just create great products—they must ensure that those products are strategically positioned to attract customers. This is where commercial merchandising comes in, playing a crucial role in product visibility, placement, and sales.
What is Commercial Merchandising?
Commercial merchandising refers to the process of managing and promoting products in retail environments. It encompasses the entire journey from production to shelf placement, ensuring that products are not only available but positioned for maximum appeal. For CPG brands, this includes items like snacks, beverages, and household goods that occupy store shelves and online platforms.
However, it’s not just about getting products into stores; it’s about where and how they are placed. The right placement—such as at eye level or in high-traffic areas—can significantly boost sales by capturing customer attention and encouraging impulse buys.
The Importance of Commercial Merchandising in the CPG Industry
The CPG industry consists of fast-moving products that consumers frequently purchase and replenish, including food, beverages, and personal care items. Given the rapid pace and competition in this industry, brands must focus on their commercial merchandising strategies to stand out. Effective merchandising ensures that products are positioned for success, building customer loyalty and driving sales.
A well-executed commercial merchandising strategy can differentiate a CPG brand in crowded retail environments. This includes everything from product design and packaging to securing optimal shelf space, ensuring that products are both visible and appealing to consumers.
What Makes for Good Commercial Merchandising?
Good commercial merchandising involves a combination of high-quality products, smart packaging, and strategic retail placement. For example, a premium snack may have great potential, but its success depends on being placed in areas where health-conscious consumers shop, such as natural food sections.
Beyond product quality, technology plays a significant role. Tools like retail execution software help brands manage inventory, monitor product placement, and track sales data, allowing them to fine-tune their strategies in real-time to improve commercial merchandise performance.
Key Metrics for Measuring Success in Commercial Merchandising
To gauge the success of a commercial merchandising strategy, CPG brands should monitor several key performance indicators (KPIs):
- Sales Volume: Measures the total units sold, indicating product demand.
- Revenue: Tracks the financial success of the merchandise.
- Sell-Through Rate: A high sell-through rate suggests that the product is selling well, while a low rate may signal issues with placement or pricing.
- Shelf Space and Placement: Prime placement in stores is critical for visibility and sales.
- Customer Feedback: Insights from retailers and consumers can help brands refine their merchandising approach.
Many CPG brands use field sales software to monitor these KPIs, ensuring optimal product positioning and sales performance across different retail locations.
Commercial Merchandise vs. Retail Merchandising
While the terms commercial and retail merchandising are sometimes used interchangeably, there is a key distinction:
- Commercial merchandising focuses on the products that brands produce and promote, covering everything from design to distribution.
- Retail merchandising focuses on how these products are presented in stores, encompassing strategies like shelf placement, in-store displays, and promotions.
For example, while a CPG brand might focus on creating sustainable packaging and negotiating retail partnerships, the retailer is responsible for how that product is displayed and promoted to customers.
Improving Commercial Merchandising
Improving commercial merchandising requires a balance of product innovation and retail execution. CPG brands can focus on several strategies to enhance their efforts:
- Product Differentiation: Offering unique features, such as eco-friendly packaging or premium ingredients, can set products apart.
- Effective Packaging: Attractive, functional packaging influences purchasing decisions.
- Retail Relationships: Collaborating with retailers ensures optimal product placement and promotional support.
- Data Analytics: Leveraging data helps brands make informed decisions about product mix and consumer behavior.
Using retail execution software helps maintain consistent product presentation across multiple stores, while sales performance management software provides real-time insights on product performance, helping brands fine-tune their strategies.
Why CPG Brands Should Prioritize Commercial Merchandising
Focusing on commercial merchandising is essential for CPG brands to remain competitive in both physical and online retail environments. A strong strategy offers several benefits:
- Maximizes Sales: Well-placed and promoted merchandise drives higher sales and revenue.
- Builds Brand Loyalty: Consistent availability and quality foster customer loyalty.
- Increases Brand Visibility: Effective placement ensures products stand out on crowded shelves.
- Supports Expansion: A solid merchandising strategy aids brands in entering new markets.
- Aligns with Consumer Demand: Data-driven strategies ensure merchandise aligns with consumer preferences.
The Importance of Effective Commercial Merchandising
Commercial merchandising is crucial to the success of CPG brands, ensuring that products are not only high-quality but also well-presented and promoted in the retail environment. Effective merchandising involves managing shelf placement, promotional displays, and stock availability to capture consumer attention and drive sales. By executing these elements strategically, brands can maintain their presence and competitiveness in an increasingly crowded marketplace.
How SimplyDepo Enhances Merchandising Strategies
SimplyDepo supports CPG brands by offering comprehensive retail execution and field sales solutions that streamline merchandising efforts. With real-time insights into merchandising activities and product performance, the platform allows brands to adjust strategies swiftly in response to in-store trends. SimplyDepo’s data analytics and automation tools help optimize merchandising tactics, ensuring each store maximizes its potential. This approach enables brands to make informed decisions, maintain a strong retail presence, and achieve sustained growth in an ever-evolving market.