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Education

Shelf Space Optimization for SMB CPG Brands

[x] mins read
Education

Shelf Space Optimization for SMB CPG Brands

[x] mins read
Manufacturing
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Manufacturing CPG & FMCG Small & Mid Sized Manufacturing Small and Medium Business Byzzer Shelf-space Optimization

For an emerging CPG company, getting your products on a retailer’s shelf is just the beginning of a long journey. Shelf space optimization is key to getting the best return for whatever space you’re allocated and lets you develop a winning product assortment strategy.

But, how do you optimize your shelf space and how much of a difference does it truly make?

Read on to learn what shelf-space optimization is, why it matters, and the tools you need to optimize your own shelf space.

What Is Shelf Space Optimization?

Shelf space optimization is the process of identifying the best location for every SKU you have to maximize sales. This process ensures your sales and profits are as high as possible with the shelf space given to you by your retailer. It also instills in the retailer confidence in your brand and products as the sales figures will highlight your value.

However, shelf space optimization isn’t just putting all of your products front and center. Highlighting the wrong products can lead to lower sales and issues with excess inventory and damaged relationships. Instead, you need to use data to maximize the return across your product assortment. This will also help streamline your supply chain management and ensures you always have the right amount of stock on hand.

Supplier-Side Planogram

A planogram is a visual representation of a retailer’s shelves. These visual aids help you understand the layout of your shelf, which products are located where, and are vital for shelf space optimization. The retailer will generally have their own planograms for each department of the store, but they will not be optimized for your particular products.

Suppliers should use their own sales data, panel data, and category data to build a planogram that optimizes their product assortment. If you can show a retailer that sales in your area would increase by using your planogram, you’ll strengthen that relationship. This will also open the door to more shelf space and distribution in the future.

Data and Shelf Space Optimization

Creating a planogram and optimizing your shelf space rely on your ability to access and digest a comprehensive set of data. To get the best results, you shouldn’t just rely on the POS sales data provided by the retailer. Combining POS and panel data gives you a more holistic view of the category and offers the best chance of increasing sales.

Here are five data points that can help you get the most out of your allocated shelf space:

  • 1. SKU-Level Sales Data

    SKU-Level Sales Data

    The first and most important data you need to know is your sales figures. Track each individual product sold at the retailer and look back at least three months. This should give you insight into what products are currently selling well and which aren’t. It will also show if there were any sudden spikes in demand that skewed monthly figures. Using this data you can start moving products within the planogram to highlight stronger products and pull back the weak ones. You can also use this data to optimize your inventory to support the shift in sales and better understand overarching CPG trends.

  • 2. Market/Category Data

    Market/Category Data

    Your own sales figures can only get you so far. You also need to have a better understanding of sales trends within your larger category and market. This may include information on a target market or geographic location and how these influence the purchasing decisions of your target demographics. If you can show that you’re outperforming in a particular area, retailers are more likely to put your products in a prime location. This will also help later when you seek out additional distribution. One important note is that this data is only available through a third-party company like NielsenIQ.

  • 3. Competitor Data

    Competitor Data

    Like market data, competitor data sets are only available from third-party providers. However, this data offers tremendous upside when it comes to shelf space optimization. If you know the competitors on your shelf, their sell-through rate, and what that does for the retailer, you know where to strike. Highlight any areas where you’re outperforming the competition and make sure to present these to the retailer in your next review. You should also identify where you’re weaker and work to fix or remove those issues. Beating out the competition will give you the ammo you need to take over shelf space and gain more valuable frontage for your products.

  • 4. Panel Data

    Panel Data

    A vital data set, but often overlooked by SMBs, comes in the form of panel data. This data is self-reported to companies like NielsenIQ by the consumers themselves. When paired with POS data, it gives you deep insight into the motivations behind shoppers’ habits. You might learn that moving a lower-priced product forward will actually increase your overall revenue because shoppers are concerned about spending. Or you might discover that you’re not targeting a demographic that is expressing interest in your products.

  • 5. Inventory Data

    Inventory Data

    Finally, you need to have a good handle on your inventory levels and supply chain. You can’t optimize shelf space using products that you can’t ensure you’ll have in stock. Increasing sales for a short period and then letting down retailers on reorders is a surefire way to lose shelf space. It will also inevitably lead to retailer chargebacks. Look at the products you can support and make sure your demand and inventory forecasts are aligned. If so, you’ll be able to optimize the shelf for better long-term sales and strengthen your relationship with the retailer.

Optimize Your Shelf Space with Byzzer

Understanding your current sales and optimizing your shelf space going forward hinges on your ability to access up-to-date and accurate data. That’s why it’s vital to understand how CPG data can help your business grow and dedicate a budget to investing in a good data platform.

With Byzzer’s reporting solutions, you can have all the data you need at your fingertips. Reach out to our team, so we can help you build a customized paid plan with Byzzer. You can have this data and much more available for any need that may come up.

Sign up for a free account with Byzzer today!
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