Horizontal Brand Block
Vertical Brand Block
Shelving / Schematics
There are more decisions for the consumer when choosing to buy an import vs. a domestic Wine. Retailers will develop a schematic or plan-o-gram based on this hierarchy structure. Domestics may be shelved together in one section, while imports segmented by country are shelved together in its own set adjacent to domestics.
Some common key points:
1. Usually the best selling products are placed at "Eye Level" on the shelf. This has the most exposure to the consumer's eye, hence why it is called "Eye Level". Larger bulk or lower price tier products may be shelved on the bottom with smaller products placed at the top.
2. A brand or product grouping may be shelved in a horizontal block - brand / products in a horizontal placement across one or two shelves. Or the brand or product grouping may be placed on the shelf in a vertical block - brand / product set in a vertical placement across several shelves. See below.
3. Private Label is likely placed to the right of the brand leader (best selling) of the category. Likewise, a brand with various sizes may see their larger size items placed to the right of their smaller items. One rationale may be due to the majority of people being right handed and may reach to the right by default.
4. An item may have one facing or several facings on the shelf - depending on the category. A top selling item has a justification for additional facings in order to prevent an out of stock, or OOS. Increased facings helps maximize "Pack-Out" (maximize shelf capacity of a product in units when fully stocked) on the shelf and lowers the risk of an OOS. If there were a promotion and the item was OOS, a consumer may opt to switch to an alternate item and may not be happy or satisfied, or they may leave the store without any purchase and seek the item elsewhere.
5. During a certain time of the year, a retailer will do a shelf reset and add in any new items as well as remove items that are discontinued. Some item may be moved from one shelf to another, increase / decrease facings, or even move the category to another part of the store with adjacency to another category - instead of the category being next to Pickles, it may have been moved next to Condiments.
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Basic Shelf Management calculations
The images to the left is a front view and side view or depth for the product Flakes 32oz which has 4 facings on the shelf when view from the front. In terms of depth, based on shelf measurements from front to back (depth), we can place 4 boxes of Flakes 32oz deep per facing. This means the shelf capacity or "Pack-out" for Flakes 32oz is 16 boxes / units based on the dedicated space allowed for this product. Or simply put, it is the maximum allowable units on shelf based on the allocated space.
Pack-out = (# facings x units deep) or (4 x 4) = 16 units
Let's look at a hypothetical scenario. Lets assume we look at a monthly period which happens to be 30 days. Some months are more. But we will keep it simple in this case. Imagine the following scenario...
Units sold for the month = 187
Pack-out = 16
Turnover / replenishment rate & DOS
Question 1: How many times during the month did Flakes 32oz have to be replenished on the shelf, or what was it's turnover rate to put it in another way? The answer is 11.7 times.
Simple way to calculate is: (Units sold / Pack-out) or (187 / 16) = 11.7
So the product turned or had to be replenished 11.7 times during the month. If the product has 12 items per case pack then we would need 16 cases (187 / 12 = 16 Cases) on hand for the month to avoid an OOS or Out of Stock condition.
What are my Days of Supply (DOS) for Flakes 32oz with full pack-out based on these numbers?
A simple calculation can tell us how many days my product last on shelf at full pack-out before I need to fully replenish it again. The calculation is: DOS = 30 / (units sold / pack-out) or (30 / (187 / 16) = 2.6 days. So we would need to replenish and fill the shelf every 2.6 days for Flakes 32oz.In our example we use 30 = 30 days in the month. This is just an example though, and other periods may be used such as an annual basis. However, when working with a product that may promote certain times of the year, it is helpful to get average scan movements for planning and forecasting purposes to a retailer does not see a lost sales opportunity and avoid out of stocks. It is also important to balance their inventory, as this is a big cost factor for the retailer. Too much stock on hand can tie up their inventory in cost and storage at the expense of other products or more profitable categories.
It is important to note that retailers differ on what shell space they allocate to a category / product. Sometimes a product mught be reduced in facings is sales are sluggish, while other products with faster movement or velocity might be given more space in order to keep up with demand and assure it maximizes pack-out capability.
Shelf size or Linear footage
This brings us to our last calculation which is linear footage. Some categories like Liquid Bleach might have 5 shelves and be 20' in width while others like Spices might have 8 shelves and be only 4' in width. In these two examples given, we will calculate their linear footage using the calculation: (width x # of shelves)
So for category Liquid Bleach, the linear footage = (5 x 20') = 100'
For the Spices category it is = (8 x 4') = 32'
Obviously Liquid Bleach moves much quicker, is a larger sized item and needs the space and capacity which warrants the size of linear footage to sell without disruption. If an item is out of stock, a few things a consumer might do is:
-Switch to competing brand
-Not buy into the category
-Buy on return trip if not a staple item
Either way, this would not please the consumer, so maintaining adequate space, holding power is important for the retailer.
Below are a couple of basic reference videos in the world of optimal product assortment and space management.