Shelf health is a set of measures that will inform how the brand is positioned in store. The guiding factor is the brand strength and a researched understanding of how the shopper engages with the category.
The following factors determine shelf health:
- Distribution of the product across the relevant stores in the universe of stores, shows that the brand owners are responsible about inventory management. A common misconception is to have the product listed everywhere. This does more harm to the retailer relationship as the product will not sell if the target market is absent in the listed store, and having the product on shelf just drives day’s inventory up for the retailer. This approach also means that the brand owner is investing merchandising and logistics resources to service a store that does not sell. It is therefore critical to have a targeted approach to distribution.
- Promotions are mechanisms to drive additional sales. These campaigns are developed to attract shoppers to switch from competitor brands and to entice new shoppers to enter the category. The challenge is to keep promotional content fresh and relevant enough to lead to increased sales.
- Shelf Merchandising determines the flow of products within a brand and where the brand is positioned in the segment within the category. The flow of products is determined by the current rate of sale of each variant and an individual sku objective. For example a merchandising strategy that increases share of facings of the fast sellers and up-weights facings of a newly launched product is ensuring that there is enough stock on shelf of the fast sellers and visibility of the new product to reach that products rate of sale potential.
- Price – there are 3 pricing strategies that a brand must participate in: normal shelf price, everyday low prices and deep discount promotional prices. Each strategy has pricing tiers with expected volume and these are blended during the year to meet maximum profit at the highest volume.
Establishing a well-informed shelf health strategy will positively impact the brand by improving profits through efficiencies, increase volume with well targeted promotions, increase sales with maximum visibility relative to size of the brand and ensure relevant pricing. A brand that is missing a shelf health strategy is at the mercy of merchandisers and category captains. Smaller brands have doubled sales just by setting ambitious shelf health targets and achieving these targets.