Hard-to-find products, cluttered displays and disorganization all play a part in poor visual merchandising, and retailers across the United States lost a “staggering” $125 billion in sales over the past 12 months because of this, according to report The Cost of Poor Merchandising, published in January.
This loss, which represents 3.3% of the size of the entire physical retail market, “highlights the importance of effective merchandising practices for driving sales and retaining customer loyalty,” according to the report produced by New York-based data and analytics company GlobalData for Boston-based One Door, which helps retailers in planning and executing in-store merchandising. “This is consistent across luxury, mid-market, discount and needs-based stores; however, the degree of impact varies by store type and shopper profile.”
For consumers, the most frustrating area of poor merchandising, with 33.3% saying they’ve been affected, was “hard-to-find products.”
‘To retain customers and reduce the substantial sales lost annually, retailers must address these core merchandising issues.’
“Products being hard to find is a shared frustration among all types of shoppers, and a customer’s propensity to purchase an item is severely dampened if they have to spend time and effort locating it within the store,” the report said “Messy, cluttered and disorganized displays are the next three main points of frustration for shoppers. To retain customers and reduce the substantial sales lost annually, retailers must address these core merchandising issues.”
Drilling down, the mid-market had the highest level of losses from poor merchandising in the last year, with retailers in this segment losing out on a potential $54.1 billion, the report said.
“However, all types of stores face significant consequences from poor merchandising,” the report said. “Of the discount shoppers who have experienced poor merchandising, only 51.5% are likely to return and, while more tolerant in some areas, particularly where prices are competitive, this group also exhibits lower tolerance for inefficiency in product accessibility. Meanwhile, for luxury shoppers, cluttered and messy displays were the most common frustrations.”
CSP spoke with experts on this subject. Here is what they said:
Issue Always Challenging
“We always try to maintain an organized, well thought-out merchandising customer experience,” said Mike Jones, director of marketing, S&S Petro, Mukilteo, Washington. “If products are not easy to find and considered shoppable, then you are doing your customer a disservice.”
Jones said this issue is always a challenge for a variety of reasons: more SKUs than space, understanding what is priority when it comes to first position or strike zone, and understanding that sometimes simply less is more.
The report is “pretty spot on,” Jones said. “You have to create and maintain a good merchandise flow in order to capture your shopper’s experience. You are dealing with small, tight time windows with customer buying decisions and it’s critical not to create barriers. There is no question that proper merchandising can enhance sales or, if done poorly, have just the opposite impact.”
Stress-Free Experience
Brandon Beil, lead field merchandiser at for Southwest Georgia Oil Co., Bainbridge, Georgia, which operates 79 SunStop c-stores, said that ensuring that his chain’s products are visible, well-organized, clearly display retail prices and are easy to find are top priorities.
“We consistently assess the layout of our stores to make sure that we are not only merchandising products effectively but also creating a stress-free shopping experience for our customers,” Beil said. “It’s important that our stores are organized in a way that minimizes clutter and directs shoppers’ attention to key items, which ultimately drives sales.”
SunStop c-stores has recognized the importance of effective merchandising, investing in the field merchandiser position, Beil said.
‘This report serves as a reminder for us to continually innovate and refine our merchandising practices.’
“We understand that when displays are not prominently displayed, are disorganized or products are hard to find, it directly affects retail sales,” he said. “This is in line with the report's findings about the frustration consumers feel when they encounter clutter or difficulty locating items.”
The report is alarming yet enlightening, he said. The statistic that retailers lost $125 billion in sales due to poor visual merchandising “highlights how significant this issue really is,” he said.
“The impact across various store types highlights the need for us to prioritize effective merchandising strategies,” Beil said. “It’s clear that addressing the frustrations in the report, such as hard-to-find products and messy displays, should be a central focus in order to improve sales and customer loyalty. This report serves as a reminder for us to continually innovate and refine our merchandising practices to ensure we are meeting or exceeding customer expectations and maximizing our potential sales.”
‘Just Too Much’
Donna Hood Crecca, principal at CSP sister research arm Technomic, Chicago, said, “I can’t tell you how many c-stores I drive by and there’s so much clutter that my brain doesn’t even pick up on anything. I can’t absorb it all. There’s just too much. And when that happens, literally there’s an overload of signage, and the consumer might just disregard everything.”
Walk the Store
Jeff Taylor worked in the c-store industry for 30 years, most recently at Last Minit Mart, New Castle, Pennsylvania. He is now director of fuel order management and dispatch for 21st Century Energy Group in the same city; 21st Century Energy Group used to own the marts.
Taylor said that supervisors don’t always take the time to walk their store and look at it from a consumer’s viewpoint—something he always coached his managers to do when they arrived in the morning.
“You need to see that things are organized, that the store is clean and that you have sufficient product, and if not, then you need to take corrective measures, whether it’s stocking, cleanliness or replenishment,” he said.
Having a supervisor do this is a challenge because they often might go into a store for a specific purpose and don’t take the time to walk the store.
“Same with the manager,” he said. “They come in and know they have to do their paperwork or have employee issues they may be dealing with, and they don’t really walk their store to see are they really ready for their day.”
‘You need to see that things are organized, that the store is clean and that you have sufficient product.’
Taylor recalled a different c-store chain in Pennsylvania where they created a spreadsheet for the manager to fill out every day to show they walked the store and checked on key areas.
One area to keep an eye on is the placement of shippers, which is important for impulse sales but that can slow traffic in aisles or block another product, Taylor said.
“Now it’s one thing to hide paper towels, not that you want to, but maybe it’s blocking your paper towels—or maybe it’s in front of high-margin items, maybe your breakfast snacks or your sweet snacks—and sweet snacks are perishable,” he said.
“Oftentimes when I would go into stores, I would have the manager walk with me and would talk about things and what they saw and why, what their thinking was, why did you put this here?” Taylor said.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.