Co-creation of the FMCG shelf in modern retail

Abstract

For many years now, FMCG majors like P&G, HUL and ITC have primarily followed two ways of merchandizing their products at the retail store level. The most common way is to purchase promotional spaces from the store and advertise themselves via banners and stickers at all possible viable spaces in the store. Such promotions are observed in terms of big banners as category headers, long advertisements on escalator rails and big stickers on the store floor. Since this is the most common way of promotion, over the years customers have been conditioned by repeated contact and have learnt to ignore such messages, and very often the companies aren’t able to convey their messages to the right audience. The second manner of merchandizing followed by companies revolves around building incremental shelves for their products. Companies again pay the store to buy promotional space on the actual shelf where their products will be lined, and use innovative displays on the shelf itself to attract the customers. Lighted miniature shelf fixtures housing Fair & Lovely tubes scented shelved lined with Ambi-Pure Fresheners and pyramid structures constructed entirely out of Tide Cartons on the floor often push the customer into making impulse purchases for these products. However, the company has to invest in a lot of manpower for installation of such fixtures and maintain them at high costs to guarantee consistent customer experience. Both of these solutions exert a big financial toll on these brands, much to the delight of the retail stores. As the balance of power shifts towards the big retail store chains today, they are able to demand ever steeper prices for promotional space within their large stores. Hence FMCG companies have been forced to reinvent these merchandizing solutions in order to remain profitable. One such innovation has been labelled as the ‘Co-creation of the Shelf’. Companies now offer to place innovative crowd pulling items within the store that would increase the overall footfalls for the store while promoting a specific brand for the company at the same time. Different categories will employ different items to add value to the store, such as free pasta sampling counter engaged in live cooking for an upcoming brand of pasta, or a free hair care specialist promoting the newest variant of Head & Shoulders. Since such augmented merchandizing solutions are a win-win for both the store as well as the brands, the companies do not have to pay anything more than what they were already paying for the regular share of promotional space.