Love it or hate it, we all go grocery shopping. But if you know grocery stores, you know they frequently move stuff around. For most shoppers, these changes are confusing and often leads to the question, why do grocery stores change the layout?
Driven by lower profit margins & high competition, grocery stores are desperate to make their stores better than their competitors. One of the best ways to do that is by changing the layout. But it’s also a way to force shoppers down every aisle, counting on them making additional purchases they hadn’t planned on making.
But there’s a lot more to know about why they change stuff, how they do it, and how often it happens.
So let’s keep going!
Why do grocery stores rearrange everything?
Like other businesses, grocery stores want to make as many sales as possible.
This is the best way to make additional profit and possibly expand. After all, the average grocery store only makes a net profit of around 2%. Think of it this way. For every dollar they take in, only about 2 cents is actually profit after every expense gets paid.
I go into much greater detail on grocery store profit margins in a recent article. In that, I also explain why a Whole Foods, for instance, might make 2-3 times as much profit percentage as a Safeway or Kroger.
Just click the link to read it on my site.
So to maximize those profits, they need their customers to purchase more items than they intended to in the first place. For that to happen, they need to make it harder for the customers to find the items they need.
This is where rearranging the store comes in.
when your local grocery store changes its layout pic.twitter.com/6fjsWdiqeK
— Spirit Juice (@TheSpiritJuice) April 30, 2015
Moving whole aisles or departments
By changing where the items are placed, the customers will have to walk around the store as they try to locate what they want. For instance, if you visit the store today then go back a few months later, you’ll find that some items are not where you found them.
As you walk around trying to locate them, you’ll see other items that catch your eye and you’ll end up buying them in impulse. If the products were left in the same place year after year, you’d probably pick up exactly what you came for.
Then, most likely you would leave without ever buying anything else.
Rearranging the store also allows the placement of best-selling products at the front and that ends up enticing the customers. But savvy retailers also know that profits are higher on some items more than others. So they’ll also rearrange things putting the higher-margin items more in your face.
Moving certain shelves or areas
The other time stores rearrange is when a new product comes out.
There are times when a product stops being made by the company. Or, maybe it just didn’t sell well and your store decided to stop selling it. Or a popular brand introduced some hot new products.
In all of those cases, the store has to rearrange stuff to fill the space of a product that went away, and/or make room for the new stuff.
Lastly, rearranging items allows the store to get rid of products that are about to expire.
They might build a whole display of potato chips that expire in 2 months. They hope to sell at least some of them before they go out of date. After all, any bag sold, even at a discount, is one they don’t have to throw away and lose 100% profit on.
— Alec Martin (@AlecmartinSEA) May 30, 2016
What is it called when you rearrange a store?
Rearranging a whole store, or just certain departments or aisles is called a reset.
A reset involves taking everything off a given shelf or the whole aisle (or occasionally the whole store), deciding how to rearrange it, and then putting it back.
In the old days when I started with Whole Foods, we just did the planning part on paper or in our heads. And I still remember doing one at the original Whole Foods store (long gone) where we had a whole aisle collapse 10 minutes before the store opened!
These days, however, there is what they call category management software or planogram software that can design the layout for you.
It does require a lot of work on the front end as you have to enter the size of every product (boxes, cans, bottles, etc). You also have to enter in the cost and sales price. Then it gets fancy and gives you the best layout based on sales, profit, and the packaging size as well as what products make sense sitting next to each other.
For displays, however, which change more frequently, there is also what’s called cross-merchandising.
This is the process where you place products together even when they are not directly related, to try to boost their sales. For instance, by placing produce next to the flowers, customers’ sensory is tricked into thinking that the products are fresh thanks to the smell of the flowers.
But anytime you see a display of boxes of pasta and jars of pasta sauce with a stack of wine bottles, that’s cross-merchandising too.
Most consumers tend to buy only items they need from the store; many just going down a written shopping list. So grocery stores can get these customers to add-on by placing additional items nearby they might buy on impulse.
How is a grocery store organized?
1. The front of the store
Most stores start by placing flowers at the front.
That is often the first item customers see when they get into the store. Produce is placed next to the flowers because of the freshness of the flowers. The freshest and most seasonal produce (and also often the cheapest) is placed at the front while that is not so fresh and is put in the back.
That’s designed to give the impression that everything is fresh, seasonal and low-priced.
Other products kept near the entrance are those that are referred to as “grab and go”. These are items such as bottled water, snacks, and even milk.
Customers can easily grab some to consume as they shop which they might not have done otherwise.
Large stores also place banks closer to the entrance. This makes it easier for customers to withdraw money to be used in the store. Apart from discounted items, new products or products that are in high demand during a specific season are placed at the end of the isles.
Candy, magazines and other products that can be bought on impulse are usually placed near the registers so that customers can pick them as they wait and they won’t have enough time to change their minds.
2. The departments around the perimeter
Bakeries are usually placed beyond the entrance. The fresh baking smell usually triggers hunger pangs and will most likely lead to shoppers buying more food items. I even know of 1 chain that has a special air conditioning system to pipe the smells from the bakery to the front of the store so it hits you the moment you walk in.
Deli and coffee bars are usually located closer to the bakeries in one of the corners. Free cooking demonstrations and samples of free products are usually placed on one side of the walls on the outside.
3. The center of the store
Other household merchandise such as cooking ingredients and canned foods are usually placed in the center aisles.
The back walls usually have staples like eggs, meat, and dairy products. By the time the customers get to the middle and the back shelves, they will have seen other non-essential items along the way and probably bought them.
We used #AI to help one of the world’s leading soft drink and food manufacturers boost sales, manage customer behaviour and achieve higher planogram compliance across thousands of their IoT connected vending machines. Read more here: https://t.co/aFVFmJA4V5 #retail #planogram pic.twitter.com/arMpjTQqIJ
— Intelygenz (@Intelygenz) August 22, 2019
What is the psychology behind retail store layouts?
Most grocery stores place products that bring in the most profit at the eye level. By placing the profitable products within easy reach, they increase the frequency they are bought and profits.
Since most customers go to the grocery store in a hurry, they’ll end up picking the products their eyes first come in contact with. They will not have time to look around as they try to compare brands and prices.
Placing the expensive items at the end of the aisle is another layout that grocery stores use.
This also attracts shoppers who are in a hurry and therefore don’t have time to compare prices. They just pick the closest products even if they are not the cheapest option available.
Here are some of the other psychological reasons to rearrange a store:
1. Color Breaks
Color breaks are another key component of good grocery store merchandising.
By that I mean if you have 2 items that come in a red box, and 1 that comes in a blue box, you WILL sell more of all of them if you put the blue box in between the 2 red ones.
That makes all of them stand out better. It also eliminates the possibility of the customer seeing 1 red one but accidentally grabbing the other one (and later returning it).
2. Products that appeal to the senses
The stores also put out visually appealing items like flowers at the front of the store where you can easily see them.
Since flowers also smell great, they give customers the idea that the store has fresh products. Most people associate the smell of flowers with freshness and they may even end up buying the flowers.
3. Proven ways to drive customers through the store to the back
Other items you buy like milk are usually placed at the back.
This is because milk is an essential product that most people need and will have to buy no matter where it is placed. As the customer tries to get to the milk, they’ll have to pass other products that they could end up buying on impulse.
4. Put the banks up near the front to make sure they have plenty to spend
By putting the banks at the entrance, it ensures customers can do their banking first and have plenty of cash to do their shopping.
5. Give people a reason to hang out
By having a deli, bakery, and/or coffee shop in the corner, customers will not be in a hurry to finish their shopping and go get soothing to eat.
Instead, they’ll spend more time in the store. The more time spent in a store, the more people are apt to buy things. And they might even decide to pick up premade meals for dinner while they are there.
6. How stores pick which items go where on a shelf
The top shelf usually has products that have products from brands that aren’t very popular.
The shelves that are at your eye level are given to the best selling and/or most profitable products. These are products that are from reputable brands and can therefore easily attract attention. They aren’t necessarily the cheapest products but they still sell well because of the reputation of the brands.
The bottom shelves are usually reserved for very heavy or bulky products. That way a customer isn’t having to reach way up to grab a 10lb jug of cat litter or a huge container of laundry liquid.
when you’re over the age of 30 and your grocery store changes its layout pic.twitter.com/5yGRnCnuSX
— The Dad (@thedad) October 29, 2018
How often do grocery stores change the layout?
Although there isn’t a specified frequency that retailers follow when rearranging the store, most of them reshuffle a little bit every few months.
But what they call endcaps, the displays at the end of each aisle, often change every 2 weeks or so.
For huge store-wide changes, once a year is not uncommon, while some retailers might rearrange twice every year. There isn’t a set pattern for how often they change. But in a hotly competitive town, you might notice they do it more frequently since they are trying to win a larger share of the grocery sales in the town.
Sometimes rearranging is done at the request of the product vendors.
Believe it or not, many large vendors these days pay the stores what’s called a slotting fee. In other words, they pay the store (a lot of money in some cases) to get good placement in a store for their products.
Good old fashioned quid pro quo.
Some vendors may want the store to place their products at a location that they consider to be premium. In such a case, the store may be forced (by their slotting fee agreement) to make the changes immediately. And yes, that’s even if it’s just a few days after they made their last reset.
Lastly, stores, of course, want to rearrange the store depending on the season.
No one wants to see a huge pumpkin patch out front in June or tons of watermelon in January. Different products are seasonal which means that they’ll sell more in some seasons than others.
So you can bet as we prepare for a new season, big changes are coming to your grocery store’s aisles.
Reshuffling the products occasionally is a good way to keep a store fresh and interesting.
But it also helps stores maximize profits by having higher-margin items in better positions. It can also be used to help sell through items about to expire.
But mostly, it’s about getting customers to go down every aisle. That way, while searching for what they came for, they’ll probably buy additional items along the way.
There’s actually a lot more that goes into how a grocery store decides how to build displays and merchandize their store. I cover all of that strategy in a recent article where I break down grocery merchandising.
I even get into some of the secret strategies of how they can build huge displays without using a ton of product (which ties up their cash flow).
Just click the link to read it on my site.