The Psychology of Retail Product Placement

There’s an adage that good design is invisible. Good product placement is, in essence, good design—both aesthetically appealing and easily navigable without drawing attention to itself. It leverages a combination of knowledge of consumer behaviors and aesthetic trends to encourage consumers to buy more. Decades worth of scientific research determines how consumers are persuaded or dissuaded from making a purchase. There is a lot we do not yet know, despite all the research. But we do know that what a buyer sees and how it is displayed matters. A lot.

At the store level, retail managers use a planogram—a store diagram that charts the hundreds, thousands, or, in some cases, even tens of thousands of items in a pharmacy’s front end; it keeps track of where in the store it is located and how it is displayed. At this point, it’s unclear how much the planograms learn from customer behavior and how much customer behavior is now influenced by the stores relying on the same basic plan: the cash wrap at the front surrounded by candy, batteries, lip balms, and impulse purchases; the produce section always to the right; the pharmacy in the back. Either way, customers now expect certain products to be found in certain areas, which can make it difficult for smaller stores to change things up or freshen up store layouts. No placement is arbitrary. Every bottle of aspirin and every bag of potato chips must go somewhere and behind its placement is a strong economic reasoning based on consumer psychology research.

Eye Level, Buy Level

Despite the mountains of research and recommendations, product placement attempts to address a central retail problem: what a buyer does not see never enters their purchasing decision process. Research has shown that a product’s relationship to customers’ eye levels directly correlates to its sales. “Eye level is buy level,” is the refrain to remember. Above eye level, a product can be difficult to see or cannot be reached. Below eye level means that the customer may have to bend over or crouch down, which may be difficult for older shoppers. Unfortunately, placing all products only at eye level would be a terrific waste of space. Retailers use primarily two methods to plan product placement, visual and commercial, to carve up the premium, eye-level shelf space.

Visual Placement focuses its efforts on arranging products in ways that direct the customer’s gaze. American consumers tend to look at retail shelves in the same way they read, left to right and top to bottom. Shoppers “read” shelves for both navigation through the store and to find or compare individual items. Visual placement strategies attempt to take advantage of the buyer’s gazing patterns to direct them to popular, expensive, or profitable items:

• Block Placement: Places products of the same or related categories in one area. For example, personal care items are grouped in a single aisle with sections of the aisle devoted to displays of razors, another to shaving creams, and another to deodorants and anti-perspirants, etc. while pain killers and analgesics are in a different aisle.
  
  
• Vertical Placement: Places similar products on shelves with two or more levels. The eye-level shelves capture the shopper’s attention and then the vertical placement allows the shopper to stand in one place while the display guides the eye up and down vertically.
  
  
• Horizontal Placement: Like vertical placement, this places similar products on shelves horizontally, pulling the buyer’s gaze down the aisle and, hopefully, drawing them further into the store.

Commercial Placement strategies rely on data to give popular products with higher selling frequency, higher profit margins, or with greater chances of purchase premium a better shelf space:

• Margin Product Placement: Places products based on the revenue generated. The bigger profit one product brings in, the better its placing in the store should be.

• Market Share Placement: Places the most popular products where customers can find them immediately. If a product or brand brings frequent sales, its placing should be prioritized. 

How can my point-of-sale solution help?

A robust and comprehensive point-of-sale system should be able to provide data about sales, margins, and profits that can help you make product placement decisions in your own store. The RMS POS system has several pre-built report options such as the Items with No Sales Report, the Profit Analysis Report, and the Movement – Price Type Report in addition to the Report Builder that offers numerous options for reporting and sorting sales, margin, and movement information and in-store data points.

Furthermore, our POS solutions include purchasable module options for creating signs and labels, including shelf-talkers, that pull the eye toward additional options available on the less desirable shelf real estate.

Conclusions

Placement strategies aren’t necessarily mutually exclusive. Commercial placement strategies can certainly complement visual merchandising strategies when done well. In addition to the above strategies, consider product labels, designs, and colors when planning to draw a customer’s eye to the products in less noticeable areas such as shelf corners or shelves above eye level. And don’t underestimate the power of blank space! In a world where visual stimuli are constantly competing for attention, sometimes surrounding a featured product or promotional item with neutral, white, or blank space allows the consumer to rest their eyes for a moment, which allows them to focus in more on the product centered in that space.

But before you begin, any product placement decisions you make in your store should be based on the needs and feedback of your store’s specific customer base. For instance, older customers prefer cleaner and more minimal aesthetics while younger customers prefer bright colors and maximalist designs. If your store serves a community that is dominated by an ethnic minority, then carry snack foods, beverages, or products that are preferred by the people in your community.  

And finally, product placement doesn’t mean a thing if the store isn’t clean. A clean store is a great first impression, and, as my old front-end manager used to say whenever idle periods arose behind the cash register, “If you have time to lean, you have time to clean.”