How do I: Increase shelf space?

Need to increase shelf space to grow the business but not sure how? Once you have secured and
are successfully supplying a listing, targeting growth through increased shelf space is a good strategy.
However, space is always at a premium and success will depend on a number of factors. This guide
outlines the key elements to consider and potential strategies to gain space.

Space is a premium commodity in any retail outlet and buyers are charged with achieving the highest
revenue return on their shelf footage: therefore, any decision to increase the space given to a product or
supplier will have to be carefully considered. The onus is on the supplier to present a convincing case as
to what additional revenue the retailer could achieve. The last few decades have seen a number of
models emerge as means of quantifying or developing space efficiency e.g. DPP direct product
profitability or Category Management. Each retailer has their own preferred methods and procedures.
However, the core principle remains essentially the same space needs to deliver profits and so must be
allocated and managed to generate the highest return.

BENEFITS

Increasing shelf space can provide many business benefits, including:

Increasing sales.
Developing company penetration in a current retailer.
Increasing influence within the retail account.
Taking sector share.
Developing new products or line extensions.

GETTING STARTED

Start by planning your approach. The strategy should be developed within the account planning process
and may be presented to the buyer either as part of an annual negotiation or at an appropriate time
during the year. The planning should take some time before you even speak to the buyer about the
possibility of increasing shelf space. In general, assume a we have no additional space response as the
starting position. The key elements you should consider at this stage include:

Retail strategy: any proposal you develop should support the aims of the retail account and,
specifically, your buying sector. A good understanding of their key strategies and targets will be
essential to your initial planning framework. As a current supplier, you should be close to this
information. You can seek to develop your knowledge here by talking to the buyer, reviewing the
retailers annual report, visiting their website, undertaking store checks and reading the trade
and financial press. The more informed you are, the more chance of developing complementary
strategies.

Current performance: the buyer is more likely to consider your proposal if your current listing
is performing well. Ensure your sales and service levels are good. Demonstrate, through your
current performance, your expertise in the sector and understanding of the consumer. Actively
develop these areas as part of your initial approach to ensure that, when you present your
proposal to increase space, your credentials are at their peak.

Buyer relationship: you want to maximise your chances of success with the buyer, so ensure
your relationship is being positively developed. If you are delivering to target and supporting the
buyer in achieving their aims, then they will be more likely to at least give your proposal its first
level of consideration.
DEVELOPING YOUR APPROACH

The better the planning, the greater the chance of success. The best conditions for approaching the
retailer regarding increased shelf space include:

When your product is performing well.

When your relationship with the retailer is strong.
When you have a new product or line extension to introduce.

Once you have agreed internally that increasing shelf space is a valid strategy for developing that retail
account, there are a number of areas you should consider.

What approach/es can you take (see below)?

What are the potential capacity and resource requirements to satisfy the increased shelf
space?
Do you require any additional information or consumer research?
Who should be involved in developing the proposal?
What are the specific retail requirements e.g. specific range review dates or calendar
windows?

Develop a plan which covers all of the main areas and includes timing and responsibilities. This should
provide a clear understanding of what the business needs to do and when additional sales may need to be
planned in. Gather your team e.g. technical, marketing and new product development, to make sure
everyone understands the strategy and is involved in the push to increase shelf space. The account
manager should lead this team approach with the endorsement of the Sales Director. However, it is not a
solo effort. A well directed, multi-functional team should generate a more comprehensive package to
present to the retail account.

STRATEGIES TO INCREASE SHELF SPACE

Once you have an established relationship in a retail account and understand their priorities, the sector
and the consumer, there are a number of strategies which can be deployed to try to increase your shelf
space. These include:

Current performance: if your product is performing well, then you may be able to develop a justification
for increased shelf space. For example, by replacing a competitor that is significantly under-performing
and not adding to sector value, or demonstrating how additional shelf space would increase consumer
sales further.

Merchandising: the account may have a merchandising team whose role is to review the performance of
each sector and ensure its space allocation is delivering the best sales and revenue return. While often
this may be addressed via a range review or full blown category management, there may be the
opportunity to work directly with the account if you have a good case to justify increasing shelf space of
your product. It will not be enough just to request a consultation and all communication should be
managed through the buyer. However, if you have merchandising expertise and even consumer research
to support your proposal, then this may be a viable strategy.

Category Management: is where the retailer and the supplier work together to manage and develop
categories to strategically and operationally develop the business return. It involves a thorough review of
the sector, consumer and competitors. This has become increasingly popular since point-of-sale scanning
data has been available to interrogate buying habits in more detail. This is an interactive and
collaborative process with the retailer and supplier. It can be a valuable means of developing your retail
relationship and increasing shelf space by developing your products to support the category needs.
Competitively, it can provide a significant advantage: however, it can be a long process which may involve
investment and can be resource intensive.

Range Reviews: a good opportunity to increase shelf space is when the retailer initiates a range review.
In this instance, you should find out why the range review has been actioned and what the retailer hopes
to achieve through it. Develop your proposals to support their objectives. For more information on this
area see the How do I Conduct a range review? guide.
Additional products: company shelf space can be increased by gaining new product listings in the
sector. If you are already operating in the sector, then you should have a good knowledge of its
performance and current trends. You are in an ideal position to develop new opportunities in the sector
and develop products to suit. This requires a proactive approach, whereby the company has an ongoing
understanding of the key market and consumer dynamics and is constantly planning for the future.
Ideally, the account manager should have a regular dialogue with marketing and new product
development to maintain the momentum in this area. Additional guides which may be of use here include
How do I develop a new product?

Product line extension: if your current product listing is performing well, then line extension can be a
great way to gain more shelf space. You will be developing a current consumer franchise which is already
delivering results for the account. There are many examples of where this has successfully built sales e.g.
snack-sized or frozen confectionery brands. While this can be a very efficient strategy - known area,
working within an established design template - dont be tempted to cut corners. The line extension cant
completely rely on the parent brand to guarantee success, it must have a clear consumer benefit and
market positioning. When presenting the line extension to the buyer, you must demonstrate the market
opportunity, the unique consumer offering, the product packaging and support. You may need to initiate
research in the development of the line extension and this should be included in the presentation to the
buyer.

Packaging development: if your product is performing well, there are simple strategies which can be
deployed to increase shelf space. For example, larger pack sizes (this has been utilised to great effect in
the cereal sector) or multi-packs (the crisps and snacks sectors have consistently built share via this
route). While these can appear simple, never forget that, to be successful, there has to be a clear market
opportunity and reason for the consumer to buy. With this strategy, you must be particularly sensitive to
the danger of cannibalisation. You do not want to gain a listing at the expense of your current listing. Nor
do you want to find that the sales of the new pack size have cannibalised the original pack so much that
your overall revenue is actually down despite having more shelf space.

Seasonal windows: as an existing operator in the sector, you should be planning to capitalise on all the
seasonal opportunities available to you e.g. Christmas, Easter and school holidays. To develop attractive
product offerings for these opportunities requires a good market knowledge and consumer understanding.
The most successful products will be built on, or for, a consumer need or in-sight e.g. weight-watching
products in January or lunch-box fillers for the start of the school term.

Promotional: it may be that the buyer will not agree to increased shelf space on a permanent basis, or in
all stores. In this instance, try to achieve a promotional listing e.g. for eight weeks, which will give the
product some time to show its potential. Another option would be to target a test region or cluster of
stores. This reduces the risk for the buyer and provides an opportunity to assess the product. For either
of these routes you will want to give the product its best chance of success e.g. you may want to consider
a trial price or promotional support. Above all, ensure that whatever you do can be replicated when the
product is given increased distribution or you run the risk of returning a disappointing performance.

DEVELOPING YOUR PROPOSAL

Introduce the potential of increasing shelf space to the buyer once you are confident that you have a
developed opportunity and the product to satisfy it. Discuss the fact that you would like to present your
proposal and samples. When you have secured an appointment, finalise your presentation. Some key
points for the presentation include:

Restate the objectives at the start and clearly address them within the presentation.
Outline the market and consumer opportunity, including any research you have undertaken.
Provide pricing and margin information.
Include sales and revenue forecasts.
Provide samples either beforehand or in the meeting.
Have a review of current business performance (even if this is not formally part of the
presentation, you should have it with you as the buyer may ask).
End with a proposed action plan which clearly shows how you would manage the new listing
or increased space with timing and responsibilities.
Include timing/responsibilities for the distributors necessary internal procedures e.g.
completion of new line forms.
The presentation will be a critical stage. Make sure you have all the relevant people present to achieve
the highest chance of success. Often you will not get a firm commitment at the presentation. The buyer
may want to consider the proposal, refer to other people within their business, or ask for more information
on a particular area. Ensure you follow-up quickly and actively pursue the opportunity, making
amendments or provisions as appropriate, to secure the additional space.

HOW DO I? SUMMARY

1. Develop the strategy within the account planning process.

2. Evaluate the opportunity on all key levels e.g. market, consumer, investment and capacity.
3. Review and evaluate potential strategies.
4. Develop your proposal for presentation to the buyer.
5. Follow-up with the buyer, including any appropriate amendments or negotiations, to secure the
additional shelf space.

OTHER USEFUL SOURCES OF INFORMATION

Visit www.scotlandfoodanddrink.org

- INSIGHTS: you can access data on geographic markets, consumers, retailers,

foodservice operators, specific product sectors and more
- There are many other How Do I? Guides which can help you grow your business

The Institute of Grocery Distributors: www.igd.com

www.scotlandfoodanddrink.org - The information service tailored to the food and drink industry.
Contact the Scotland Food & Drink Helpline on 0845 601 3752.