Take the time to weigh the costs and benefits of different strategies to merchandising your products in order to maximize effective retailing and customer service.

Daniel Lohman, Organic Industry Strategic Advisor

April 30, 2014

3 Min Read
Develop a successful multi-channel merchandising strategy

Some mainstream retailers believe consumers will search out natural and organic products at any cost. This is not the case. A lot depends on how those products are placed and displayed on store shelves. Here, I will discuss the merits and drawbacks of integrated versus segregated natural merchandising.

Categories are divided into segments, and segments are defined by the way the consumer shops the category. Deciding, for example, between powder or liquid laundry detergent. These choices the consumer makes during a purchasing decision form what's called the consumer decision tree.

Some retailers choose product assortments that feature only a few select brands, while others choose product assortments that provide more options based on the needs and wants of their customers. While the first restricts choices and usually tries to encourage consumers to support the retailer’s private-label, the second strategy provides a good representation of available brands. It doesn't attempt to limit consumer’s choices.

Knowing how the consumer shops the category will help the retailer develop an effective merchandising strategy. This is information that should be supplied by the manufacturer assuming they know their customers needs and wants.

Think of the decisions and the choices every consumer makes when buying energy bars. Do they want meal replacement or energy bars? Oats or bran flakes? Processed or natural grain? Mainstream or conventional? With or without fruit? They will also consider the quality of the brand as either economy, premium, or super-premium.  The choices can seem endless but the savvy retailer will merchandise products in a way that helps consumers wade through the choices more easily.

Segregated Merchandising. Merchandising similar items in a separate natural section can be an effective strategy in some markets but not all. The term "natural" is generic in the eyes of many consumers. This should be considered when developing a merchandising strategy. Are your customers only interested in natural items or do they shop at your store to buy both conventional and natural items in the same trip? If the latter is true then having items in a separate natural/organic section will cause customers to overlook other items you sell.  Conversely, customers shopping the conventional section will completely ignore your natural product offerings.  

The primary advantage of this strategy is that it provides the retailer with an opportunity to educate their customers on the value of items between segments. Integrating natural and conventional gives your customers the opportunity to compare items side-by-side and then choose what’s best for their needs while also giving you an opportunity to up-sell and convert them to natural/organic products.  

It gives the consumer an opportunity to better appreciate the additional value for the premium price.  Consumers appreciate it because it’s easy to shop. This strategy addresses the needs of the committed natural shopper and it makes it easy for new consumers to try natural products.  It’s a true win-win for both the retailer and the consumer.

Category management strives to understand the customer and then meet their needs.  When applied correctly, category management will increase foot traffic and customer’s shopping basket size (total ring).  The goal is always to satisfy all of your customer’s needs in a single shopping trip to your store.

About the Author(s)

Daniel Lohman

Organic Industry Strategic Advisor, CMS4CPG (Category Management Solutions)

Daniel Lohman is an expert in the organic and natural CPG industry. With more than 20 years experience, he is certified at the highest level of category management proficiency: Certified Professional Strategic Advisor.   

Focused on leveling the playing field between natural and conventional CPG manufacturers and retailers, Lohman is passionate about helping them get more out of their available resources. He believes that natural and organic CPG companies deserve to benefit from the same practices and technologies as their conventional counterparts—without sacrificing what makes the natural channel distinctive. Lohman is a trusted and respected member of the natural community, a Natural Products Expo speaker, and a writer for Supermarket NewsNatural Food Merchandiser and newhope360. He is a staunch advocate, passionate about bringing true category management to the organic and natural channel and offers a unique and fresh perspective on the industry. 

Responsible for growing sales and teaching Category Management theory and principals while at Kimberly-Clark, Unilever and SPINS, Daniel has worked with and supported hundreds of natural and conventional manufacturers, retailers and brokers. His extensive knowledge and expertise extends beyond that of a traditional Category Manager and has earned him recognition and a reputation throughout the industry as a thought leader. He has mentored Category Managers, is a trainer, speaker and expert panelist for the Category Management Knowledge Group. 

Lohman is internationally published and the author of Strategic Solutions And Guide To Grow Your Natural Business and the What You Need To Know blog.

Category Management Solutions (CMS4CPG) provides innovative strategic solutions for natural and organic CPG companies interested in gaining a significant competitive advantage. CMS4CPG provides companies with actionable insights to assist them better connect with consumers, helping them "win-at-shelf." 

Follow Lohman on TwitterLinkedIn and Facebook. Lohman lives in Colorado, is a member of Naturally Boulder and can be reached at [email protected] or 303-748-3273. 

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