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.