Retail displays: Non-implementation is the problem, study finds

It’s a marketing strategy that’s effective at boosting sales. Leading manufacturers and suppliers will plan display campaigns and sign contracts with retailers that specify when to install the exhibits and for how long. They often provide incentives to retailers to encourage this.

But a new study from two associate professors at the McCombs School of Business at the University of Texas at Austin reveals a major problem with the strategy: the stores. They’re failing to place promotional displays according to plan – if at all.

Their study, titled ‘Promotional Inventory Displays: An Empirical Analysis Using IoT Data’, is published in the academic journal Manufacturing & Service Operations Management.

In the past, says Associate Professor Ashish Agarwal, it’s been difficult to fully monitor compliance by individual stores, making penalties for non-compliance a rarity.

For this study, however, he found a new data source: internet of things (IoT) technology, which embeds sensors in displays to provide real-time reporting of where and how the displays are being used.

Agarwal and his McCombs colleague Ioannis Stamatopoulos, along with Jacob Zeng of Gonzaga University based in Washington State, conducted a six-month study covering 10 marketing campaigns, almost 4,800 stores, and close to 15,000 promotional displays. Companies involved included Johnson & Johnson and Coca-Cola.

Thanks to the IoT, the researchers could track when and whether those displays made it to store floors at the planned times. They found that:

• One-third of the displays were never installed.

• Those that were installed were in place for just 62% of the specified periods.

• Only 2% of displays were placed on, and removed from, the floor on time.

“One major issue is poor execution, leading to missed sales opportunities,” says Stamatopoulos.

Botched displays cost sales

Poor execution deprived brands of substantial sales, the researchers found. Displays boosted sales of targeted products by 2.3% when they were installed during the specified campaign period, rather than during a non-campaign week. “If it’s done correctly, it can actually boost sales,” emphasises Agarwal.

Why aren’t stores doing it correctly? Because busy managers often see the displays as a nuisance. From the data, researchers found correlations that support the ‘nuisance’ diagnosis.

• Larger, more complex displays were far less likely to make it to the floor.

• So were ones that arrived too early or on weekends.

Agarwal believes the best solution is to invest in IoT technology. Installing sensors in every store and on every promotional display might be cost-prohibitive for some organisations, but it could pay off over time as brands recoup lost sales by ensuring compliance with the wider marketing strategy.

If using IoT technology is not viable, another solution would be to offer better incentives to store managers to encourage them to install displays correctly.

“This study is showing [suppliers and retailers] the value of promotional displays,” Agarwal says. “The next step would be to do a cost-benefit analysis to determine whether you should implement the [available IoT] technology or not.”

You can find out more about the study here.