The Power of Effective Merchandising and its Impact on ROI
Would you give me $1 today if I told you I would give you back $3400 in 1 year? Who wouldn’t take that offer? Those compelling economics are at the heart of a mini case study we published a few years ago on Tieman’s Fusion Coffee. We’ll revisit the results of that study today and share an update on the display that keeps on giving.
Tieman’s Fusion Coffee makes a distinctive coffee product that is ultra smooth, flavor rich, nutrient dense, and low in acid. A single cup of Tieman’s coffee contains 5 times the daily requirement for anti-oxidant production.
When we first met Tieman’s in 2014, the company had been selling its product through Sprouts and other health-oriented food retailers. At the time, however, Tieman’s product was placed inline among a variety of other coffee brands, which made it very difficult to tell their story and highlight the unique health benefits of their product. In addition, the coffee category is intensely competitive, and the big brands have large promotional budgets that make it extremely difficult for smaller brands like Tieman’s to compete.
Tieman’s asked RICH LTD. to design a freestanding mobile display with an organic feel and sufficient graphics to communicate the health benefits of the brand. We designed the display pictured below which was then placed in Sprouts stores. We were curious to measure the impact of the freestanding display relative to the product’s historical inline placement.
During the study period, sales increased 500% (6-fold). The payback on the display was less than 9 days. That is, in less than a week and a half, the company recouped the entire cost of the display from the profits it generated from incremental sales. Extrapolating the study-period sales results, we calculated Tieman’s first year effective return on investment to be 3400%. So, every $1 the company invested in displays yielded $3400 in incremental bottom line profit after 1 year.
You might think those results are too good to be true, but the story gets even better. The same display that went into Sprouts is still there 5 years later. What that means is the company has been able to amortize the cost of the display over all the sales it has generated over the last 5 years. Tieman’s reports that in Sprouts stores in which they have the display, sales are double the sales of the stores where they don’t have a display. That is undeniably compelling evidence for brands who are debating whether it is worth investing in a display that enables them to get off-shelf rather than competing inline.
Because of the strong results they have generated, Tieman’s got approval this year for a national roll out to 325 Sprouts stores in 25 states which would likely not have happened without a point-of-purchase display to help drive impressive sales. So, the right display can create expansion opportunities that lead to growth and profitability that might not be possible otherwise. What’s perhaps more impressive is that by telling its story, building its brand, and clearly communicating the benefits of its product, Tieman’s has outsold Starbucks’ packaged coffee 17 to 1 in another major grocery retailer.
You might be thinking that these kinds of results are not achievable for your brand. But, consider that even if Tieman’s only got 10% of the sales lift presented in this case study, it would be a smart investment for the company since not many investments these days can provide a 34 to 1 return. Most of our customers focus on the cost of the display without regard to the potential sales lift and return on investment. However, making a wise financial decision and viewing a display as an investment with a measurable return will yield better brand awareness, increased sales, and stronger profitability.
Jim Hollen is the owner and President of RICH LTD. (www.richltd.com), a 35+ year-old California-based point-of-purchase display, retail store fixture, and merchandising solutions firm which has been named among the Top 50 U.S. POP display companies for 9 consecutive years. A former management consultant with McKinsey & Co. and graduate of Stanford Business School, Jim Hollen has served more than 3000 brands and retailers over more than 20 years and has authored nearly 500 blogs and e-Books on a wide range of topics related to POP displays, store fixtures, and retail merchandising.
Jim has been to China more than 50 times and has worked directly with more than 30 factories in Asia across a broad range of material categories, including metal, wood, acrylic, injection molded and vacuum formed plastic, corrugated, glass, LED lighting, digital media player, and more. Jim Hollen also oversees RICH LTD.’s domestic manufacturing operation and has experience manufacturing, sourcing, and importing from numerous Asian countries as well as Vietnam and Mexico.
His experience working with brands and retailers spans more than 25 industries such as food and beverage, apparel, consumer electronics, cosmetics/beauty, sporting goods, automotive, pet, gifts and souvenirs, toys, wine and spirits, home improvement, jewelry, eyewear, footwear, consumer products, mass market retail, specialty retail, convenience stores, and numerous other product/retailer categories.