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 of the merchandising effectiveness of a point of purchase display RICH LTD. created for Tieman’s Fusion Coffee.
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. The company has been selling its product through Sprouts and other health-oriented food retailers. However, until recently its 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 the product.
Given our experience with coffee merchandising at retail, Tieman’s asked RICH LTD. to design a freestanding mobile store fixture with an organic feel and sufficient graphics to communicate the health benefits of the brand. We designed the pop display pictured above 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. The company’s effective return on investment assuming sales continue at the current rate measured during the study period would be 3400%. So $1 invested today would yield $3400 in incremental bottom line profit after 1 year.
While this mini case study was limited in scope and duration, the economics are undeniably compelling. 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 34:1 return. Most of our customers focus on the cost of their retail store fixture without regard to the sales lift and return on investment. However, making a wise financial decision and viewing a display rack as an investment with a measurable return on investment in retail will yield better business decisions, 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.
