“Merchandising, while often neglected, is the single biggest differentiator of highly successful smart fridge operators. A well-merchandised fridge will yield tens of thousands of dollars in additional revenue over the life of a smart fridge.”
-Nathan Downs, FoodSpot CEO
How to Think About Merchandising
Imagine you're on a shopping trip to Target. From the parking lot, you see the iconic red sign calling you into the store. When you walk in, the interior is well-lit and clean, and the signage orients you quickly to the store’s layout. As you approach the men’s section you see full shelves with neatly folded shirts and jeans. The labels give you instant information about the products and prices. This is merchandising at its best.
It’s a scientific fact that humans spend more money when comfortable and confident throughout the buying process. Commonly, our clients will increase their sales from 10-30% overnight by performing a makeover that follows the Merchandising Best Practices discussed in this lesson.
Your Task
From across the room, the large premium exterior and bright LED lighting of your smart fridge invite consumers into the experience. As they approach, the Swipe Grab and Go sticker at eye level walks them through the process. The rest of the consumer experience relies on your attention to detail and ability to consistently deliver the best merchandising experience based on the best practices below.
Merchandising Best Practices
To illustrate best practices, we will use a Microstore that is operated by a rural hospital in the Midwest, but all operators can learn from the principles employed here:
Find the right balance between fresh and shelf-stable products: In this fridge, the right balance is about 30% shelf-stable products (drinks and cracker packs on shelves 1 and 3) and 70% fresh products (soups, salads, and sandwiches on shelves 2, 4,5, and 6). Starting with this ratio of 70% fresh and 30% shelf stable is good for learning what works and gives your customers the impression that they can get fresh food from the fridge. Do not fear waste in your first few weeks. Give customers time to develop new habits. After 3 weeks you can scale back your fresh offering and make other obvious changes if need be.
Give them what they want: What product(s) would make you come to this fridge 2-3x per week? You can send out an online survey via email or have your community request products by scanning the QR code on the fridge. A ritual product like Starbucks Frappuccino or Red Mill Oatmeal will drive frequency and impulse purchases. Microwaveable meals add a sense of heartiness and are a strong recommendation. This particular operator serves both white-collar and blue-collar workers in the building, so they stocked the fridge with more premium salads (shelf 5) and value salads (shelf 6).
Cover all meal periods: The fridge is stocked with products appropriate for breakfast (yogurt, milk, orange juice), and lunch/dinner (salads, soups and sandwiches). You may want to include dessert or other impulse options. Theme each shelf by meal period - breakfast, lunch, dinner, snacks, drinks, etc.
Group by shelf: Shelves are clearly grouped by drinks (1), breakfast/snacks (2–3), sandwiches (4), and salads (5–6), making the fridge easy to navigate. Because drinks have familiar branding, keep them on the top shelf (you don’t need to showcase apple juice on a middle shelf, people know what it is).
Keep it neat: products are neatly placed with a small space between each row. Metal row dividers (included in your merchandising kit) are used where appropriate (shelf 3).
Keep it full: Each shelf is stocked and full of products. After right-sizing the amount of fresh food, max out shelves with shelf-stable products.
Make your food visible: Products that can be propped up at an angle are done so to showcase the colors and freshness. Product labels face outward.
Use shelf clips (not pictured): Use the provided shelf clips to communicate product name and price.
New Items: Regularly introducing new items that are similar to your top sellers is a must.
Consistently returning to the principles above will help you continually optimize your smart fridge profitability. However, further, more tailored, insights can be gleaned from your dashboard data.
Learn From Your Data
Your FoodSpot dashboard has been designed to offer quick merchandising insights to improve your operation. Again, we’ll use data from fellow FoodSpot operators to explain how to learn from your data.
Using the Top 10 Tiles
The main tab of your dashboard includes charts displaying your top 10 Best Selling items and your Top 10 Most Expired Items. This data can be viewed by period or fridge for fleet operators. The following data is from a small liberal arts college in Los Angeles.
Here are some possible considerations for this operator based on their Top 10 tiles above:
The most expired item is a Candy Yam with Apples. Judging by the sheer number of these products expired, the operator may consider removing these items from the menu.
Removing Candy Yams will leave empty shelves to fill. The operator may consider creating a new product or looking for a similar product in the Top 10 Best Selling tile to replace them, such as a Gluten Free Waffle Pack.
Some top expired items need not be removed completely but just need to be reduced. For example, the operator may consider reducing Pesto Chicken Pasta (#7 on the list) by 30% and backfilling that row with Meat Lasagna, their best-selling item.
Replacing commonly expired items with commonly purchased or sold-out items will improve your bottom line.
Seeing Patterns
The revenue and waste tiles on the main tab of your dashboard show your historical sales and expirations by quantity and dollar value. We’ll use the revenue and waste tiles of a hospital cafeteria to explain how seeing patterns can optimize your merchandising.
Peak sales days tend to be Saturdays and Sundays, prompting the operator to stock more food on Friday to meet the weekend demand.
Peak waste days tend to be on Wednesdays, prompting the operator to stock fewer fresh items during the middle of the week.
Merchandising is a Journey
Whether you’ve been operating a FoodSpot microstore for one month or one year, you can always improve your merchandising. Whether it’s using shelf dividers to clean up the look of your fridge, or spicing up your menu with a seasonal item, continuously refining your merchandising skills will continuously improve your profitability. We recommend a refresh every 6-8 weeks. Set a calendar reminder every 6 weeks to ask yourself: “If I were to change three things about the fridge what would it be?” The best answers will come from your dashboard and talking to your customers.
We encourage you to send up close pictures of your fridge to your customer success manager from time to time to get feedback. You can book office hours with our team any day of the week to discuss your merchandising using the link at the top of the Library of Resources.
-Team FoodSpot
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