Shortly before his death in 2007, Carnegie Mellon professor Randy Pausch delivered a final address to his students which was famously entitled “The Last Lecture.” If we were asked to give “The Last Lecture on Point of Purchase Displays,” we would focus our remarks on the 20 things that matter most in creating successful P.O.P. displays and in-store marketing programs.
Successful POP display programs have 3 things in common:
After more than 25 years in the POP display business we know that the heart and soul of any successful point of sale display or visual merchandising program is great design. Simply put, design matters. And it matters hugely. The goal of any point of sale display design is to win the hearts and minds of customers and to sell more product. There is a lot to consider when thinking about Point of Purchase displays effectiveness, but here’s what we have found to be most important:
Having a clear understanding of your target customer is the first and arguably most fundamental step in developing an effective point-of-purchase display. What is your target customer demographic? How will in-store displays help them?
What does your target customer value? What motivates them? What is their lifestyle and how might your product help to enhance that lifestyle? Once you understand as much as possible about your target customer, you can incorporate those demographic and behavioral insights into your design.
For example, one of our customers, 9Five Eyewear, is a luxury brand of eyewear founded on the aesthetics of street culture, skateboarding, and fashion. In attempting to build a top-tier eyewear brand and capture its target customer of 18-24 year old males, 9Five tapped into some of the world’s most sought-after trend setters in music and pop culture.
We created a one-of-a-kind sunglass display case for them that looked like a video game console, fully equipped with push buttons, a real joy stick, and coin slots. The display was designed to tap into the passion that 18-24 year olds have for video games while also creating an element of surprise (i.e., Who would expect a sunglass display to look like a video game console?).
An example of designing store fixtures to appeal to a very different target customer is the line of animal-themed step stools we designed for Petco. The majority of Petco shoppers are women, and many of them have kids in tow when shopping. Petco asked us to create a set of safe, folding step stools that would be attention-grabbing and fun while specifically appealing to kids.
Everyone likes a good story. Story telling is an art. Stories enable us to connect with people. The more remarkable or unforgettable the story, the easier it is to engage your audience. Stories can also connect us with products. The best retail displays are ones that tell a story to establish an emotional connection with a buyer.
Sseko Designs, the creator of an ethical fashion brand, hires high potential women in Uganda to make sandals. While not unique, Sseko’s story of hiring and empowering women artisans to help end the cycle of poverty in Africa resonates with most people.
The focal point of the sandal display that RICH LTD. created for Sseko Designs was the front-facing center graphic panel which provided a vehicle to tell the company’s story. We added brochure holders to enable interested customers to learn more about Sseko’s products and their vision for creating a brighter, more just, and more beautiful world. Sseko’s story helps to create a positive, feel-good impression of the brand while increasing the likelihood of purchase.
In the same way we all can relate to a good story, people are genetically wired to connect with one another. Our genetic predisposition toward human interconnectedness is the underlying driver of the Internet, smart phone, and social media revolutions. Personalities play an important role in establishing connections between people. So the question then becomes if we are trying to connect POP displays to people, can we actually create retail displays with a personality? The answer is yes.
We were challenged by our customer Romotive to create a display for ROMO, their friendly programmable toy robot from outer space. The point of sale display needed to be so unique and so compelling that it could stop store traffic and capture the imagination of shoppers young and old.
The way we accomplished that was by giving the ROMO display a personality. More specifically, we discovered that ROMO already had a personality- a cute, friendly, and quirky personality. After getting to
know ROMO, we learned that he could respond to facial expressions, play chase, roam around and connect with family and friends.
In collaboration with Romotive, our team designed a display that focused on showcasing ROMO’s personality. We designed a table top display that was constructed of acrylic and included a clear acrylic space-age dome, an air brushed latex moonscape, LED lights, a digital media player, digital graphics with targeted messaging, and most importantly, a fully powered ROMO robot. The display succeeded because it put the focus on ROMO and created an environment in which ROMO could move around and fully express his personality. Watch this short video to see how ROMO helped to make his own display.
Great point of purchase displays enable the shopper to quickly zero in on the key points of differentiation of a product relative to other products on the market. What makes this product different from all the other products on the market? How does that product differentiation make the product better, and how does it translate into more value for the customer?
RICH LTD. was asked by 180s to design a product glorifier display for its Exolite ear warmers, which is one of several products in its distinctive line of active sportswear and accessories. By creating a wire head with the ear warmers attached, our POP design highlighted 180s patented behind-the-head design and its click-to-fit frames. We created base graphics which communicated the benefits of the product design, including collapsibility, customized fit, and the ability to wear the ear warmers with other headwear or head protection.
While the main point here is that customers could immediately understand how the ExoLite ear warmers were different from traditional ear warmers, we also added versatility to the display by designing a rotating neck that enabled the fixture to be used as a countertop display or as a slatwall display.
Seeing is believing so whenever possible incorporate a product demonstration into your display. Point of purchase displays that incorporate well-executed product demonstrations accomplish 4 things:
An example is a merchandising display we designed for Griffin Technology’s line of fully waterproof Survivor® iPhone cases. The
display featured a waterproof case completely submerged in a clear acrylic container of water. Our display effectively created a real-time, in-person testimonial to validate the claim that the Survivor® phone cases are waterproof. The graphic panel on this display provides the customer with additional product information, but it’s the product demonstration that turns the shopper into a customer.
As a general rule, the most effective retail store displays are ones that increase shopper engagement by enabling the shopper to interact with the product. In virtually every case in which the shopper can touch, feel, and interact with the actual product, sales increase.
For the next shelf retail display example, we had an opportunity to work with PetSafe on an inline fixture designed to showcase its shock collars and dog training products in PetSmart stores. Traditionally, PetSafe merchandised its products in a locking glass case which was designed to enable shoppers to view their products but not steal them. However, higher-end dog training products often require an educational sale, and the locking cases created a barrier between the customer and the product.
Our solution was to reduce the size of the locking case but continue to utilize it to secure high-value products. We reallocated a portion of the space and created a countertop area which featured tethered products that the customer could interact with while learning about the features and benefits of the product through product information cards and back panel graphics. The addition of interactivity to the display resulted in a measurable increase in product sales.
Graphics play a vital role in capturing shopper attention, showing your product and educating potential customers. In almost every retail store environment, shoppers are bombarded with visual stimuli. Not only are product marketers competing with other in-store products, but many shoppers these days are distracted, hurried, and preoccupied with their smart phones, making it increasingly difficult to capture their attention. In most cases, a display has only a matter of seconds to attract a shopper.
The second example is an inline display we created for Surf City Garage which helped to set its products apart from the sea of other car care products in the automotive section at Wal-Mart. There were a number of elements that contributed to the success of the display, but the component that was most effective was the large 3D vacuum formed plastic header sign. Relative to competitor signs in the aisle, the Surf City Garage sign helped to set the company’s products apart by creating a premium auto detailing center while also reinforcing the company’s enthusiast-grade brand image.
Bold, eye-catching graphics can make all the difference in capturing the interest of a shopper as well as building a desired brand image. We could offer countless examples of effective graphics used in conjunction with retail display fixtures to capture shopper attention, but we will focus on just two. The first is a graphic-intensive display that we designed for Maidenform. The display was actually simple but quite empowering visually. It consisted of a low rise table, a 3-tiered product glorifier, a small “Comfort Devotion” sign, and a large attention-grabbing graphic.
Graphics can also be used to show your product. Before making a purchase, customers want to see the product they are buying. Sometimes this is difficult to do because of packaging or space constraints. A good example of how graphics can be used effectively to show your product is the 2-sided t-shirt cubbie display we designed for Kerusso’s Cherished Girl t-shirt line. In addition to the brand-building header graphics, each t-shirt style has a graphic showing the design on the front of the t-shirt. This enables the t-shirts to be folded within the cubbies, which is very space-efficient, but it also provides a way for the customer to see the product and choose the design she likes best. RICH LTD. offers a 4-sided version of the t-shirt cubbie display as a stock item.
Finally, graphics can be used to educate the customer on the features and benefits of your product. The trick here is to focus on a few key educational points without making the graphics too text-heavy. Providing customers with a way to learn more through a website or take-away brochure is often a good idea. We designed a retail floor display for Zodiac Pool Systems that not only had header and footer graphics to promote the brand, but it also had a digital media player, product-specific call-out graphics, and a side brochure holder, all of which were focused on educating the customer.
In their widely acclaimed baby naming book “Beyond Jennifer and Jason,” the authors argue that the best names for children are ones that make them stand out yet fit in. And so it is with retail displays. The challenge is always to stand out, to differentiate your product, to be unique and distinctive. However, in the world of visual merchandising, there’s a fine balance between standing out and fitting in within the overall décor of the store environment.
An example of a shelving display rack that stands out yet fits in is an end cap display we designed and manufactured for The Honest Kitchen. We created a solid wood shelf display with a natural finish and organic feel to reinforce the features of our customer’s line of natural dehydrated pet food, but we added high-impact header, side, and shelf graphics that helped both the display and the product stand out. Although this display rack stood out, it also fit in with the wide range of independent pet store environments in which it was placed.
Selecting the right type of display to meet your marketing and sales objectives is an important step in the design process. One of the first things to decide is whether it is better to go with a temporary display or a permanent display. Temporary displays, often referred to as shippers, shipper displays, corrugated displays, or cardboard displays, are generally used for in-and-out promotional or seasonal programs.
However, in our experience many customers who do not have promotional programs initially gravitate toward corrugated displays to save money. What they don’t realize is that temporary displays can often end up costing more over time than a permanent retail display. The reason is that with corrugated displays, once the product sells through the display is usually tossed by the retailer and needs to be replaced.
In addition, most shippers are less durable and may not last more than 6 or 8 weeks in a busy, regularly maintained store environment. Corrugated displays are typically seen as disposable and are more likely to be discarded at the whim of a retail district manager. Finally, corrugated display costs are generally more sensitive to volume than permanent displays in the lower quantity ranges so small quantities of custom corrugated displays can be pricey, particularly if the design is graphic-intensive.
If you think a permanent display is better suited to meet your objectives, it is important to determine the type of display that makes the most sense. This decision is often contingent on store plan-o-grams and the specific location where your display will likely be placed. Generally, securing off-shelf placement is more desirable since freestanding displays tend to generate more product sales than inline placement for most products.
End cap displays represent prime retail real estate. Simply moving product from an inline gondola location to an end cap location can drive a meaningful increase in sales. For example, the Pepsi end cap we built for Target stores drove an immediate double-digit increase in sales compare to sales generated by the previous inline location.
Beyond end cap displays, there are dozens of different types of point of sale and visual merchandising options available, such as tabletop stands, counter displays, floor standing displays, wall mount racks, pegboard displays, slatwall displays, slatgrid fixtures, basket displays, dump bin displays, floor shelf displays, hanging displays, locking display cases and glass display showcases, nesting tables, grid fixtures, fold-out wire shelf displays, counter and floor hook spinners, banner stands, and many other types of displays that are product-specific such as sunglass displays, eyewear displays, cap racks, hats displays, magazine racks, apparel displays, clothing racks, accessory displays, food displays, beverage displays, cosmetic displays, jewelry displays, earring displays, CD displays, toy displays, garment racks, greeting card racks, nail polish racks, necklace displays, newspaper racks, postcard racks, poster displays, shoe displays, t-shirt displays, watch displays, footwear fixtures, wine displays, etc.
Selecting the right type of display can not only have an impact on your sales, but it can affect your brand image and your product’s perceived value. For example, selecting a dump bin fixture might be just the right merchandising strategy for your “Grab N’ Go” program, but it would be important to consider the impact on your brand image since most shoppers associate dump bins with clearance merchandise or lower value products.
Designing modularity, configurability, and flexibility into your retail store fixtures is the best way to increase the versatility and utility of your displays while also ensuring the best possible return on investment. Effective modular and configurable designs enable you to meet the specific needs of retailers in a highly customized way, particularly when:
Designing for modularity and configurability is akin to the manufacturing concept of mass customization. Not only are there benefits in terms of meeting retailers’ needs and increasing opportunities for retail display placement, but there are important economic benefits that arise from being able to replace fixture parts and components rather than complete fixtures in the event of fixture damage, obsolescence, or plan-o-gram changes.
Two good examples of modular and configurable designs come from our stock line of store fixtures. The first example is our Store Fixture Line which we designed around a single heavy-duty steel frame on castors with an MDF panel insert. These steel frames with panels can be configured in a number of ways to create completely different displays.
With just one common panel it is possible to create a pinwheel display, an “H” rack, a t-sided fixture, and a mobile gondola fixture. Once a basic configuration is established, customers can choose from a variety of fixture accessories such as shelves, apparel hanging bars, crossbars, waterfalls, straight-outs, cap pockets, hooks and sign holders. Further customization is possible by adding branded header graphics and changing out stock maple laminate panels for graphical panels or other finishes.
A second example from RICH LTD.’s stock line is our 4-WAY fixture. This apparel fixture features an MDF base with a bamboo veneer finish and a 4-sided slotted metal tube structure. The display can be configured in many different ways using accessories such as waterfalls, straight-outs, jet rails, cap pockets, shoe shelves, and a header sign holder. It’s a great example of how to use a display to cross merchandise complimentary apparel accessories and how one display can meet a wide range of merchandising needs.
In the last few years there has been a clear trend toward digital signage and the use of videos in POP displays. Adding videos to your display can be a smart move if it is important to show your product in use, if your sale is highly educational, if your product is highly technical or if you believe video is the best way to engage a shopper. However, videos are not appropriate for all point of purchase displays, and in some cases the cost of adding a digital media player outweighs the benefits.
If you want to incorporate video into your display, there are a few things that are important to understand. First, make sure the production quality of the video is high, the messaging in your video is concise and on point, and the entertainment or educational value of your video is sufficient to captivate and convert potential buyers of your product. Your video needs to represent your company well while serving to enhance your brand image. Unprofessional or hastily produced videos can hurt your brand and are likely to be a waste of money.
Before making a decision to incorporate a video into your display, make sure you will have access to electrical power in the specific locations where your display will be placed within the chain of retail stores. AC powered digital media players tend to be somewhat less expensive than battery powered players, while also having the advantage of being able to play a continuous loop video without being limited by battery life. The downside is that store personnel may decide to turn off the sound on the video or even turn off the entire video player after a couple of weeks of exposure to continuous loop monotony.
If you have a lower-end display and a limited budget, you might consider using a digital photo frame that plays video. The resolution is typically not as good as standard digital media players, but you may find the quality acceptable given your budget constraints. If you have the budget to invest in a standard LCD advertising player, make sure you specify a player with good resolution (ideally 800 x 480), the proper Aspect Ratio (ideally 16:9), a cord of at least 8 ft., one or preferably two high quality stereo speakers, a USB connection, a mute button, and a motion detection sensor if desired. Also, be sure to invest in a good SD card since the range of quality in SD cards on the market is highly variable.
If you want to incorporate a video player into your POS display but will not have access to electrical outlets in your designated retail location, you may want to opt for a battery-powered LCD media player. Prepare to spend a little more, but battery-powered digital media players can still be a viable option. If you are forced to go the battery-powered route, the first thing you need to do is make sure your video is not too long (ideally no more than 30 seconds or a maximum of 45 seconds). Generally battery packs are available in a variety of combinations, but 8, 12, and 24 D-Cell battery packs are the most common. A 24-count D-Cell battery brick has an estimated play time of over 26,000 30-second advertising spots.
For battery-powered LCD media players, customers often ask us if it is better to have the video activated through motion detection or through push button activation. Our answer is generally to go with push button activation since it tends to do a better job of preserving battery life, whereas in high traffic stores motion detection players are frequently activated by shoppers who are just passing by and may have no interest in your product. Some media players utilize motion detection to turn on the LCD screen and display a JPEG image as a way of signaling the shopper that the video is ready to play. That option is worth considering despite the incremental battery power consumption. At a minimum, we recommend including a flashing activation button which is a relatively inexpensive add-on that can help to capture shopper attention.
We have included a couple of examples of retail displays we have designed which incorporate digital media players.
Selecting the right materials for your custom retail display is an important part of the design process. There is a lot to know about materials, and the right mix of materials can make or break a display. In addition, to achieve the most cost-effective display possible, it is vitally important that the display is designed to maximize material yield. For example, if it is possible to make a wood shelf 23 7/8” x 23 7/8” instead of 25” x 25”, it means you can get 8 shelves out of a 4’x8’ sheet, rather than 3 shelves. This seemingly small difference in shelf size can result in significant differences in the cost of the display. Yield tends to be most important in working with standard sized sheets of wood, MDF, acrylic, PVC, sheet metal and graphics. Knowing material sizes and designing to maximize yield is an essential part of designing cost-effective displays.
Similarly, for knock-down display racks it is important to create a design that knocks down in the most efficient way possible, which means the disassembled display will be able to fit in the smallest box or set of boxes possible. Experienced designers know, for example, that slightly flaring out the fronts and sides of baskets will enable the baskets to nest efficiently, which in turn will reduce shipping and storage costs.
The 3 most commonly used materials in point of purchase displays are metal, plastic, and wood or wood composite materials. Each of these material categories has a different set of physical properties, different strengths and weaknesses with regard to manufacturability and aesthetics, and different economics.
Metal is often used for the structural elements of store fixtures because of its strength and cost effectiveness. The most commonly used types of metal are tube (round, square or rectangular), wire, and sheet metal. Although it is lighter weight and better for shipping, aluminum is used less often since it is often double the cost of steel and can’t be welded to metal since aluminum and steel have different melting points. Developing a basic understanding of material economics is essential to making wise material choices. For example, a sheet metal shelf is likely to cost 45%-50% more than a wire shelf, and shipping will be more expensive since it is likely to weigh about 30% more. Similarly, perforated sheet metal has aesthetic appeal but generally costs more than regular sheet metal since it requires an extra step in the manufacturing process.
Plastic materials are even more complex than metal. The most common type of plastic used in retail fixtures is acrylic. POP displays are relatively easy to fabricate out of acrylic, and acrylic displays are widely used in retail. The downside of acrylic is it can scratch easily, is more fragile and damages more easily than other types of materials, and can turn yellow over time after prolonged exposure to UV lighting in stores. Injection molded plastic shelves, bases and other display components are also fairly common in the point-of-purchase industry. Understanding the advantages and disadvantages of injection molded plastic materials such as ABS, HIPS, PMMA, and PP is important in creating an effective design. Also with injection molding, unit costs may be lower, but upfront tooling costs can be hefty so volume plays a bigger role as the tooling costs will need to be amortized across the quantity of units produced.
Vacuumed formed plastic is also widely used to create displays, most notably in the cosmetic industry as well as for in-store signage. Vacuum formed plastic is fabricated using a lower tech process, and therefore tooling costs are lower than injection molded tooling costs. However, vacuum formed plastic lacks the strength and durability of injection molded plastic. There are many other types of plastic fabrication methods such as blow molds and rotational molds as well as many other plastic materials such as PVC, expanded PVC, extruded plastic, and so on. If you are working with a POP display company, make sure they have a solid understanding of these types of materials.
Wood and wood composite materials such as MDF and particle board are also commonly used in retail store displays. Like plastics, wood materials can be complex and knowing the best materials to choose for specific applications, as well as the cost of those materials, is critical for creating display fixtures that work. MDF with a high pressure laminate or melamine finish is widely used and relatively cost-effective, but it is generally heavier than plywood or solid wood and therefore more expensive to ship. Plywood is stronger than MDF but has fewer finish options. Pre-finished birch plywood tends to be a popular choice among our customers who require stronger materials with a more finished look.
Solid wood is often a good choice for making store fixtures, particularly if the design requires a natural or organic look such as you might find in a produce department of a grocery store. Some solid woods like pine are soft while oak and maple are examples of hard woods. Selecting the right type of wood for a particular POP application requires experience and frequently depends on whether the display will be knock-down or assembled and what type of stain or finish is desired. An increasingly popular material choice for display fixtures is bamboo because it is environmentally sustainable, extremely strong, and offers a premium look. Aside from its natural beauty and inherent dimensional stability, bamboo has higher tensile strength than many types of steel, higher compressive strength than many mixtures of concrete, and a higher strength-to-weight ratio than graphite.
Make sure your POP display is designed and built for durability. Assume your fixture will be the victim of abuse, neglect, and shameless piracy. In engineering any display, it is important to consider more than just the weight of the products that will be merchandised on the display. Fixtures need to be designed to withstand the force of fully-loaded shopping carts bumping into them, kids hanging on them, and misguided floor scrubbers gone awry. For freestanding wood floor displays it generally makes sense to invest in a high quality bumper such as McCue to protect the base and T-molding rather than edge banding to protect vulnerable edges and corners.
End caps and freestanding fixtures are often the greatest victims of abuse, particularly in high-traffic store environments. For example, we manufactured a Pepsi end cap for Ralphs stores. We were informed that in selected stores the bottom and top shelves were being damaged. After investigation, we learned that damaged sustained by the bottom shelves was a result of floor scrubber crashes as well as reps standing on the bottom shelf to make it easier to reach the top shelf during restocking. Damage to the top shelves was caused by reps slamming 2 liter bottles onto the shelves during restocking. As someone once said, “Experience is the toughest teacher because she gives the test first and the lesson afterwards.” We’ve learned from experience that shelf load is just one of many inputs that need to be considered in ensuring the overall structural integrity and durability of a display fixture.
In addition to abuse and neglect, point-of-purchase displays need a strong defense against fixture piracy. It is not uncommon for a POP display to lose its brand identity simply by someone removing the signs and merchandising the display with a completely different brand or product. These acts of shameless piracy are not always policed by store personnel so the best way to prevent your display from getting hijacked is to have some kind of permanent branding on the display. That doesn’t mean you need to give up on interchangeable signs. We are simply suggesting that some permanent branding will go a long way toward discouraging blatant acts of fixture piracy.
Investing in the design process is the best way to ensure your point of purchase display will produce the sales and brand-building results you desire. In too many cases we have seen companies who manufacture their product in China make a poor decision by allowing their factory’s “sister factory” to manufacture their displays. This short-sighted approach is common practice in a number of industries such as toys, hardware, and automotive aftermarket products. While this strategy may save some money in the short run, it almost always results in unimaginative, uninspiring, and unremarkable displays that underperform at retail. In our view, any savings produced by this approach are generally more than offset by potential lost sales and missed opportunities to enhance a company’s brand image.
Another common practice is to settle for an off-the-shelf stock display rather than invest in a custom display that will truly differentiate your product. At RICH LTD., we offer a full line of some of the most flexible, customizable, and design-oriented stock displays in the industry. We understand that some customers either don’t have the time or the quantities to pursue a custom design. Many of these customers can find a workable merchandising solution within our stock line, and we offer numerous options to customize our stock retail fixtures through custom signage, the addition of accessories, and lots of opportunities for configurability. Some customers, however, have products that just don’t fit any of our stock fixtures, yet they are resolute about using a stock fixture. While we are big fans of our stock fixtures, we believe spending the time to work with us to develop a custom fixture might be a better answer than force fitting your product into a stock POP fixture. Many customers are surprised to learn that custom fixtures do not necessarily cost more than stock fixtures.
Investing in the design process means taking the time to think about what you want your POP display to accomplish and what you are really looking for in a design. Some of our customers provide us with a formal design brief that introduces the company and the product, discusses the brand image, highlights competition, provides product and packaging details, outlines display requirements, offers budget guidance, and includes quantities as well as timelines. Design briefs are helpful but not always necessary. Investing in the design process means at least thinking through the following types of questions that we are likely to ask:
There are many more questions that would need to be answered throughout the design process, but the above questions can help you get started.
As much as design matters, the success of POP display programs boils down to economics.
Setting a budget for your display is a critical step before beginning the design process. Without a realistic budget or budget range, the design process will be inefficient and unfocused. A significant percentage of design inquiries we receive come from customers who don’t have a budget for the display they would like us to design. Many others think that if they share a budget with us, they won’t get as good of a price. Still others remind us that they have to give the displays away so they want the price to be “as low as possible.”
The truth is that communicating a realistic budget will help you get the best value for your money. In establishing a budget for your display, consider the price of your product, your profit margin, your anticipated sales volume, and the length of time you expect your display to be in place. Many retailers like to see inventory turn a minimum of 2-3 times per year, but this can vary by type of product, type of retailer, and other factors. In some cases, you may not be able to completely cover the cost of the display with your opening order,
but in setting your budget it usually makes sense to amortize the cost of the display over the expected life of the display investment. As general rule, the higher the sales price of your product, the more you should be willing to invest in a display. Alternatively, if you have a low-priced product with a low profit margin, be careful not to overinvest in the display or it will be difficult to get your money out of your investment.
Keep in mind that sometimes a cheap or low-budget display can end up being the most expensive type of display in the long run. A cheap display might be easier on your pocket book in the short term, but it might be very expensive in the long run after considering the damage it could do to your brand or company reputation, the ill will and potential lost future opportunity with retailers, and the possible costs related to repair and servicing issues. If, for example, you spent twice as much on a display that enabled you to sell 3 times as much product, you may find that the display that required twice the initial outlay is actually relatively cheaper since you can amortize the cost of the display over 3 times the sales volume. A good question to ask before making a decision on a display is how many more units would you have to sell to justify the incremental investment in a particular POP display or add-on display feature?
The bottom line is that for a POP display program to be successful, the numbers need to make sense. Spending the time to develop a workable budget is as important as creating a set of detailed design specifications for your display.
The overwhelming majority of our customers view retail displays as a cost or expense rather than as an investment. An “expense” mentality often leads customers to view a display as a necessary evil or as a burden that they must bear for the privilege of selling their product in a particular retailer. This type of thinking frequently leads to underinvestment in displays since expenses generally fall into the category of things we want to minimize. As discussed, we believe it is valuable to set budgets for fixture programs, but viewing your POP display as an investment rather than an expense will result in better business decision making.
percentage). The return on investment formula is:
If for example, your profit was $10/unit, you sold 100 units during the year, and your display cost was $100, then your return on investment would be ($1000-$100)/$100 or 900%. If you expect the display to last 2 years in the store, your return would actually more than double (1900% in this case) since you could amortize the cost of the display over 2 years so your first year expense would only be $50.
So why even spend money on a display? The 4 main reasons are:
Together, these reasons provide the financial justification for an investment in any display program. The main difference between an expense and an investment is that an investment comes with an expectation of a return.
While most of our customers look at retail display fixtures as an expense rather than an investment, only a tiny minority of customers try to measure the return on their display investment. Sadly, measuring the return on investment (ROI) is a relatively straight-forward exercise that does not require an advanced degree in finance. It is really just a matter of financial discipline and good business practice. Not measuring the return on your display program is like going on a diet and not bothering to weigh yourself after 3 months.
If you are selling your product in a store for the first time, then you can measure the ROI by taking the profit per unit sold x the number of units sold during the year (i.e, gain from your investment) minus the cost of the display divided by the display cost (expressed as a
If you already are selling your product in a store and have the opportunity to go “off-shelf” with a freestanding display, you may want to analyze your ROI on an incremental basis. So, for example, let’s say your product is currently inline on gondola shelves and you have no display expense. If you had an opportunity to invest $100 in a freestanding display that resulted in a 25% increase in sales which generated $500 in incremental profit during the year, then you can calculate your ROI on an incremental basis as follows: ($500-$100)/$100= 400% ROI.
In addition to ROI, there are other ways to measure the effectiveness of your display investment. One measure is the Payback Period which is used to calculate how long it takes to recover your investment.
Payback Period (In Days) = (Cost of Display/Annual Profit) x 365
In the example above, the Payback Period would be ($100/$1000) x 365 or 36.5 days. That means that the initial display investment would be recouped after a little over a month. The Payback Period calculation is another measure of capital efficiency and should generally be used in conjunction with an ROI analysis since it has 2 shortcomings as an investment measurement tool: (1) It ignores the benefits that occur after the payback period and therefore does not measure true profitability, and (2) It does not measure the time value of money.
Measuring your return on your display investment will not only help you make smarter business decisions, but you may be surprised at the magnitude of your return. Check out this mini case study to see how one of our customers generated an astounding 3400% return on his display investment.
Developing a thorough understanding of the economics of your POP display program will help to maximize the success of your program. To begin, it is important to consider the total delivered cost of a display rather than just the quoted manufacturing cost per unit. A lot of manufacturers quote FOB their location so it is important to factor in shipping cost when comparing quotes. Some of our customers have us ship their POP displays to their warehouse, and then they ship to their customers’ stores or distribution centers. There may be some good reasons for doing this, but savings are often possible by having the display manufacturer drop ship to stores or ship directly to a retailer’s distribution center. Likewise, some of our retail customers only focus on the cost of the fixture without regard to transportation costs since in some cases freight falls into a different budget and is outside of their area of accountability. However, this approach generally does not yield the best results when measuring total delivered display cost.
Just as it is important to understand shipping costs, other costs related to fixture storage, assembly, fulfillment and installation also make sense to consider in developing a complete picture of the economics of a display. It is important for the company providing the display to understand a particular retailer’s tolerance for assembling a display. If the retailer is equipped to handle in-store assembly, if the assembly is not too difficult, and if the retailer does not charge back for assembly services, then it almost always makes sense to ship the display fixture knock-down and have it assembled in the field, unless the fixture is very large. Some customers think they can save money by having us ship displays to them without signs so they can print and add signs themselves. These customers typically underestimate the true cost of labor in printing and adding signs to each box.
Understanding material costs and economics is also important. In considering overseas material costs, it is helpful to know that for most materials like metal and plastic, there is a very strong economic relationship between the weight of the material and the cost of the display. So, for example, a metal display that weighs twice as much as another metal display will likely cost about twice as much. Likewise, an acrylic counter display made of 3MM acrylic is likely to cost about half as much the same display made of 6MM acrylic. While the relationship between overseas material weight and cost is not perfect, the correlation is high. That relationship is much stronger for overseas materials than materials in the U.S. because labor costs tend to play a bigger role in determining overall display costs in the U.S. than for displays manufactured overseas where labor costs are lower. Despite overseas wage inflation in recent years, the relationship between material weight and cost still largely holds.
One way to hold an overseas manufacturer accountable is by weighing the display to ensure they are not lightening up some of the materials to save money. Several years ago we noticed a discrepancy in the weight of boxes of the same style hooks between two different POs. We discovered that our factory had used lighter gauge wire on one of the POs as a way to squeeze out a little more profit margin. Monitoring weight fluctuations for items that are ordered on a repeated basis is one important element of an enlightened quality assurance process. In the event that material thicknesses are not thoroughly specified, it is equally important for a customer who is comparing quotes from different POP display companies to check the weight of the display being quoted since companies utilizing lighter gauge materials may be able to offer a lower price.
In specifying materials, it is important to keep in mind another key economic principle which relates to the law of supply and demand. We are referring to the difference between scarcity and utility. Water, for example, has extremely high utility. It is extremely valuable and essential for life. However, because it is plentiful it is cheap relative to its value. In contrast, beachfront property is lower in utility, but because of its relative scarcity, it commands higher prices. The same is true for materials used in POP displays. Whenever possible, try to specify common materials that are readily available in the market. Create uniqueness and value in your displays by combining readily available materials in new and interesting ways rather than trying to differentiate
your display by specifying some obscure laminate or exotic wood that is in short supply.
Aside from material costs, perhaps the biggest lever in managing per unit display costs is volume. Given that manufacturing most displays requires tooling and set-up time, the longer the manufacturing run, the more units that can be used to spread tooling and set-up costs. With smaller runs of let’s say fewer than 100 units, all of the upfront development costs, tooling costs, and set-up cost can only be spread across a very limited number of units, resulting in higher per unit manufacturing costs. When set-up time is high as a percentage of overall production time, unit costs are likely to be higher. Similarly, when the quantity is high, the set-up costs tend to be low relative to total production time, thereby resulting in lower unit costs.
Many customers do not understand the difference between ordering 1000 units to be produced at the same time and placing 5 orders of 200 units each of which is produced two months apart. Although both quantities are 1000 units, the material purchasing economies of scale and the lower total set-up time of the single large order explain why the single order of 1000 units would deserve better pricing. The difference between the economics of short runs and long runs helps to explain in part why custom POP displays may not necessarily be more expensive than stock displays. That is, because custom displays typically have higher minimums than stock displays, the volume discount built into custom display pricing is often more than enough to cover the expense associated with designing and creating special tooling for a custom display.
Two other important considerations in understanding the economics related to manufacturing costs relate to manufacturing processes and productivity. With respect to manufacturing processes, customers should understand that each additional step in the manufacturing process generally has an associated cost. For example, MDF with a laminated finish is typically less expensive than MDF with a high-gloss polyurethane (PU) finish. The reason is PU-coated MDF takes approximately 9 coats to create a durable high-gloss finish so the labor costs are significantly higher than the labor required to stick laminate to MDF. The reverse is also true. Reducing the number of welds required to fabricate a wire rack, for example, can reduce labor costs and per unit manufacturing costs.
Productivity is also a key factor in understanding manufacturing costs. Most articles in the popular press focus on the changes in worldwide labor rates and the continued wage inflation in countries like China. The changes, they claim, are creating a manufacturing resurgence in the U.S., more “near-shoring” opportunities in Mexico, and growth in manufacturing activity in smaller Asian countries like Vietnam and Cambodia. While it is true that wages in China have accelerated in recent years, most of these analyses fail to consider the impact of productivity on overall manufacturing costs. For example, although wage rates in Vietnam are roughly half of those in China, Vietnam has a far less mature manufacturing infrastructure, a less well developed supply chain, and a less sophisticated national transportation and logistics system. These shortcomings, coupled with China’s strength in mass production and domestic raw material production capabilities, largely erode Vietnam’s labor advantage, thereby creating much greater manufacturing cost parity.
Point-of-purchase display programs with great designs and compelling economics will ultimately fail without proper execution.
We know it is not always possible to plan ahead when developing a retail display program, but whenever possible, we recommend engaging in a strategic and thoughtful process to develop your in-store merchandising program. We understand that when opportunity knocks, in many cases you have to move quickly to take advantage of retail space that you have been offered or to meet the needs of a seasonal or promotional opportunity. Because we know customers have different timing needs, we offer a range of solutions to meet those needs- from in-stock fixtures and domestic production for quick turnaround situations to overseas manufacturing for longer lead time projects.
Generally, we recommend planning on a minimum of 90-120 days to develop and implement a custom retail fixture program. Although every custom POP display is different, the following are timing guidelines that may be helpful in the planning process. Note that these timing guidelines are based on projects with RICH LTD. and may differ for other POP companies:
Given the development and production process outlined above, there are a number of significant benefits of planning ahead, including:
In developing a POP program timeline, it is always smart to build in time for things to go wrong. Anticipating problems that can affect the timeline will help to ensure that you meet your timeline without spending extra money unnecessarily. Some examples of things that could go wrong and negatively impact your project timeline include:
If you are planning to have your POP displays manufactured overseas, it is especially important to plan for holidays since they can have an impact on production and shipping schedules. The granddaddy of all worldwide holidays is Chinese Lunar New Year which typically occurs in late January or February and lasts for about 15 days. In our experience, however, the impact of Chinese New Year (CNY) is more than just a 2-week delay. Production and shipping schedules tend to get jammed with orders trying to ship before CNY, raw material suppliers begin shutting down as early as 2 weeks before the official start of the holiday, and many workers extend the holiday and often do not return to their factory job. In recent years as workers in China have gained more power, the lost production time from CNY has increased so planning on 3-4 weeks of lost production or reduced production output is wise.
While most customers are aware of Chinese New Year and plan in advance for it, what many do not realize is that there are other holidays that can also impact production schedules. In fact, there are approximately 27 National Holidays or Common Local Holidays that occur throughout the year in China. In addition to CNY, these include holidays such as Labor Day, Dragon Boat Festival, Mid-Autumn Festival, National Day, and Qing Ming Je holiday. China is a hardworking, industrious society, but they do like their holidays so it is best to plan for them.
Most of our customers don’t spend much time thinking about packing requirements for their point-of-purchase displays. Making sure your display is properly packed is one of the most important elements of a successful display program. Failure to ensure safe packing can be very costly and can result in program delays and retailer dissatisfaction.
Packing materials can be expensive, and in our experience most customers prefer to have their limited budgets allocated toward the POP display rather than the packing. That makes sense, but a beautiful display that gets compromised in the shipping process is likely to be less effective in selling your product.
In thinking about what packing materials are necessary, there are a number of important considerations:
If your display is shipping assembled there is a greater likelihood of damage and therefore it is important to make sure all parts are immobilized and there is adequate protection on all sides of the display. Knock-down displays also need to be carefully packed, but generally parts of a knock-down POP display can be packed in such as way that the risk of damage is less. It also tends to be less costly to ship knock-down displays since they can be packed with greater space efficiency than assembled fixtures.
Shipping your display on pallets is the safest option in most cases, and it’s not always as expensive as you might think, particularly when you factor in possible oversized box charges. When your display is packed on pallets, it is important to ensure that there is no overhang beyond the footprint of the pallet since forklifts and other material handling equipment may cause damage. We recommend corner protectors since the corners are the most vulnerable part of the packing (This is also true for boxes that are not shipped on pallets.).
If your display is shipping assembled on a pallet, you can cover the entire display with a large box, but we sometimes find it more effective to forgo the box and wrap it with shrink wrap while ensuring that the vulnerable parts of the display are well protected. If the people handling the pallet can see the contents of the pallet they tend to be more careful than if they have no idea what is on the pallet. Furthermore, if an assembled display is boxed on a pallet and the pallet is cross-docked, it is more likely that the transportation company will try to double stack the pallet which could result in damage.
If the display is shipping in boxes to a retailer’s distribution center and will subsequently be delivered to store locations on company trucks, you may be able to get away with a little lower quality box and possibly less protection inside the box. However, if your display is shipping via UPS or FEDEX, it is important to make sure your packaging is battle-ready.
Over the years, we have had significantly more damage with UPS than FEDEX, which could be a result of the type of material handling equipment they employ. Both FedEx and UPS have strict guidelines for packaging in order to qualify to make a claim (for example, click here for FedEx’s guidelines). Prior to a big shipping program, we recommend that you get FedEx or UPS to approve the packaging in advance to ensure it qualifies for making a claim. You can do this by simply contacting your account rep. Also, be sure you are aware of the time period within which claims have to be made.
Your packing approach will be determined in part by the types of materials that were used to make your display. For example, acrylic displays or displays which have high acrylic content need to be packed very carefully. We typically recommend foam on all 6 sides inside the box. Unless you are using large blocks of foam, it is important to separate the acrylic from the foam with plastic wrap since the foam tends to stick to the acrylic which causes frustration and added time during the unpacking process. Display fixtures made of MDF can succumb to shipping abuse if not properly protected, particularly on the corners. Injection molded parts and metal parts tend to require less protective packaging, but metal parts should always be separated by plastic or corrugated material inside the box so that the powder coating finish is not damaged by metal parts rubbing together. If metal and acrylic are shipped together, it is important that they are separated inside the box so the metal parts do not damage the acrylic. Most damage to wire and sheet metal happens on the ends, and lighter gauge wire can easily damage with inadequate protective packaging.
It is also important to consider the weight of your display and the weight of the boxes. We recommend limiting the weight of any box to 65 lbs. Boxes that are heavier than 65 lbs. tend to incur more damage since they are too heavy for most people handling the boxes, and they tend to get thrown and set down a lot harder as a result. Another very important consideration related to weight is the dynamic load of the box or the pallet. In determining the right packing materials and approach, most people do not consider dynamic load. The dynamic load is the load that is put on a box or a pallet when force is combined with weight. So, for example, if a truck is carrying a heavy box and stops quickly, the force combined with the weight creates significantly more stress on the box than just the weight of the contents of the box. The principle of dynamic load is routed in physics and can be responsible for a lot of shipping damage if it is not accounted for in packaging. Light-weight boxes are far less vulnerable to dynamic load, but if they are not packed using strong enough boxes they can be easily damaged if heavy boxes are stacked on top of them.
To ensure your display arrives safely, it is also important to pick the right type of corrugated material. You don’t want to spend too much on a box, but you also want your fixture to arrive undamaged. There are 3 factors to consider in selecting the right corrugated material:
Based on our overseas manufacturing experience, the quality of the boxes coming out of China is inferior to US-quality boxes. Moreover, during ocean transit boxes can absorb moisture so a lot of boxes that leave China in good shape ultimately get compromised after a 2-week ocean journey. For fragile items, we recommend either over-packing the units in China or repacking them when they arrive in the U.S. or the destination country. It is possible to get higher quality boxes in China so we always specify U.S.-quality boxes if we know the units are going to be shipped via UPS or FEDEX.
There are a number of other tips related to proper packing to ensure your point of purchase displays arrive safely. A few examples include:
We can’t stress enough the importance of proper packing. When selecting a POP display company, be sure they have the right packing experience and are taking a thoughtful approach to packing your display. If you are bidding a display project to several POP suppliers, be sure to compare quotes on an apples-to-apples basis by understanding each firm’s proposed packing solution.
Maximizing results from any POP display program not only requires a great design and a clear understanding of display economics, but it also requires exceptional execution of all aspects of the display program. Effective program execution necessitates excellent project management and attention to detail since there are hundreds of details that need to be coordinated and properly managed to ensure successful execution.
Some examples of tips for effectively managing details that can make or break a display program include the following:
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