Finn Wikander, Global Chief Product Officer at Pricer urges retailers and brands to think again about how they negotiate, using tools that enable physical and digital space to be thought about differently, as presence.

The relationship between retailers and brands is based on familiar elements - price, promotions, listings, ranging, positioning and, ultimately, physical space. The negotiation is around who gets the eye-level position, how many facings does a product receive, which brands secure promotional displays and what does that visibility cost.

But as stores become more digitally connected, the shelf edge is changing from a largely fixed piece of infrastructure into programmable territory. That has implications not only for store operations and the customer experience, but for the commercial relationship between retailers and their suppliers.

That relationship is already under pressure from rising costs, squeezed margins and increasingly complex promotional strategies, so being able to change what happens at the shelf without making permanent physical alterations creates a potentially powerful new negotiating tool.

The big lesson is that visibility is more important than space. Till now, increasing a brand's presence in-store often required a physical intervention through additional signage, printed point of sale material, secondary displays or more shelf space. These relatively blunt instruments take time to deploy, are difficult to change quickly and can create considerable operational work across a large store estate.

A digitally enabled shelf edge is a better solution. Messaging, promotions and product information can be updated centrally and deployed across individual stores, groups of stores or an entire estate. That means retailers can create different levels of visibility around products and categories without constantly rebuilding the physical environment.

This enables the brand and retailer to grow their relationship because they can start to programme their presence. Consider this example; a retailer might give greater prominence at the shelf edge to a new product during its launch period, support a supplier funded promotion in selected locations or change messaging according to local demand. That visibility could be switched on for a defined period and then removed or replaced without creating redundant printed material or requiring stores to undertake another implementation exercise.

And there is flexibility built in; a national agreement does not necessarily need to be executed in the same way in every store. A product may deserve greater prominence in locations where it performs strongly, while another message may be more appropriate elsewhere. Campaigns can potentially be targeted according to store format, geography, customer behaviour, inventory or trading conditions.

Now we have an asset that is both commercial and measurable. Retail media has already demonstrated the value of turning retailer owned customer touchpoints into media inventory. Much of the attention has naturally focused on ecommerce, apps and larger digital screens but the shelf occupies a uniquely valuable position because it reaches the shopper where a purchasing decision is being made.

That opens up new opportunities, but retailers should take care of how they exploit them. It is obviously tempting to treat the shelf edge simply as another advertising surface and sell visibility to the highest bidder. Taken too far, that would be a mistake. The primary purpose of the shelf edge remains helping shoppers understand products, prices and promotions. Overloading it with commercial messaging risks making stores more confusing rather than more useful.

It is essential that the retailer, the brand and the shoppers’ interests all overlap. A brand may want greater visibility, while the retailer may want to increase conversion, communicate value or accelerate stock movement, or the shopper wants relevant information that makes the decision easier. Programmability allows those objectives to be reconciled far more intelligently than static point of sale material can achieve.

Rather than discussions being dominated by permanent physical positioning, retailers can potentially offer brands time limited, measurable forms of presence. A launch could receive enhanced visibility for four weeks, or a promotional messaging could appear only while an offer is active, or a campaign could operate in stores where availability is sufficient to support it and disappear when inventory falls below an appropriate level.

There is another important benefit; programmability gives retailers greater control over execution. One of the perennial difficulties in brand-retailer relationships is the gap between what has been agreed centrally and what actually appears in-store. Printed material may arrive late, be positioned inconsistently or remain in place after a promotion has finished. Centrally managed digital infrastructure can reduce that discrepancy, giving both parties greater confidence that agreed activity has been implemented accurately and at the right time.

For retailers, this requires a shift in thinking. Shelf-edge technology should not be viewed solely as operational infrastructure for displaying prices. Once the shelf becomes connected, it becomes part of a broader digital architecture linking pricing, promotions, inventory, merchandising and increasingly retail media. Retailers can now shift the conversation with brands from “How much shelf space do you need?” to “What kind of presence do you want, where and for how long, under what conditions and what value will that presence create?”

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