Towards a better decision making for In-Store Product Placement

The Middle East and North African region is a key retail market that has experienced both smooth and slow growth in various dimensions. The retail sector in the region has grown as a result of socioeconomic and economic trends that reflect the sector's opportunities. These trends increase the number of market competitors and the challenges that businesses and consumers must face.

Over the last ten years, the retail sector in North Africa and the Middle East has expanded, primarily in countries that are members of the Gulf Cooperation Council. Due to population density, the United Arab Emirates, Egypt, and Saudi Arabia have the most modern retail channels in the Middle East region. According to various sources, the market of the United Arab Emirates has shown an increase in consumer spending behavior in the food and beverage sector by the end of 2020. Given the size of this market, it is worth discussing some of the most pressing issues that retailers face, such as product placement.

Shopping in a supermarket may appear simple because there are between 5,000 and 6,000 different products available to us as customers, and we can find a wide variety of them, including fresh vegetables, food, and beverages, as well as daily cosmetics, kitchen utensils, and special goods. Product placement in supermarkets, on the other hand, is not as simple as we might think. Product placement is a challenging task for retailers because shelf space must be negotiated with companies regarding how and where their products should be placed. For this, we must consider various factors such as size, price, and packaging. Consumer Reach Points (CRP) are used to measure the degree of genuine connection between a brand and its customers. CRP are the number of times a customer purchases that brand per year. For example, in Egypt, a well-known brand of water increased their penetration through various marketing strategies and entered the most preferred brands, thereby increasing their CRPs. However, with less consumer reach, a retailer can better position a brand on the shelf. Because these types of consumer studies are only published once a year, most retailers lack reliable information when deciding where to place shelf space. Especially with fast-moving trends or products to which the retailer wishes to adapt.

Typically, in-store product placement is accomplished by paying retailers a slotting fee to have their products placed in specific positions on their shelves. If other companies improve their bargaining power with the distributor, the brand with the most customer reach may be able to gain a second space in the supermarket aisles. This does not necessarily imply that it is the best strategy for the retailer, as it may affect sales. Artificial intelligence (AI) is proving to be one of the most successful solutions for retailers, especially in terms of customer insights. Retailers can use AI to predict what is happening on the shelf with greater than 94% accuracy, allowing them to generate automatic actions to address problems or make decisions in real time. Customer Insights in this case provides retailers with detailed information on customer traffic, such as heat maps. Store heat maps can be extremely useful in understanding product areas within stores and how long customers spend in them. Retail heat mapping technology tracks movement in real time by assigning colors to each area of a floor based on traffic volume. The resulting data can be used to not only identify the most popular areas of the store, but also to test new merchandising strategies and experiment with layouts. This data can be retrieved at various times of day and for specific groups, such as single shoppers or individual demographic groups. Additionally, shopping analytics enable the determination of customer paths from entry to exit. This gives a more accurate picture of preferred shopping routes, allowing for more customer-friendly store design. The ability to map the entire in-store consumer journey allows the retailer to make important business decisions. Recognizing dwell times also allows for a better understanding of customer behavior.

Furthermore, the more appealing Shopping Analytics allows retailers to increase sales by allowing them to easily select the most efficient method of product placement based on the habits of their customers. This has a two-fold benefit: not only does it result in a better consumer experience, but it also gives the retailer more control over what happens in the store, allowing for better decision-making that translates into financial and informational gains. Adopting this critical AI solution represents a significant opportunity for a market such as the North African and Middle East region, as the invoicing of a product positioned using these AI solutions can increase by 50% to 70%. As a result, the transition to smart retail is critical for business and highly desirable, as new technologies optimize revenue and lower costs in retail establishments.