Shelf Layout Effects for Sustainable Products

As companies increasingly realize the importance of corporate social responsibility, many of them attempt to stimulate the sales of sustainable products. In supermarkets this becomes evident from the rising availability of sustainable grocery products, such as fair trade and organic products. Although market shares for these products are not very high, these have been increasing steadily over the last few years. In order to stimulate the sales of sustainable products, it is important for retailers to understand the key drivers of these sales levels. This study investigates the extent to which sales depend on (1) presentation of the sustainable products within a category, using shelf descriptors such as the number of product facings and the position on the shelf relative to other (i.e., regular) products in the same category, (2) placement of the product category within the store, and (3) differences in the store trading areas. To examine this, we use a multi-level model that describes the effects of shelf layout on the sales of sustainable products. These effects are allowed to vary across product categories. The second level of the model includes socio-demographic variables of the store area. An important issue is that there may be endogeneity between sales and facings. The model is applied to a unique supermarket dataset that contains nine categories with sustainable products, such as coffee, chocolate and vegetables. Our results indicate that sales indeed depend on shelf layout. Moreover, the socio-demographic variables give interesting insights in the variation of effects across store trading areas. We also derive implications for shelf and store layout