Journal of Governance and Regulation / Volume 4, Issue 4, 2015, Continued - 4

POINT-OF-PURCHASE DISPLAYS IN THE FMCG SECTOR:

A RETAILER PERSPECTIVE
Jeevarathnam P Govender*

Abstract

Intense competition in the (fast-moving consumer goods) FMCG sector has prompted manufacturers
and marketers to rely more heavily on point-of-purchase displays, an antecedent manipulation of the
retail setting, to stimulate sales. Retailers, on the other hand, have become more discerning about the
number and types of displays they will allow in their stores. There has been limited research on point-
of-purchase displays in South Africa. This paper therefore examines retailers’ perceptions of point-of-
purchase displays. Being an exploratory study, a survey was conducted among 100 supermarket
owners and managers using a quantitative approach. It emerged that respondents believed that point-
of-purchase displays drive in-store sales and contribute to retailers’ profits, as well as drive impulse
purchases. It was found that point of purchase displays create an interactive retail experience, create
brand loyalty and alone can drive sales without a price reduction. The results also indicate that point-
of-purchase displays lead to clutter in stores and that marketers’ bargaining power influences point of
purchase decisions in stores. Of concern was the perception that point-of-purchase displays did not
cater for low literacy consumers.

Keywords: Fast-Moving Consumer Goods Sector, Retail Business, Point-Of-Purchase Displays

* Department of Marketing and Retail Management, Durban University of Technology, South Africa

Introduction this, Brown (2007) believes that marketers are now

diverting large budget allocations to shopper
The FMCG retail sector has witnessed intense marketing compared to the past.
competition where manufacturers and marketers of Internationally, retail outlets are currently
low-involvement products are relying heavily on inundated with point-of-purchase displays throughout
point-of-purchase displays with a view to gaining a the year. Securing prime positions in stores is key,
competitive advantage. Behaviourally, in-store and this poses a challenge to manufacturers and
displays are antecedent manipulations of the retail marketers. Adhering to retailers’ requirements is a
setting and fall under the classification of marketing further challenge. Retailers, especially those with
communication channels, more commonly referred to strong bargaining power are prescriptive when it
as point-of-purchase communications (De comes to point-of-purchase displays in their stores.
Pelsmacker, Geuens & Van den Bergh 2004). Recent Retailers prefer less clutter, hence less confusion in
trends in marketing have seen an increased emphasis their stores. There has been significant growth in
on in-store advertising with the intention of grabbing retail sales in South Africa. In keeping with this, the
the attention of shoppers at the point of purchase. use of point-of-purchase displays has also risen
Retailers have become more discerning about the significantly. However, there has been limited
number of displays they will allow, to the point of research in the South African retail environment in so
restricting the number of displays or even disallowing far as point-of-purchase displays are concerned. The
certain types of displays. Point-of-purchase displays aim of this paper is to evaluate retailers’ perceptions
are materials used in the retail sector to promote an of point-of-purchase displays. Specifically, the views
item or a brand and are useful in showcasing the of store managers are solicited. Effective point-of-
product (Newlands & Hooper, 2009). Point-of- display displays can make the difference between
purchase displays allow for the prominent display of products lying in inventory and products making their
products, often in high traffic areas or aisles, and at way into customers’ shopping baskets, including the
strategic areas such as pay points, thereby giving the encouragement of impulsive purchasing. It is
product greater prominence and consequently, greater envisaged that managers of retail outlets will view the
chance of purchase. importance of point-of purchase displays as an
According to McDaniel, Lamb & Hair (2013), effective means of stimulating sales. It is envisaged
point-of purchase promotion has a key advantage in that this paper will find applicability to marketers in
that 70% to 80% of all retail purchase decisions are similar developing economies.
made while the consumer is in the store. In light of

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 Journal of Governance and Regulation / Volume 4, Issue 4, 2015, Continued - 4

Literature review discounted, even if this is not the case (Inman,

McAlister & Hoyer, 1990; Woodside & Waddle,
Point-of-purchase refers to the moment a consumer is 1975). (Solomon (2007) believes that consumer
about to buy the product; a crucial point where the behaviour, at point-of-purchase, is influenced by out-
exchange takes place, offering the marketer the last of-store memory-based factors and in-store attention-
chance to attract the customer (Abrishami & based factors. Therefore, considering the clutter in the
Peivandi, 2014). According to De Pelsmacker et. al. retail environment, creating memory-based consumer
(2004), point-of-purchase communications have five pull is insufficient; marketers must create “visual lift”
key objectives: (a) to capture the attention of for their brands. To this end, Kerfoot, Davies & Ward
consumers in order to differentiate the product, (b) to (2003) point to the importance of visual point-of-
remind consumers of prior and on-going marketing purchase product presentation in influencing in-store
communications stimuli, (c) to inform consumers browsing and purchase behaviour. Leech (2009)
about product attributes, (d) to create image of observed that, in difficult economic circumstances,
positive associations and (e) to persuade the consumers change the way they shop, focusing on
consumer to make an impulse purchase. Moore necessities and changing their in-store movement
(2010) believes that marketers are placing more patterns to avoid the enticement of purchasing non-
emphasis on connecting with the consumer at point of essential items. However, brands with share of voice
purchase. Effective interaction will entice new will continue to have share of market. To this end, the
consumers, encourage brand switching from effective use of point-of-purchase displays can reduce
competing products and maintain brand loyalty the risk of brand decline, given that display alone can
among existing customers (Shaffer & Zettelmeyer, drive sales without a decrease in price.
2009). Mitchell (2002) suggests that point-of- Sudhir and Rao (2006) believe that
purchase, as an advertising medium, should be manufacturers are willing to pay a premium price in
viewed for its long term benefits in building brand exchange for strategic placement of their point-of-
awareness and not just as a distribution channel. purchase displays. It is common practice for retailers
Point-of-purchase displays serve an important role in to put up a portion of their shelf space for bidding by
product search, product choice, making the shopping manufacturers who compete for shelf space. Those
experience more favourable and reminding who offer the highest bid secure preferential shelf
consumers (Solomon, 2007). Liljenwall (2004) space, e.g. products being displayed in the centre of
believes that the majority of consumers go into a an aisle which are most likely to be chosen. It is not
store undecided about exactly what they intend to uncommon for manufacturers to offer hefty upfront
purchase. They look at products available and their payments that are not related to current retail
attention focuses on in-store displays. It is for this volumes, which Shaffer (2005) refers to as “ slotting
reason that point of purchase display becomes allowances”. Another challenge faced by marketers is
important, hence the need for point of displays to compliance, whereby retailers demand that point-of-
attract the attention of consumers. Horward, Flora, purchase displays be tailored to meet their needs,
Scheicker & Gonzalez (2004) believe that it is for this apart from the needs of the marketer. Retailers are
reason that marketers are now spending more on non- imposing stricter conditions pertaining to the number
traditional media such as point of purchase of displays as well as the types of displays they are
advertising and promotions. willing to accommodate and prefer that point-of-
Raghubir & Valenzuela (2006) observed that purchase displays blend with the store’s ambiance,
large food retailers exercise strict control over what posing a challenge for marketers who wish to
point-of-purchase displays appear in their stores. participate at a particular retail outlet (Hill, 2003).
Before a display does eventually appear on the aisle, Milman (2009) believes that point-of-purchase
it needs to go through rigorous scrutiny. This decision displays not only bring brands to consumers, but are
is guided by clean-store policies and the necessity to also enabling a more interactive retail experience.
reduce clutter of the aisles. It becomes necessary for Kerfoot (2003) identifies three important factors for
marketers to adhere to retailers’ rules, especially to the success of a retailer, viz, creating the perfect retail
prevent conflict with retailers. Hunt (2002) concurs setting for the target customer, effectively presenting
by stating that a strong retailer relationship not only the product to the customer and creating beneficial in-
gets point-of-displays in store, but also ensures that store displays that will attract customers. Soars
point-of-purchase displays are effectively set up to (2009) believes that, given the complexity of today’s
optimise their benefits. consumers, retailers will have to go a step further in
According to Chandon, Hutchinson, Bradlow & creating an enhanced shopping experience. This can
Young (2007), given the situation that the consumer be achieved by moving beyond simple points-of-
faces an array of choices at a store, attracting display and signage to a sensory approach whereby
consumer visual attention at the point-of-display shoppers’ sense of sound, smell, light and touch will
strongly influence consumer choice. Items placed at influence choice of store, in-store decision making
point-of display with a price-tag attached, create a and spend. This can stimulate sales as the consumer
notion in the consumer’s mind, that the price has been

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 Journal of Governance and Regulation / Volume 4, Issue 4, 2015, Continued - 4

moves through each aisle, aided by point-of-purchase point-of-purchase displays were chosen.
displays which encourage purchase. Supermarkets with more that 20 point-of-purchase
When it comes to product decision-making, low displays were included in the study. Secondly,
literacy consumers face challenges in the context of convenience sampling was chosen to select
processing information from point-of purchase supermarkets. Being an exploratory study, a net
displays. Jae & Delvecchio (2004) found that in the response rate of 100 usable questionnaires was the
USA, as much as 50% of the population operate at a target. The intended respondents were owners or
maximum of level two literacy i.e. possessing only managers of supermarkets. Questionnaire content
marginal literacy skills. Furthermore, high literacy covered the perceptions of retail store owners or
consumers made product choices based on central managers on point-of-purchase displays at their
cues, whereas low literacy consumers relied on stores. All questions were interval in nature,
peripheral cues to make product decisions. The employing the five-point Likert scale (Strongly
authors also found information in advertising and on disagree to strongly agree). Questionnaires were
packaging to be generally written at a level that was personally delivered and collected at a later date by
beyond the comprehension of low literacy consumers. agreement with the respondent.
To this end, visual cues such as graphic information
at point-of-display can improve choice for consumers Results
with low literacy levels (Wallendorf, 2001;
Viswanathan, Rosa & Harris, 2005). The following section discusses the findings of the
empirical study.
Methodology
Point-of-purchase displays drive in-store sales
The study was exploratory, descriptive, quantitative
and cross-sectional in nature. A structured The results, as presented in Figure 1 indicate that the
questionnaire consisting of closed questions was vast majority (75%) agreed, with 24% of respondents
used. The target population comprised large agreeing and 51% strongly agreeing that that point-
supermarkets in the city of Durban, South Africa. of-purchase displays drive in-store sales. 14% of
Two non-probability sampling techniques were respondents disagreed in this regard. The mean value
employed. Firstly, purposive sampling was used, was 4.06, indicating the degree of agreement that
whereby supermarkets with a sizeable number of point-of-purchase displays drive in-store sale.

Figure 1. Point-of-purchase displays drive in-store sales

60%
51%
50%

40%

30% 24%
20%
11%
6% 8%
10%

0%
S Disagree Disagree Neutral Agree S Agree

Point-of-purchase displays contribute to a retailer’s that point-of-purchase displays contribute to a

profits retailer’s profits. The results are presented in Figure
2. The mean value was 3.69 suggesting the overall
21% of respondents agreed and 42% strongly agreed, extent of agreement in this regard.
meaning that 63% of respondents were in agreement

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 Journal of Governance and Regulation / Volume 4, Issue 4, 2015, Continued - 4

Figure 2. Point-of-purchase displays contribute to a retailer’s profits

S Agree 42%

Agree 21%

Neutral 12%

Disagree 14%

S Disagree 11%

0 0,05 0,1 0,15 0,2 0,25 0,3 0,35 0,4 0,45

Point-of-purchase displays drive impulse purchases impulse purchases. These are reflected in Figure 3.
The mean value was 4.08, an indication of the strong
It emerged that the vast majority (79%) agreed, with agreement that that point-of-purchase displays drive
39% of respondents agreeing and 40% strongly impulse purchases.
agreeing that that point-of-purchase displays drive

Figure 3. Point-of-purchase displays drive impulse purchases

50%
39% 40%
40%

30%

20%
13%
10% 5%
3%
0%
S Disagree Disagree Neutral Agree S Agree

The greater the number of point-of-purchase purchase displays, the greater the sales. The majority,
displays, the greater the sales at 25% were neutral and 44% agreed (24% agreeing
and 20% strongly agreeing) in this regard. The mean
As reflected in Figure 4, 31% of respondents value was 3.17, suggesting that generally,
disagreed (16% strongly disagreeing and 15% respondents did not strongly believe that more point-
disagreeing) that the greater the number of point-of- of-purchase displays meant more sales.

Figure 4. The greater the number of point-of-purchase displays, the greater the sales
30%
25% 24%
25%
20%
20%
16% 15%
15%

10%

5%

0%
S Disagree Disagree Neutral Agree S Agree

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 Journal of Governance and Regulation / Volume 4, Issue 4, 2015, Continued - 4

Point-of-purchase displays create an interactive purchase displays create an interactive retail

retail experience experience. 13% of respondents disagreed in this
regard. The mean value was 3.89, indicating the
The results, as presented in Figure 5 indicate that the degree of agreement that point-of-purchase displays
vast majority (72%) agreed, with 47% of respondents create an interactive retail experience.
agreeing and 25% strongly agreeing that point-of-

Figure 5. Point-of-purchase displays create an interactive retail experience

S Agree 25%

Agree 47%

Neutral 15%

Disagree 8%

S Disagree 5%

Point-of-purchase displays create loyalty to the that point-of-purchase displays create loyalty to the
brand and the retailer brand and the retailer. The results are presented in
Figure 6. The mean value was 3.71 suggesting the
42% of respondents agreed and 23% strongly agreed, overall extent of agreement in this regard.
meaning that 65% of respondents were in agreement

Figure 6. Point-of-purchase displays create loyalty to the brand and the retailer

45% 42%
40%
35%
30%
25% 23%
21%
20%
15% 11%
10%
5% 3%
0%
S Disagree Disagree Neutral Agree S Agree

Point-of-purchase displays alone can drive sales without a price reduction. 10% were neutral and 6%
without a price reduction disagreed in this regard. The mean value was 4.41,
suggesting that generally; respondents were of a
As reflected in Figure 7, 84% of respondents were in strong belief that point-of-purchase displays alone
agreement (21% agreeing and 63% strongly agreeing) can drive sales without a price reduction.
that point-of-purchase display alone can drive sales

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 Journal of Governance and Regulation / Volume 4, Issue 4, 2015, Continued - 4

Figure 7. Point-of-purchase displays alone can drive sales without a price reduction

70% 63%
60%
50%
40%
30% 21%
20%
10%
10% 6%
0%
0%
S Disagree Disagree Neutral Agree S Agree

The rate of sales determine space allocation in a that the rate of sales determine space allocation in a
prime aisle position prime aisle position. 21% of respondents were in
disagreement in this regard. The mean value of 4.58
The results, as presented in Figure 8 indicate that the is indicative of the strong degree of agreement that
vast majority (68%) were in agreement, with 47% of the rate of sales determine space allocation in a prime
respondents agreeing and 21% strongly agreeing that aisle position.

Figure 8. The rate of sales determine space allocation in a prime aisle position

S Agree 21%
Agree 47%
Neutral 11%
Disagree 11%
S Disagree 10%
0% 10% 20% 30% 40% 50%

Payment for space determines space allocation in a These are reflected in Figure 9. The mean value was
prime aisle position 4.48, an indication of the strong agreement that that
payment for space determine space allocation in a
It emerged that the vast majority (89%) were in prime aisle position. The findings are consistent with
agreement, with 22% of respondents agreeing and those in the aforementioned section where it became
67% strongly agreeing that payment for space evident that the rates of sales determine space
determines space allocation in a prime aisle position. allocation in a prime aisle position.

Figure 9. Payment for space determines space allocation in a prime aisle position
80%
70% 67%

60%
50%
40%
30% 22%
20%
10% 2% 4% 5%
0%
S Disagree Disagree Neutral Agree S Agree

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 Journal of Governance and Regulation / Volume 4, Issue 4, 2015, Continued - 4

Point-of-purchase displays create too much clutter 23% of respondents strongly disagreeing and the
in my store maximum, 27% of respondents agreeing that point-
of-purchase displays create too much clutter in their
As reflected in Figure 10, there appears to be a stores. The range of 4% supports the close spread of
similar distributing of opinion among the scale responses, implying that there were varying opinions
categories on point-of-purchase displays creating too on the issue of clutter in similar proportion. The mean
much clutter in stores. The minimum frequency was value was 3.85.

Figure 10. Point-of-purchase displays create too much clutter in my store

S Agree 26%

Agree 27%

Neutral 24%

Disagree 26%

S Disagree 23%

The bargaining power of marketers influences influences point-of-purchase decisions in their store.
point-of-purchase decisions in my store 8 % were neutral and 7% were in disagreement in this
regard. The mean value was 4.22, suggesting that
As reflected in Figure 11, 85% of respondents were in overall, respondents strongly believed that the
agreement with 38% agreeing and 47% strongly bargaining power of marketers influenced point-of-
agreeing that the bargaining power of marketers purchase decisions in their store.

Figure 11. The bargaining power of marketers influences point-of-purchase decisions in my store

50% 47%
45%
40% 38%
35%
30%
25%
20%
15%
10% 8%
3% 4%
5%
0%
S Disagree Disagree Neutral Agree S Agree

Point-of-purchase information caters for low and 22% in strong agreement in this regard. These are
literacy consumers reflected in Figure 12. The mean value was 1.92, an
indication of the sentiment that, overall, respondents
It emerged that the majority (54%) were in felt that point-of-purchase information did not cater
disagreement, with 22% of respondents strongly for low literacy consumers. This is an important
agreeing and 32% strongly disagreeing that point-of- consideration in light of a large proportion of the
purchase information caters for low literacy South African consumer market having low literacy
consumers. 32% of respondents were in disagreement levels.

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 Journal of Governance and Regulation / Volume 4, Issue 4, 2015, Continued - 4

Figure 12. Point-of-purchase information caters for low literacy consumers

35% 32%
30%
25% 22% 23%

20%
14%
15%
9%
10%
5%
0%
S Disagree Disagree Neutral Agree S Agree

Conclusion having several smaller displays, with smaller impact.

The findings allude to the power exerted by suppliers
The results show that respondents believed that point- with strong bargaining power on point-of-purchase
of-purchase displays did indeed drive in-store sales. displaying in supermarkets. This has raised concern
This needs to be seen in the context of respondents in recent years where powerful marketers have been
also acknowledging the importance of point-of- accused of using strong-arm tactics in the retail
purchase displays also contributing to their stores’ environment in which they operate, much to the
profits. The aforementioned suggests the importance disadvantage of smaller and also emerging marketers.
place on point-of purchase displays insofar as It has become evident that low literacy consumers are
turnover and profitability were concerned. It emerged placed at a disadvantage at point-of purchase because
that point-of-purchase displays influenced impulse of the difficulty in comprehending messages. To this
purchase, an important consideration, given the end simplifying the language on packaging or using
prevalence of impulse purchases among consumers. signs and symbols may facilitate better understanding
Interestingly, the findings indicate that more point-of- of the marketer’s message by the consumer, leading
purchase displays do not translate into more sales, to customer confidence and the possibility of repeat
suggesting that respondents were mindful of the purchase.
clutter factor. It will reach a point when an excessive
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