Merchandising Finesse: Key Components to Great End Caps

Kenneth Wilbanks

December 2005

At traditional sales based organizations, the customer service emphasis is one-on-one with a sales clerk, usually from behind a sales counter. At such home channel dealers, I believe another extraordinarily valuable operational discipline originating from a merchant culture stands surprisingly neglected and costs enormous sales, profits and image potency day after day. I am talking about the under-utilization of the single most valuable piece of real estate owned by any retail business. I mean your end caps. A properly executed end cap program boosts both service image and revenues. Following these simple principles of end cap utilization you will realize amazing results.

Essential Components of a Synergetic End Cap Program

Establish Proper Product Adjacencies

Don’t recreate this concept. Think like a well-developed grocery store. I don’t mean carry beer and chips. I mean locate your end caps with synergetic product adjacencies. When you encounter an end cap of flour and sugar you know beyond any reasonable doubt that the rest of the baking supplies are in the adjacent aisle. Paper towels and toilet paper? The other paper products such as napkins, paper plates, and for that matter aluminum foil, wax paper and trash bags, will be found side by side. Canned peas and corn? Turn the corner and you will find the mother lode of canned veggies and fruits. Simple concept, right? You bet! The products on the end caps communicate the location of an entire product category making it quick and easy for customers and employees to find what they seek with minimal frustration. That sounds like a smart business practice to me. We can use it in our industry: End caps loaded with 12/2 WG and the little blue electrical boxes lead to other electrical products; Paint thinner or a basic interior primer introduces your paint department; Duct tape and packing tape point the way to other tapes and adhesives; Tool boxes and nail aprons introduce hand tools. Each end cap product locates with amazing ease the category of goods filling the customer’s needs. We as consumers of the grocery business are already programmed to think this way. Why go against such a wonderfully established shopping and merchandising strategy?

Select Top Selling Items & Clearly Identified Values

Do not waste your time or money putting obscure peripheral products on an end cap. Who has the space and why take the gamble? Dedicate your space and money to your top selling items within a category. If you want a caulk end cap, pick your best selling interior caulk, couple it with your best selling exterior caulk or construction adhesive, and add a great affordable caulking gun to the mix for an end cap that makes a statement: You have what people want in a quantity that conveys confidence in the product and in your ability to serve your customer preferences through appropriate product selection.

Follow an Identifiable Theme

End caps have got to make sense as a whole. A few months ago I visited a hardware store exhibiting a prominent eight foot wide end cap at the front of the store shelving the following exact items: a wooden drying rack (only one and it was broken), two cans of interior paint, a Dustbuster and a feather duster. Eighty-five percent of the end cap was empty. It was dirty. This display was located at the premier location in the store (at the front) and at the premier location in the signature department (at the front of the paint department). No identifiable theme can be determined from such a disparate display of unrelated stuff. Better to present three to six items on a huge display all clearly related to paint as a statement of pride in the signature sales product. As is stands, this dealers end cap is just confusing his customers.

Make a Mass Stacked Presentation

Ends make a primary contribution to your organization through generation of optimism, confidence and enthusiasm. End caps have to be full of product. Not a little bit of anything. I mean full shelves. Whether you merchandise one, two or several items on an end cap, maximize the quantity of each item and fill the shelves. Too often when I assist a business that is struggling with low sales volume I find an alarming number of end caps with weak display and absolutely paltry inventory levels. Each time we fill up the end cap, we boost sales. Make sure your prime real estate makes the most money for your space. Fill up your end caps.

Feature Fewer Items

As an alternative to single item end caps that generate a mass stacked feel, I suggest a format that generates more sales and better gross margins. When selecting items for an end cap, choose two of three primary items that all relate to each other, like wall primer, a roller set, and a bag of rags. Merchandise these three items together on the end cap as a system of products that all go together. I believe that more than three primary items clutter and dilute the impact of the display. After using this two-to-three item approach for years, I find it absolutely amazing how often a customer takes one of each and merrily strolls down the adjacent aisle for everything else needed for the project.

Use a Vertical Merchandizing Orientation

If you offer more than one primary item on an end cap, place all like items above one another in a vertical orientation and not horizontally next to each other. When products are generally oriented horizontally, customers must scan selections up and down which is unnatural for our culture. It takes longer to assimilate the product information and customers might miss obvious product synergies. You want a customer to glance across a display and experience your selection the same way they read a book - from left to right. Follow this principle even in your aisle merchandising. The more often you orient like products vertically so that the range of related products is viewed horizontally across the reading span of the merchandising sweet spot, the quicker customers will be able to get what they need and get through the point of purchase and be on their way with products in hand. This is important to consumer and pro customers alike.

Show Seasonally Appropriate Items

Just this week in December, I entered a local hardware with fertilizer from last spring still on an end cap. With 6 inches of snow on the ground as I write this article, this end cap display of fertilizer is not earning one thin dime this week nor will it make a dime for the rest of the winter. Ice melt or antifreeze is a better end cap item this week, and I could find neither of these products anywhere in the store. Be sure that some end caps reflect the seasonal and even daily weather conditions. Don’t be asleep at the merchandising wheel.

Price Products to Generate Volume

Price your products to sell! You do not need to be the best price in town, just don’t be the worst! You never want to apologize for your price on a product. Correctly price your “A” velocity items all the time, not just when “on-sale” but everyday. The age of using sale prices to generate volume has ended. People often ask if there is a best price range for end caps items and my answer is YES. I encourage end caps items to be routinely below $10 and below $5 as often as you can. You want customers see what they need, grab it and move on without having to consider the price of a product or deliberate if it is in the current budget to get it now.

Use Bold Signage

I recommend a big sign, boldly written, with the product price as the dominant piece of information on the sign, whether it’s handwritten or generated via computer and printer. Which is better? I personally like a handwritten sign. I like the message of down-to-earth hands-on service that is subliminally generated through handwritten text. But if you use handwritten signs, you better use great handwriting. A sloppy chicken scratch sign looks terrible and definitely has a negative effect on product sales and your professional image. If no one in the store demonstrates good penmanship, then use software for agreeable and legible signage.

Complete the Theme with Great Small Items

A clip strip or a wing panel with a few accessory items completes the end cap theme and drives sales and margins. Customers get what they need quickly. Transaction velocity counts. The price range for these final cross-merchandised related items is $2 or less and at a high margin of return like 50%. For example, on an end cap with caulk and adhesives, the perfect final touch is a corner smoother. On an end cap with 12/2 WG and electrical boxes, a package of wire nuts or a stripper is right on the money. Mailboxes and mailbox posts? A great choice is a set of numbers and letters. Maybe a package of screws to connect the mailbox to the post. A couple of clients have taken my coaching and merchandised pieces of cull 1×6 and 1×8 cut to16″ lengths along with mailbox end caps. Any hardware veteran knows that it takes one of these to get the mailbox mounted to the post properly. Since the cost on this item is almost zero (cull or trash headed for the scrap pile anyway) and my clients sell them for a buck and a half, they gain quite a boost in the gross margin on the entire sale of a post, a box, a set of numbers and letters, screws, maybe a post-up and the deliciously profitable short board. Look for ways to merchandise a complete system. You will satisfy customers and make a lot of money.

While these ten constitute the essential components of a successful end cap program, there are two other primary principles. First, one half or more of your total end caps should be dedicated to consumable items. Contractor trash bags, window cleaner, paper shop towels, light bulbs, propane cylinders, caulking and adhesives, tape, paint thinner, wall primer are just a few consumable products that are sold again and again to the same customer. Analyze your product sales by item and you will see that consumable items dominate your transaction counts. They also carry a great gross profit as well, especially compared to the durable goods in your product mix. One of the frequent mistakes in merchandising is dedicating most end caps to low margin durable goods like power tools, well pumps, or anything else for long term use by a particular customer. These low margin durable products are important to your total product mix but they cannot give you the kind of daily return on your investment that your consumable items do. Look for yourself. Compare the profit dollars on your best selling power tool or your best selling caulk, see which item annually turns the most product and generates the most profit dollars for you. You see what I mean. If you have more than one end cap dedicated to power tools and none dedicated to consumable goods you are simply losing money.

Second, a select number of your end caps should be permanently set with a particular item that makes a statement about who you are as an organization. If you want to be recognized as a dominant tool seller in your market, utilize one or two end caps at all times to build a desirable image dedicated to a particular tool of high quality and great value. Focus on the particular tool, rather than the whole range of power tools.

A few years ago, to help a client invigorate retail trade, I targeted a number of initiatives including an end cap program. Aisle by aisle, category by category, we identified key products, bought them in sufficient quantity to complete the essential components, built the displays, made great signs, and cleaned up the merchandising and general standards in the adjacent aisles. We worked for weeks through the winter months to prepare for the spring surge in business as the true test of our efforts. We were paid back in spades. Never did we dream of the kind of sales increases we experienced. In every instance, within a few weeks the number of selected items topped the entire previous sales total for the YEAR. Some of the sales improvements were measured at several hundred percent and even several thousand percent. We saw the same trends across entire categories of goods within a year. The end cap program, along with a few other points of finesse, led to the rejuvenation of an entire business with increased employee and customer confidence and a heck of a lot of fun. Even I was surprised at the levels of sales increases we experienced. I knew the steps we had to take. They were the right ones. Now you can take them, too.