In trade, there are many tricks and mechanisms that are used to increase sales efficiency and maximize profits. One of these methods is called “product rotation”. What it is? We will tell about this phenomenon, its types and methods of application.
Concept of rotation
In our everyday life, the word "rotation" came from the Latin language, where it meant "rotation, movement in a circle." More often than not, we have to hear about staff rotation, that is, about the systematic movement of employees, most often senior staff, to increase the effectiveness of the organization. Also, the concept is found in the printing industry, where the term refers to the principle of the printing machine. In agriculture, rotation is called the replacement of crops during sowing, when, in order to increase the efficiency of land use, crops are plotted every few years. It also exists in television and radio broadcasting, where they denote the frequency of repetition of a clip or musical composition. Recently, the term “product rotation” has appeared in commodity science. What is it? This is also the circular movement of goods on shelves or in storage. In almost all cases, rotation is associated with the efficiency of a system; it involves the replacement of some elements with others to improve the process.
Definition of a concept
In the field of trade organization and merchandising, the term “product rotation” is used. This is the process of moving goods on the shelves of outlets and in the warehouse in order to ensure greater sales efficiency. Only an ignorant observer may think that the goods on the floors are motionless until the time of purchase, that the seller needs to arrange them nicely and you can wait until the buyers pick them up. But in fact, the product is in constant motion, and at each stage of this path the seller pursues the main goal - to minimize costs and increase profits.
Principles of rotation
In a broad sense, product rotation is the replacement of one with another in order to increase sales. The main principle of this action is to stimulate buyers to buy. So that he would have confidence in the seller and a desire to purchase the goods. Another principle of rotation is the maximum efficiency of the use of trade and storage facilities. Moreover, all the rules of rotation of the goods are reduced to the requirement of mandatory filling of shelves at the outlet. The buyer should have a feeling of excess of goods and a large selection.
Rotation functions
Product rotation is one of the promotion tools, part of merchandising. Its main goal and function is to stimulate the buyer to purchase goods. In order to achieve this goal, rotation should create a feeling in the buyer of a constant updating of the assortment and freshness of the product. There are rules for the layout of goods that increase sales. Rearrangement of goods, features of the display help to increase sales. It is human nature to pay attention to the new, to experiment with purchases. The movement of a product enhances its search behavior and also promotes sales. Also, rotation allows you to accelerate the changeability of the range, contributes to the rapid disposal of stale product. Any grocery store knows what problems arise with goods that have an expiration date and rotation is one of the sales tools here. Fast sales of goods can accelerate the release of warehouse space, which also entails minimizing costs. Of course, this method is not a panacea, it has both advantages and disadvantages, but it is one of the effective tools to stimulate sales and optimize costs.
Advantages and disadvantages of rotation
Product rotation is a way of convincing a buyer to make a purchase. Its main advantage is the ability to find the “right” place for goods on the shelf, which will increase sales. Rotation allows you to combine related products on the trading floor , which also helps to increase sales. For example, you can put washcloths, body care products, and towels next to shower gels. Such a complex will help the buyer to make a “package” purchase. This method allows you to take into account the seasonality of goods and put relevant goods on more visible places, which also accelerates the sale of goods. During the rotation, you can conduct analytical studies to evaluate the effectiveness of certain points in the store and take this into account when drawing up a merchandising planogram. Rotation allows more efficient use of trade and storage facilities.
Its drawbacks are that it must be carried out thoughtfully and reasonably, otherwise the economic effect of such actions may be unpredictable. If you do not take into account the rules of the neighborhood of different groups of goods, then you can get a negative dynamics of sales. If you do not conduct analysis and monitoring during the rotation, you can also get a negative economic result.
Stock rotation
The movement of goods at each stage should be subject to the general principles of expediency and sales assistance. To do this, the rotation of the goods in the warehouse. Its main purpose is to sell goods before the expiration of storage periods. Therefore, an indisputable rule applies here: goods that were the first to arrive at the warehouse should be the first to be put into the trading room: “first come, first leave”. Warehouse workers must closely monitor the shelf life of goods and timely move stale goods to store shelves. The science of inventory management requires the employee to understand the mechanisms of sales of goods and the ability to keep a strict record of the assortment and shelf life of each batch of goods.
Today, store formats in which goods are stored directly on the trading floor are widely used. Here, logisticians will need a special art in order not to push goods deeper into the shelf with earlier storage periods, so as not to lead to the need to write them off. The merchandiser has to follow the deadlines and timely deliver the goods with an expiring date for general viewing, most often for this purpose a pallet calculation is used, i.e. exhibiting in the form of a cube or a pyramid of goods in the center of the hall.
Commercial rotation
For the efficient movement of goods at a point of sale, coordinated work of warehouse and sales staff is required. The company should have developed a unified system of product labeling, created a plan for the movement of goods in the warehouse and in the hall. This not only helps sell products faster, but also simplifies the work of staff. When thinking about what rotation of goods is in a store, one must remember that this is not a meaningless rearrangement of goods from place to place, but justified movement. First of all, it is justified by the shelf life of the goods.
There is an unshakable rule: the closer the expiration date is, the closer the product should be to the buyer. That is why sellers and merchandisers are constantly rearranging packaging with goods, which will soon expire in the first row, and fresh goods in the second and further. At the same time, you cannot leave only old goods on the shelf, hoping that they will be sold out and then already put fresh. Consumer psychology says that a person is less willing to take goods from a half-empty shelf. He should have a sense of the recent receipt of products, this causes him to associate with the freshness of the goods. The rotation of goods on the trading floor is also associated with attracting the attention of the buyer. Therefore, the merchandiser must think through the calculation, make sure that the buyer takes more units of products and selects the most expensive product.
Types of rotation
When answering the question of what rotation of goods in a store is, it is worth dwelling on its varieties. There are several basic types of this procedure.
- Cost rotation. The most difficult and costly way to move goods. It consists in the fact that the calculation of the goods is combined with price variation. So, for example, for seasonal goods exhibited in the center of the hall, the price can be slightly increased. But at the same time, you need to carefully monitor prices from competitors. On the contrary, for the goods for which demand is declining, you can reduce the price and accompany this with a certain calculation and holding of the action.
- Rotation by quantity. It is related to procurement and inventory planning. The procurement specialist must carefully plan and track the quantity of goods and ensure their systematic movement from the warehouse to the trading floor, and from suppliers to the warehouses.
- Rotation by shelf life. We have already talked about this species. In this case, the old product should always get to the buyer ahead of the fresh.
Rotation strategies
Experts, answering the question of what rotation of goods means, note that this is not just “rotation” of goods in the store. This is a thorough planning, analysis and thoughtful permutation. The merchandiser and merchandiser must conduct demand analytics and, in accordance with this, conduct the purchase of goods and their movement in the warehouse. Proper procurement and warehousing helps to reduce storage costs and minimize the amount of goods being written off. To ensure the competent movement of goods in the company, a unified rotation strategy should be developed, which includes logistics solutions, solutions for promotion and merchandising. These strategies can be based on stimulating test or repeat purchases, on the use of knowledge about consumer psychology, on economic and price mechanisms to stimulate demand.