Tusco Display
Tusco Display

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Return on Merchandising Investment

In business, everyone knows about ROI: Return on Investment. Surprisingly, many display clients don’t explicitly think about ROI. We think this is a mistake.

Often brands feel pressure to provide “free” merchandising equipment to gain entrée into a retailer. Brands willingly spend it because it invariably increases sales. The best marketers use Return on Merchandising Investment (ROMI) to measure the bang for their buck.

Beyond the specifics of doing matched-store tests, A/B testing and similar research techniques, we encourage clients to carefully consider the key cost-side variables like design development, equipment, graphics, logistics, time to install, maintenance, restocking, refreshing the unit, and eventual disposal. That’s the investment part of the equation.

Next, we suggest that they track sales of products that move off of the rack over a prescribed length of time. This can be complicated when the display augments an existing location in the store but there are means to manage those variables.
Once you know your total in-the-store costs, the length of expected time for the display to be in service, and can see the incremental sales that result, dividing the extra gross margin generated by the display by the cost of that display gives you an ROMI.

Many marketers mistakenly assume low-cost displays provide the best ROMI. It’s often just the opposite. And these tangible measures don’t include the benefits of additional product on the store floor, added ad impressions gained by the presence of a display, or the fact that you might not even have your products in the store without the display.

The better clients understand their ROMI, the more they tend to spend – because at-retail marketing often provides a remarkable return on investment.