Retail Execution

Retail Analytics for Shelf Space Allocation in Stores

Ankit Singh
June 9, 2025
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If you work with Consumer Packaged Goods (CPG) brands, you know what really matters is what customers see and pick from the shelf. It’s not enough to have products stocked in the backroom or warehouse. 

Nearly 40% of consumers decide which brand to buy only once they are inside the store. About 10% change their minds while shopping, and 20% leave behind products they initially intended to buy. Even more surprisingly, almost 30% end up buying from categories they hadn’t planned on before entering the store.

Retail Analytics for Shelf Space Allocation in Stores

This shows how crucial shelf space and product placement are to your sales. Many brands struggle to use shelf space effectively, resulting in products that are not visible enough and missed sales opportunities. 

Research also shows that products in prime shelf spots can increase sales by up to 30%.  But without clear, real-time data on how shelves are performing, you may be guessing. This can result in shelves cluttered with slow-moving items while fast sellers are pushed aside. This mismatch costs you revenue and weakens your brand.

Retail shelf analytics provides the tools you need to solve this problem. It helps track product sales, on-shelf stock, pricing and planogram compliance so you can ensure that the right products are on the right shelves at the right time. Allocating shelf space based on data improves visibility and increases the chances shoppers will pick your products. 

In this article, we’ll discuss how retail analytics can optimize your shelf space, boost sales, and sharpen your in-store execution.

Key Takeaways

  • Proper allocation of shelf space, based on real-time data, maximizes visibility, reduces wasted space, and increases the chances of products being picked up, leading to higher sales.

  • AI-powered tools like ParallelDots' ShelfWatch provide real-time insights into stock availability, planogram compliance, and promotional display effectiveness, ensuring products are always in the right place at the right time.

  • Regularly assessing and refining shelf space allocation strategies through retail analytics allows CPG brands to adapt to evolving shopper demands for products and market trends, optimizing in-store execution.

  • Accurate tracking of on-shelf stock levels and in-store shelf conditions enables brands to minimize stockouts, reduce excess inventory, and prevent product waste, leading to improved customer satisfaction and operational efficiency.

What is Retail Analytics?

Retail analytics refers to the process of collecting, analyzing, and interpreting data from various retail operations to make informed decisions. It helps brands understand customer demand for products, sales trends, in-store inventory levels, and operational efficiency. For Consumer Packaged Goods (CPG) brands, retail analytics plays a crucial role in optimizing how shelf space is allocated in stores, ensuring products are positioned to maximize visibility and sales.

The Role of Retail Analytics in Shelf Space Allocation:

Using this data, brands can strategically allocate shelf space to maximize visibility, improve sales, and enhance overall in-store performance. Here's how retail analytics specifically influences shelf space allocation:

  • Analyze Sales and Inventory Data: Retail analytics tracks units sold, revenue, and inventory turnover to identify which products perform best and require more shelf space.
  • Assess Shelf Space Efficiency: By measuring sales per square foot or linear feet, analytics helps determine how effectively shelf space is being utilized.
  • Identify High-Performing Products: Analytics highlights top-selling and high-margin SKUs, guiding brands to prioritize these products on prime shelf locations.
  • Optimize Planogram Implementation: Retail analytics verifies whether shelf layouts follow approved planograms that enhance shopper engagement.
  • Incorporate Shopper Behavior Insights: By understanding foot traffic patterns and dwell times, brands can place products where they are most likely to be noticed and picked up.
  • Monitor and Adjust Space Allocation: Continuous data analysis allows brands to test planogram changes and refine shelf space based on real-time performance.
  • Support Strategic Decision-Making: Analytics provides actionable insights that align shelf allocation with broader business goals like increasing category sales and improving customer satisfaction.

Also Read: What is Share of Shelf? Why CPG Brands Must Measure It?

What are the Steps to Optimize Shelf Space Using Retail Analytics? 

Optimizing shelf space is a continuous, data-driven process that directly impacts sales and shopper satisfaction. For CPG brands, making informed decisions about what products to display and where to place them on the shelf is key to capturing consumer attention and maximizing revenue.

To achieve this, you need to follow a structured approach that leverages sales data, inventory insights, shopper behavior, and technology-driven analytics. Below are the essential steps CPG brands should implement to optimize shelf space effectively:

1. Collect Sales and Inventory Data

To begin optimizing shelf space, start by gathering detailed sales data, such as units sold and total revenue per product. This helps you identify which products are performing well and which aren’t.

  • Track inventory turnover rates to understand the frequency of product sales and how often restocking is necessary.

  • High turnover indicates popular products, while low turnover signals products that may be underperforming or sitting too long on shelves.

  • Use this data to build a clear picture of demand and profitability. It will form the foundation of smart, data-backed decisions for your shelf space strategy.

2. Measure and Assess Current Shelf Space

Next, evaluate how much space each product occupies. Depending on your store's layout, this can be measured in linear feet or square footage.

  • Use planograms to understand current product placements and assess how your products are arranged.

  • Calculate sales per square foot to measure the effectiveness of your space allocation. Products with low sales per square foot may be taking up valuable shelf space that could be used more efficiently.

  • Regularly review these measurements to identify underperforming shelf areas and make adjustments accordingly.

3. Identify High-Performing Products

Focus on products that are delivering the best results. After assessing performance, identify high-margin, high-demand products based on key metrics such as gross profit margin and inventory turnover.

  • Segment products based on performance, prioritizing high-performers for better placement.

  • Products that sell the most should be given prime shelf space like eye-level spots or end caps where they can gain maximum visibility and increase shopper interaction.

  • By giving top sellers better shelf space, you boost their chances of being picked up, increasing overall sales.

4. Execute Shelf Space Allocation

Now that you have data on what works and what doesn’t, strategically adjust your shelf space allocation. Use your findings to prioritize high-performing products by dedicating more space to them.

  • Adjust planograms to reflect product priorities, ensuring the best products are highlighted.

  • When placing products, consider shopper foot traffic. Popular products should be featured in high-traffic areas, or “hot zones,” to maximize exposure and sales opportunities.

  • Ensure every inch of shelf space is efficiently used, with popular products easily accessible to shoppers.

5. Use Technology for Data-Driven Decisions

Retail analytics software simplifies the process by integrating sales, inventory, and shopper behavior data into one easy-to-use dashboard.

  • Use machine learning to predict which products will perform well and suggest optimal shelf layouts.

  • Leverage automation tools for fast and accurate planogram adjustments, improving efficiency.

  • These technologies help you make decisions quickly and keep your shelf space strategy flexible, responsive to market changes, and shopper preferences.

6. Monitor and Adjust Allocation Strategies

Optimizing shelf space requires constant monitoring and adjustment.

  • Test planogram adjustments and track the results. If certain changes don’t yield the expected results, refine your approach accordingly.

  • Conduct regular audits to ensure compliance with your planograms and maintain proper product placement.

  • Continuous evaluation allows you to keep your merchandising strategy in sync with evolving shopper behavior and market trends.

7. Evaluate Impact on Customer Experience

Ultimately, the way you allocate shelf space has a direct effect on your customers’ shopping experience.

  • Well-organized shelves improve product visibility, making shopping easier and more enjoyable for customers.

  • When shoppers can quickly find what they want and discover appealing new products, they are more likely to make a purchase, boosting sales and loyalty.

  • Use retail analytics to ensure that your shelving decisions not only drive numbers but also enhance the overall customer journey within the store, benefiting both shoppers and your brand.

As a CPG brand, you can optimize shelf space effectively, improve in-store experiences, and ultimately boost sales while enhancing customer satisfaction by following these steps.

Considerations for CPGs Using Retail Analytics for Shelves

Implementing retail analytics can change the way CPG brands optimize shelf space and increase sales. However, before diving into the world of data-driven shelf optimization, there are a few key factors to consider. 

These considerations will ensure that the analytics you gather and apply are actionable, sustainable, and aligned with your goals. Below are the critical things you should keep in mind as you implement retail analytics for shelf space optimization:

1. Data Quality and Accuracy: The foundation of effective retail analytics lies in the quality and accuracy of the data. Make sure that the data collected is accurate, consistent, and up to date. Inaccurate or incomplete data can lead to wrong conclusions, ultimately affecting product placement and sales decisions.

2. Integration with Existing Systems: Your retail analytics tool should integrate seamlessly with your existing in-store inventory and POS systems. Ensuring compatibility helps you avoid data silos and enables real-time, accurate tracking across all channels.

3. Scalability: As your CPG brand grows, so will the volume of data you need to manage. Choose analytics tools that are scalable and can handle increasing data inputs, especially if you're expanding into more retail locations or managing a larger product portfolio.

4. User-Friendly Dashboards: The power of retail analytics lies in actionable insights, and to achieve this, your team needs an easy way to interpret the data. Invest in tools that provide intuitive dashboards and reports that are easy to understand, even for non-technical team members.

5. Actionable Insights: Collecting data is only half the battle; making data-driven decisions is where the real impact lies. Ensure that the analytics platform you use helps you quickly identify trends, opportunities, and areas for improvement, allowing you to act on them without delay.

6. Employee Training and Adoption: The successful implementation of retail analytics depends on how well your team adapts to the new technology. Provide proper training to ensure your employees can effectively utilize the analytics tools and apply insights to their daily operations.

7. Continuous Monitoring and Adaptation: Retail trends and customer preferences are constantly evolving. To stay ahead of the curve, continuously monitor your analytics and make adjustments as needed. This allows you to keep your shelf space optimization strategies fresh and relevant.

By keeping these considerations in mind, CPG brands can ensure they are setting themselves up for success with retail analytics, driving better sales outcomes, and enhancing the customer shopping experience.

Also Read: How AI is Driving Shelf Space Management and Optimization Strategies

How Does ParallelDots Help with Shelf Space Allocations?

ParallelDots offers advanced AI-powered solutions designed to provide CPG brands with the real-time insights and tools they need for effective on-shelf optimization. With a focus on shelf-level data, ParallelDots helps CPGs ensure their products are always in the right place, visible, and ready for purchase. Their technology uses machine learning, computer vision, and automated analytics to streamline shelf management processes and maximize product availability, visibility, and sales.

Here’s how ParallelDots helps CPGs optimize on-shelf execution with key features and KPIs:

1. Real-Time Stock Availability: ParallelDots utilises ShelfWatch to provide real-time visibility into stock levels at the shelf, detecting out-of-stock situations and low inventory levels. This ensures products are consistently available to customers, reducing lost sales due to stockouts. Accurate on-shelf stock tracking allows for timely replenishment, which directly improves customer satisfaction.

2. Planogram Compliance Monitoring: Using ShelfWatch, CPG brands can monitor the arrangement of products in stores and automatically detect deviations from the planogram. This helps brands maintain consistency across all store locations, ensuring that high-margin and high-demand products are always in prime locations.

3. Promotional Display Compliance: ParallelDots’ AI-powered solution monitors promotional displays, ensuring that signage, price tags, and offers are correctly positioned and visible. This leads to improved promotional effectiveness and higher conversion rates.

4. Automated Image Capture and Analysis: The real-time quality checks on images reduce human error and increase the speed of decision-making, helping field teams identify issues and resolve them quickly to optimize shelf execution. ParallelDots uses automated image capture to gather shelf data, which is then analyzed for accuracy.

5. Actionable Insights and Reporting: With its easy-to-understand dashboards, ParallelDots provides field teams and managers with actionable insights based on real-time data. Key performance indicators (KPIs) such as stock availability, planogram compliance, and promotional execution are continuously monitored.

6. Scalable and Efficient Deployment: One of ParallelDots’ strengths is its scalable deployment. The system is designed to support the monitoring of thousands of shelves in stores, requiring minimal setup and training. ParallelDots’ AI-powered tools help brands expand their reach without sacrificing accuracy or efficiency in shelf management.

These advanced features offered by ParallelDots enable CPG brands to maintain optimal shelf conditions, reduce lost sales, and enhance the overall shopper experience. The result is improved sales performance, better stock utilization, and more efficient in-store execution. 

Conclusion

Optimizing shelf space and ensuring the right products are available at the right time are crucial for the success of any CPG brand. Retail analytics can help brands effectively track sales performance, improve inventory management, and optimize product placement. AI-powered solutions like ParallelDots' ShelfWatch provide real-time insights into stock levels, planogram compliance, and promotional effectiveness, enabling CPG brands to stay ahead of the competition and maximize sales.

Using these advanced analytics tools, CPGs can ensure their shelves are always stocked with high-demand products, properly placed for maximum visibility, and aligned with customer preferences. 

Book a demo with ParallelDots today to learn how our AI-driven solutions can transform your retail execution and help your brand achieve optimal shelf performance.

If you work with Consumer Packaged Goods (CPG) brands, you know what really matters is what customers see and pick from the shelf. It’s not enough to have products stocked in the backroom or warehouse. 

Nearly 40% of consumers decide which brand to buy only once they are inside the store. About 10% change their minds while shopping, and 20% leave behind products they initially intended to buy. Even more surprisingly, almost 30% end up buying from categories they hadn’t planned on before entering the store.

Retail Analytics for Shelf Space Allocation in Stores

This shows how crucial shelf space and product placement are to your sales. Many brands struggle to use shelf space effectively, resulting in products that are not visible enough and missed sales opportunities. 

Research also shows that products in prime shelf spots can increase sales by up to 30%.  But without clear, real-time data on how shelves are performing, you may be guessing. This can result in shelves cluttered with slow-moving items while fast sellers are pushed aside. This mismatch costs you revenue and weakens your brand.

Retail shelf analytics provides the tools you need to solve this problem. It helps track product sales, on-shelf stock, pricing and planogram compliance so you can ensure that the right products are on the right shelves at the right time. Allocating shelf space based on data improves visibility and increases the chances shoppers will pick your products. 

In this article, we’ll discuss how retail analytics can optimize your shelf space, boost sales, and sharpen your in-store execution.

Key Takeaways

  • Proper allocation of shelf space, based on real-time data, maximizes visibility, reduces wasted space, and increases the chances of products being picked up, leading to higher sales.

  • AI-powered tools like ParallelDots' ShelfWatch provide real-time insights into stock availability, planogram compliance, and promotional display effectiveness, ensuring products are always in the right place at the right time.

  • Regularly assessing and refining shelf space allocation strategies through retail analytics allows CPG brands to adapt to evolving shopper demands for products and market trends, optimizing in-store execution.

  • Accurate tracking of on-shelf stock levels and in-store shelf conditions enables brands to minimize stockouts, reduce excess inventory, and prevent product waste, leading to improved customer satisfaction and operational efficiency.

What is Retail Analytics?

Retail analytics refers to the process of collecting, analyzing, and interpreting data from various retail operations to make informed decisions. It helps brands understand customer demand for products, sales trends, in-store inventory levels, and operational efficiency. For Consumer Packaged Goods (CPG) brands, retail analytics plays a crucial role in optimizing how shelf space is allocated in stores, ensuring products are positioned to maximize visibility and sales.

The Role of Retail Analytics in Shelf Space Allocation:

Using this data, brands can strategically allocate shelf space to maximize visibility, improve sales, and enhance overall in-store performance. Here's how retail analytics specifically influences shelf space allocation:

  • Analyze Sales and Inventory Data: Retail analytics tracks units sold, revenue, and inventory turnover to identify which products perform best and require more shelf space.
  • Assess Shelf Space Efficiency: By measuring sales per square foot or linear feet, analytics helps determine how effectively shelf space is being utilized.
  • Identify High-Performing Products: Analytics highlights top-selling and high-margin SKUs, guiding brands to prioritize these products on prime shelf locations.
  • Optimize Planogram Implementation: Retail analytics verifies whether shelf layouts follow approved planograms that enhance shopper engagement.
  • Incorporate Shopper Behavior Insights: By understanding foot traffic patterns and dwell times, brands can place products where they are most likely to be noticed and picked up.
  • Monitor and Adjust Space Allocation: Continuous data analysis allows brands to test planogram changes and refine shelf space based on real-time performance.
  • Support Strategic Decision-Making: Analytics provides actionable insights that align shelf allocation with broader business goals like increasing category sales and improving customer satisfaction.

Also Read: What is Share of Shelf? Why CPG Brands Must Measure It?

What are the Steps to Optimize Shelf Space Using Retail Analytics? 

Optimizing shelf space is a continuous, data-driven process that directly impacts sales and shopper satisfaction. For CPG brands, making informed decisions about what products to display and where to place them on the shelf is key to capturing consumer attention and maximizing revenue.

To achieve this, you need to follow a structured approach that leverages sales data, inventory insights, shopper behavior, and technology-driven analytics. Below are the essential steps CPG brands should implement to optimize shelf space effectively:

1. Collect Sales and Inventory Data

To begin optimizing shelf space, start by gathering detailed sales data, such as units sold and total revenue per product. This helps you identify which products are performing well and which aren’t.

  • Track inventory turnover rates to understand the frequency of product sales and how often restocking is necessary.

  • High turnover indicates popular products, while low turnover signals products that may be underperforming or sitting too long on shelves.

  • Use this data to build a clear picture of demand and profitability. It will form the foundation of smart, data-backed decisions for your shelf space strategy.

2. Measure and Assess Current Shelf Space

Next, evaluate how much space each product occupies. Depending on your store's layout, this can be measured in linear feet or square footage.

  • Use planograms to understand current product placements and assess how your products are arranged.

  • Calculate sales per square foot to measure the effectiveness of your space allocation. Products with low sales per square foot may be taking up valuable shelf space that could be used more efficiently.

  • Regularly review these measurements to identify underperforming shelf areas and make adjustments accordingly.

3. Identify High-Performing Products

Focus on products that are delivering the best results. After assessing performance, identify high-margin, high-demand products based on key metrics such as gross profit margin and inventory turnover.

  • Segment products based on performance, prioritizing high-performers for better placement.

  • Products that sell the most should be given prime shelf space like eye-level spots or end caps where they can gain maximum visibility and increase shopper interaction.

  • By giving top sellers better shelf space, you boost their chances of being picked up, increasing overall sales.

4. Execute Shelf Space Allocation

Now that you have data on what works and what doesn’t, strategically adjust your shelf space allocation. Use your findings to prioritize high-performing products by dedicating more space to them.

  • Adjust planograms to reflect product priorities, ensuring the best products are highlighted.

  • When placing products, consider shopper foot traffic. Popular products should be featured in high-traffic areas, or “hot zones,” to maximize exposure and sales opportunities.

  • Ensure every inch of shelf space is efficiently used, with popular products easily accessible to shoppers.

5. Use Technology for Data-Driven Decisions

Retail analytics software simplifies the process by integrating sales, inventory, and shopper behavior data into one easy-to-use dashboard.

  • Use machine learning to predict which products will perform well and suggest optimal shelf layouts.

  • Leverage automation tools for fast and accurate planogram adjustments, improving efficiency.

  • These technologies help you make decisions quickly and keep your shelf space strategy flexible, responsive to market changes, and shopper preferences.

6. Monitor and Adjust Allocation Strategies

Optimizing shelf space requires constant monitoring and adjustment.

  • Test planogram adjustments and track the results. If certain changes don’t yield the expected results, refine your approach accordingly.

  • Conduct regular audits to ensure compliance with your planograms and maintain proper product placement.

  • Continuous evaluation allows you to keep your merchandising strategy in sync with evolving shopper behavior and market trends.

7. Evaluate Impact on Customer Experience

Ultimately, the way you allocate shelf space has a direct effect on your customers’ shopping experience.

  • Well-organized shelves improve product visibility, making shopping easier and more enjoyable for customers.

  • When shoppers can quickly find what they want and discover appealing new products, they are more likely to make a purchase, boosting sales and loyalty.

  • Use retail analytics to ensure that your shelving decisions not only drive numbers but also enhance the overall customer journey within the store, benefiting both shoppers and your brand.

As a CPG brand, you can optimize shelf space effectively, improve in-store experiences, and ultimately boost sales while enhancing customer satisfaction by following these steps.

Considerations for CPGs Using Retail Analytics for Shelves

Implementing retail analytics can change the way CPG brands optimize shelf space and increase sales. However, before diving into the world of data-driven shelf optimization, there are a few key factors to consider. 

These considerations will ensure that the analytics you gather and apply are actionable, sustainable, and aligned with your goals. Below are the critical things you should keep in mind as you implement retail analytics for shelf space optimization:

1. Data Quality and Accuracy: The foundation of effective retail analytics lies in the quality and accuracy of the data. Make sure that the data collected is accurate, consistent, and up to date. Inaccurate or incomplete data can lead to wrong conclusions, ultimately affecting product placement and sales decisions.

2. Integration with Existing Systems: Your retail analytics tool should integrate seamlessly with your existing in-store inventory and POS systems. Ensuring compatibility helps you avoid data silos and enables real-time, accurate tracking across all channels.

3. Scalability: As your CPG brand grows, so will the volume of data you need to manage. Choose analytics tools that are scalable and can handle increasing data inputs, especially if you're expanding into more retail locations or managing a larger product portfolio.

4. User-Friendly Dashboards: The power of retail analytics lies in actionable insights, and to achieve this, your team needs an easy way to interpret the data. Invest in tools that provide intuitive dashboards and reports that are easy to understand, even for non-technical team members.

5. Actionable Insights: Collecting data is only half the battle; making data-driven decisions is where the real impact lies. Ensure that the analytics platform you use helps you quickly identify trends, opportunities, and areas for improvement, allowing you to act on them without delay.

6. Employee Training and Adoption: The successful implementation of retail analytics depends on how well your team adapts to the new technology. Provide proper training to ensure your employees can effectively utilize the analytics tools and apply insights to their daily operations.

7. Continuous Monitoring and Adaptation: Retail trends and customer preferences are constantly evolving. To stay ahead of the curve, continuously monitor your analytics and make adjustments as needed. This allows you to keep your shelf space optimization strategies fresh and relevant.

By keeping these considerations in mind, CPG brands can ensure they are setting themselves up for success with retail analytics, driving better sales outcomes, and enhancing the customer shopping experience.

Also Read: How AI is Driving Shelf Space Management and Optimization Strategies

How Does ParallelDots Help with Shelf Space Allocations?

ParallelDots offers advanced AI-powered solutions designed to provide CPG brands with the real-time insights and tools they need for effective on-shelf optimization. With a focus on shelf-level data, ParallelDots helps CPGs ensure their products are always in the right place, visible, and ready for purchase. Their technology uses machine learning, computer vision, and automated analytics to streamline shelf management processes and maximize product availability, visibility, and sales.

Here’s how ParallelDots helps CPGs optimize on-shelf execution with key features and KPIs:

1. Real-Time Stock Availability: ParallelDots utilises ShelfWatch to provide real-time visibility into stock levels at the shelf, detecting out-of-stock situations and low inventory levels. This ensures products are consistently available to customers, reducing lost sales due to stockouts. Accurate on-shelf stock tracking allows for timely replenishment, which directly improves customer satisfaction.

2. Planogram Compliance Monitoring: Using ShelfWatch, CPG brands can monitor the arrangement of products in stores and automatically detect deviations from the planogram. This helps brands maintain consistency across all store locations, ensuring that high-margin and high-demand products are always in prime locations.

3. Promotional Display Compliance: ParallelDots’ AI-powered solution monitors promotional displays, ensuring that signage, price tags, and offers are correctly positioned and visible. This leads to improved promotional effectiveness and higher conversion rates.

4. Automated Image Capture and Analysis: The real-time quality checks on images reduce human error and increase the speed of decision-making, helping field teams identify issues and resolve them quickly to optimize shelf execution. ParallelDots uses automated image capture to gather shelf data, which is then analyzed for accuracy.

5. Actionable Insights and Reporting: With its easy-to-understand dashboards, ParallelDots provides field teams and managers with actionable insights based on real-time data. Key performance indicators (KPIs) such as stock availability, planogram compliance, and promotional execution are continuously monitored.

6. Scalable and Efficient Deployment: One of ParallelDots’ strengths is its scalable deployment. The system is designed to support the monitoring of thousands of shelves in stores, requiring minimal setup and training. ParallelDots’ AI-powered tools help brands expand their reach without sacrificing accuracy or efficiency in shelf management.

These advanced features offered by ParallelDots enable CPG brands to maintain optimal shelf conditions, reduce lost sales, and enhance the overall shopper experience. The result is improved sales performance, better stock utilization, and more efficient in-store execution. 

Conclusion

Optimizing shelf space and ensuring the right products are available at the right time are crucial for the success of any CPG brand. Retail analytics can help brands effectively track sales performance, improve inventory management, and optimize product placement. AI-powered solutions like ParallelDots' ShelfWatch provide real-time insights into stock levels, planogram compliance, and promotional effectiveness, enabling CPG brands to stay ahead of the competition and maximize sales.

Using these advanced analytics tools, CPGs can ensure their shelves are always stocked with high-demand products, properly placed for maximum visibility, and aligned with customer preferences. 

Book a demo with ParallelDots today to learn how our AI-driven solutions can transform your retail execution and help your brand achieve optimal shelf performance.