Shelf Wars: Why Supermarket Shelves Are the Times Square of CPG

How Brands Fight to Stay Seen

Author

Misagh Jebeli
June 27, 2025

The Shelf as Times Square: Every grocery shelf is prime real estate—think Times Square at rush hour. Brands jam-pack the space, jockeying for the "front row" (eye-level shelves, endcaps, checkout lanes). Products placed at eye level or on aisle endcaps are like the big neon billboards in Times Square, commanding the most attention (and the deepest pockets). Indeed, studies find that two-thirds of items in those prominent spots are highly processed, big-brand products, while healthy or niche items barely register (below 1%). Retailers charge handsomely for these positions. For example, a new SKU can incur slotting fees (upfront listing charges) on the order of thousands per store; roughly $1,500/store per year is cited (so a 100-store regional roll-out could be $150K+). Endcap or display placements often run $350-$500 per store ; holiday or seasonal displays nationwide can reach the tens or hundreds of thousands. Brands learn quickly that paying "rent for attention" is the cost of doing shelf business.

Like Times Square's billboards, prime grocery shelves (eye-level, endcaps, checkouts) demand big advertising spend. Brands "rent" these spots to capture shoppers' eyes.

  • Eye-level shelves ("buy box"): reserved for national brands or best-sellers—it's literally the first thing shoppers see. Nielsen and advocacy groups note these spots overwhelmingly feature ultra-processed big brands.

  • Endcap and promotional displays: aisle-ends and special displays are "corner lots" of the aisle, premium turf for new products or promotions. CPG marketers pay extra to occupy these. Trax Retail reports that endcaps or seasonal displays can cost roughly $350-$500 per store , and major campaigns (holiday, sports events) can run into the tens of thousands.

  • Checkout lanes and add-on racks: the "last breath" before checkout, stocked with impulse buys (gum, candy, magazines). These spots are often controlled by retailers, but CPG brands pay slotting or revenue share to be there—think "soda at checkout" vs. water alternatives.

Virtually every brand in grocery is scrambling for that front-row view. Even well-funded challengers must fight hard to earn prime placement next to the incumbents. As one industry report quips, "brands pay for shelf space"—and the winners at eye-level are typically those with the biggest budgets.

How Many SKUs Are in the Fight?

Modern supermarkets carry tens of thousands of products. A typical U.S. grocery assortment is on the order of 30,000+ SKUs per store. For context, Costco sells only about 4,000 SKUs in its warehouse format, and Sam's Club around 6,000-7,000. But traditional grocers stock far more: think thousands of canned goods, cereals, beverages, snacks and frozen items alone. Major big-box/warehouse formats (like Walmart) can carry 100,000+ SKUs when all categories (grocery and general merchandise) are counted.

  • By department: Center-store groceries (canned/dry goods) and frozen foods make up the bulk. For example, a mid-size chain's frozen department may stock ~1,400 SKUs. Snack aisles can have thousands of bagged chips and crackers. Even the dairy case can contain hundreds of different yogurts and cheeses.

  • Specialty or local lines: Many chains now allocate shelf space to local/regional products or healthier alternatives. Others (notably discounters like ALDI or Lidl) shrink assortments to streamline operations—ALDI stores famously carry only around 1,500-1,600 SKUs, focusing on a tight roster of essentials and own brands. In contrast, a supercenter like Walmart might stock 3-4 times as many food items, plus tens of thousands in non-food.

  • SKU rationalization: After Covid disruptions, some retailers actively pruned flattish-selling items. Gartner estimates that one big U.S. chain reduced SKUs to improve turnover and complexity. Still, the fight for the shelf is crowded. Industry data shows 30,000 new products launch each year , meaning retailers are constantly adding and dropping items. No wonder Euromonitor reports that ~25% of new FMCG launches (2023-24) went "inactive" within months—roughly one-quarter of new products fail to maintain distribution.

In short, every shelf is a battleground with thousands of contenders. Many SKUs compete for the few front-row spots. Chain buyers and category managers regularly cull slow-movers to make room for innovations or higher-margin items, which only intensifies the fight among brands.

How Products Get to the Shelf (Logistics)

Getting a product onto the retail shelf is a multi-step supply chain and merchandising challenge. In general: Manufacturer → (Distributor/Warehouse) → Store → Shelf.

  • Centralized distribution: Larger retailers (e.g., Walmart, Kroger) often operate regional DCs. CPG companies ship pallets to those DCs, which then break-pack and route products to stores. Store staff or contracted merchandisers then unload and stock shelves on the floor.

  • Direct Store Delivery (DSD): Some categories bypass retailer DCs entirely. "Fast-turning" items (soda, snacks, baked goods, dairy, beer, etc.) are often handled via DSD. Here, CPG logistics teams deliver direct to stores. According to logistics experts, DSD represents roughly 24% of grocery unit sales and over 50% of profits in grocery (reflecting its high velocity). Powerful CPG players like Coca-Cola, PepsiCo (including Frito-Lay) and many bread or snack brands use DSD. These vendors send their own trucks and merchandisers into stores to restock shelves, rotate product and execute promotions under their own planograms. The benefit is maximum control: PepsiCo has said, "There is nothing like" DSD for execution. One exec even boasted that if a Pepsi product is out at a Walmart on a Friday, "we will put a person out there in one second" , illustrating how DSD teams can react instantly to shelf gaps.

  • Brokers and third parties: Smaller brands or imported lines may work through regional distributors or brokers. A broker (or sales agent) will visit accounts on behalf of a vendor, pitching products and ensuring they're placed correctly. Some chains let manufacturers run in-store merchandising themselves, while others use contract merchandisers or planogram compliance firms. (Notably, many beverage and snack giants have long-standing "route salesmen" on store teams, essentially brand reps stocking shelves daily.)

In short, who stocks the shelf varies by product. A Nestlé cereal box likely arrives via the retailer's warehouses ; a Coke can is delivered and shelved by Coke's own crews ; and a local soda brand might rely on the store's beer distributor. Successful CPG teams coordinate closely with all partners—logistics, distributors, retail category leads and even store managers—to ensure their products end up on shelf exactly when and where planned.

The Economics of the Shelf (How Retailers Monetize It)

Shelf space is a revenue source for retailers. Several charging mechanisms exist:

  • Slotting fees (listing fees): One-time or recurring payments to "buy" the right to list a product on shelf. Fees vary widely by chain and market size, but industry reports suggest $5K-$25K (or more) per SKU for regional launches, and millions for a national roll-out. (For example, a new soft drink reportedly might pay on the order of $2 million to achieve wide supermarket distribution.) These fees compensate the retailer for dedicating shelf space to a product (especially when the item is promotional—i.e., expected to drive incremental sales). Slotting deals often cover a fixed term (e.g., 6-12 months) and can include commitments on promotional support or exclusivity.

  • Display and endcap fees: Apart from slotting, brands often pay extra for premium positioning. Endcap displays, special aisle stacks, and temporary promotional placements usually come with "tradespend" or promotional allowances. As noted, the cost can be several hundred dollars per store for a display. A national holiday or event campaign (e.g., a Super Bowl-themed display) can run into the tens of thousands across a chain.

  • Promotional funding ("Trade spend"): Almost any discount or deal (e.g., BOGO, "50% off") offered in-store is typically funded by the brand through trade promotions. The retailer and brand negotiate a trade allowance: for example, the brand might reimburse half the discount under a "Spend $10, save $5" coupon. Trade promotion budgets are massive—industrywide, CPG companies can spend 10-20% of gross sales on trade deals annually (hundreds of billions in aggregate). It's part of the cost of acquiring shelf-based sales.

  • Co-op marketing and loyalty programs: Retailers may offer co-op marketing dollars, bundle deals with their private labels, or include promotional support as part of a partnership. Some chains require contribution to their national TV ad funds or their loyalty-card programs if the brand wants featured placement. And now, retail media networks charge for digital ads via apps, emails or in-store screens (see next section).

Each of these fees ultimately drives up the effective cost of shelf distribution. CPG finance teams must include slotting, tradespend and allowances in their P&L calculations for new products. Savvy brands negotiate package deals: e.g., a slotting payment might include a number of display weeks or in-advertising space. But one truth holds: on the shelf battlefield, every square inch of gained space is paid for by a brand—either directly to the retailer or indirectly through promotions and co-ops.

Shelf Compliance and Execution: What Can Go Wrong

Even after a product is supposedly "listed," nothing is guaranteed on-shelf until it's actually stocked and maintained. Common failure points include:

  • Phantom inventory: This is when the retailer's system shows a product as "in stock" (so it isn't reordered) but the shelf is empty. Causes can be theft, damage in backroom, or scanning errors. Phantom inventory means lost sales because the system falsely assumes product availability. AI is now being used to flag such ghost inventory in real time by comparing shelf scans to inventory records.

  • Stockouts and voids: Even without phantom data errors, shelves run empty. Out-of-stock (OOS) items are frequent: industry estimates suggest U.S. grocery OOS issues cost roughly $150 billion per year in lost sales. That's real money off the table for brands (and frustration for customers). In fact, research shows some households will permanently switch stores if they encounter recurrent OOS situations.

  • Planogram non-compliance: Retailers specify shelf layouts (planograms) by category. If stores don't follow them—e.g., an item is misplaced, the shelf tag doesn't match the product, or promotional signage is missing—it harms both brand visibility and sales. Compliance audits often reveal mis-rows, facings out of place, or entire brands missing from the space they paid for.

  • Incorrect pricing/labels: Price tag errors (wrong price on shelf) erode trust. If a sale is rung up wrong, the retailer loses money; if higher, the brand may get blamed. Thousands of shelf tags can be wrong on any given day.

These execution failures mean the enormous investment in shelf space can go to waste. Fortunately, technology is stepping in. Computer vision and AI tools scan shelves frequently (see next section) to report compliance issues. For example, modern systems can automatically detect missing products, misplacements or "phantom" cases and alert store teams. As one industry expert notes, machine vision can flag a phantom inventory event and even estimate the sales loss, then suggest corrective steps. In short, brands now have to solve not just buying shelf space, but also keeping it compliant. Execution teams—and even store managers—are leveraging these insights (and occasionally surprise visits by CPG "sales blitz" teams) to reduce voids and ensure products stay on shelf.

Retail Media Networks and Data Arms Rethinking the Shelf

The concept of the shelf is expanding into the digital realm. Retailers have become media companies, monetizing shopper data and on-site ad space:

  • Retail Media Networks: Supermarkets now offer advertising on their own channels—apps, websites, kiosk screens, even shelf-edge digital tags. Kroger (through its data arm 84.51°) and Walmart (Walmart Connect) sell ad placements tied to shopper data. A brand might pay to have its banner ad appear on a shopping app or send coupons to targeted loyalty members in real time. Target's "Roundel" and Instacart Ads are similar examples. These digital ads complement physical shelf placements, capturing attention elsewhere in the store's ecosystem.

  • Data arms and insights: Chains have massive loyalty-card databases. Kroger's 84.51° mines transactions from ~60 million households, providing CPGs with predictive analytics on demand and pricing. Tesco/Dunnhumby, Ahold/Peapod's Harvard, and others play the same game worldwide. These first-party data platforms let brands see "who buys what, where, when" and shape assortment and pricing accordingly. In some cases, shelf layouts are adjusted on the fly based on local buying patterns (for example, putting ethnic or seasonal products where that store's demographic will buy them).

  • Omni-channel shelf: The "shelf" now includes online. When a shopper uses click-and-collect or home delivery, digital planograms (or search ads) determine which products are shown first. Retail media spend on e-commerce listing ads effectively fights for the "shelf" on a screen.

One tangible example of shelf-level media is shelf-edge digital tags. Vestcom's shelfAdz® (used at Kroger) can display brand messages and prices on the shelf edge. In a measured trial, CPG brands using shelfAdz® at scale saw about a 10% incremental sales lift on promoted items. This illustrates how integrating ads with the physical shelf can move products—and why retailers are keen to sell that capability back to brands.

In summary, the shelf battle now includes bytes as well as boxes. Retailers' media networks are an extension of the aisle, and they expect CPG brands to pay for this exposure (much like billboards inside the store). Brands that harness these data tools—aligning their loyalty marketing, digital ads and pricing strategies with in-store shelf moves—will have the clearest view of the competitive landscape.

Tech-Driven Shelf Intelligence: What's Changing Now

Finally, cutting-edge technology is transforming how both retailers and brands "see" the shelf in real time:

  • Autonomous shelf scanning: Robots like Simbe Robotics' Tally now autonomously roll through aisles with cameras. Simbe reports scanning 5,400 products per hour and achieving ~98-99% accuracy in recognizing SKUs and gaps. Remarkably, they claim to catch 10x more out-of-stock items than a manual audit. Simbe's system also uses depth-sensing to flag "low stock" before a stockout occurs. Major retailers worldwide (BJ's, Carrefour, Wakefern, etc.) are piloting these solutions.

  • Shelf cameras and AI platforms: Startups like Pensa Systems, Focal, Trax and others install cameras or use hand-held scanners to capture shelf images continuously. For instance, Focal Systems mounts tiny WiFi cameras on shelves that snap hourly. Their AI, trained on billions of images , detects every product and even tracks shelf-perfect compliance. Trax's on-device image recognition claims ~96% accuracy on any phone-captured shelf photo. These systems integrate directly into the retailer's execution process: if a camera sees a missing "plug" of cereal, it can automatically generate a replenishment alert or compare against backroom stock.

  • Planogram forecasting and dynamic layout: Beyond just scanning, AI tools now help design and adjust planograms. Machine learning can forecast category demand at individual stores (e.g., anticipating local sales spikes for a particular brand) and suggest shifting shelf facings or pricing. Brands can supply proprietary models to predict where their new item will best fit. The result is shelf assortments that are more responsive: for example, a high-demand flavor can get an extra row, while a slow-mover is delisted quickly.

  • AI-driven compliance scorecards: With rich shelf data, retailers now generate scorecards for suppliers and stores. Instead of a simple audit, brands can see dashboards of on-shelf availability, share-of-shelf vs. competitors, pricing errors, and more—all updated daily. This transparency turns shelf management from guesswork into a data science.

Modern shelf-scanning technology (e.g., robots with cameras) can digitize inventory on-site. AI systems (Simbe, Trax, Focal, etc.) use such images to detect missing items, misplacements, or pricing errors in near real-time.

These tech advances are game-changing for CPG executives. For example, instead of losing sales to a phantom out-of-stock, a brand might get an alert via AI and restock the very same day. Frontline merchandisers can be guided by "next-best-action" alerts (e.g., "fix this soda facing first"). Over time, brands with better shelf intelligence can negotiate more effectively with retailers (proof-of-execution data is gold).

In practice: The war for shelf space is as brutal as ever, but now armed with data. Coke, Pepsi and others use DSD and data analytics to protect every inch of their soft drink bays. Niche startups scrape by with guerilla tactics: microscopic test-runs in local stores, viral loyalty campaigns, or aligning with health trends (a natural cereal brand might pay more to land an endcap next to "clean" products). The reality is that the "shelf life" of a new product is short—Euromonitor finds ~25% of new food/drink launches in 2023-24 were gone (inactive) by year-end. Brands fighting to stay seen must combine strong retailer relationships, promotional muscle, and now AI-powered visibility.

Ultimately, retail shelf space is a high-stakes real estate play. It's a battlefield where only the agile (and well-funded) conquer. CPG executives must plan shelf strategy as they would a media buy: investing in prime placements, ensuring flawless execution, and leveraging every insight from loyalty and tech tools. Those who master these layers—from slotting deals to shelf scanning—will win the shelf war, keeping their products in shoppers' view (and carts) amidst the skyscraper of competing SKUs.

About the Author
Misagh Jebeli is an enterprise data architect and founder, exploring how AI and data-driven products are reshaping the CPG industry, from inventory and forecasting to brand strategy and product innovation. - Connect on LinkedIn

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