First we need to set up the inventory level of a product at which it will be considered as low stock.

1. Login to admin and navigate to System >> Configuration
2. Scroll down to the Catalog tab and click the Inventory section to open it. Now expand the 'Product Stock Options' section.
3. Set Manage Stock as 'Yes' and add a value for 'Notify for Quantity Below', save the configuration. Note that you do not set 'Notify for Quantity Below' as 0 as it disables the RSS feed.

Lets see how we can display them on the frontend.

1. Using Layout updates

You can add layout updates in local.xml file for a page as shown below:

<reference name="right">
     <block type="cms/block" name="your_block_name" before="-">
         <action method="setBlockId">
             <block_id>your_block_identifier</block_id>
         </action>
     </block>
</reference>

You can enter these layout updates in Magento admin also - Categories, Products, CMS Pages provide a field for "Custom Layout Update".

STEP 1: Create a PHTML file

First we create a phtml file {{MAGENTO_ROOT}}\app\design\frontend\rwd\mytheme\template\catalog\category\subcategories.phtml

To enable/disable the demo store notice:

• Log into the Magento Admin
• Navigate to System >> Configuration
• Select the Design Section