What is merchandising?

If you sell products in any way, shape, or form, it's a good idea to understand how merchandising works. The right merchandising strategy often can be the difference between high sales and a struggling retail enterprise.

Merchandising defined

Merchandising promotes products and increases sales in a physical space and on a digital platform.

Product promotions in merchandising include adjusting prices to manage profit margins across products and selling locations and designing attractive displays. They also involve providing special offers to customers. The goal is to influence the buyer with a compelling assortment (PDF) or offer to drive a purchase.

Effective merchandising presents products at the right place, time, and price, all in the correct quantity. This balance will increase sales and profits without a shortage or surplus of products. You can adopt numerous merchandising strategies based on your objectives. Your brand identity determines how you approach selling your products.

Merchandising is essential for three reasons: variety, product placement, and promotions. Customers will see the variety of products available with strategic product placement. Then, they will be motivated to make a purchase when you promote a sale.

We offer technology that lets you organize your match invoices (PDF), audit sales, address import/export requirements, pay suppliers, and allocate merchandise. It's all about automation, efficiency, and scale.

Elements of merchandising

Retail merchandising involves numerous strategies that you can customize. Below are some common elements of merchandising (PDF) to consider.

Store design and layout will guide customers through the store and its products. Consider if you want a more open space that lets people move freely. Or, you may wish to guide people through a more specific path.

Inventory visibility is crucial to the customer experience. Maintaining accurate store inventory lets you shift more quickly to meet consumer demands, whether in store, outside/curbside, or on other channels.

Product displays will showcase all your essential products. Even the best products will not sell well if customers aren't attracted to them.

Product selection refers to the products themselves. You need to display them at the right time to attract customers.

For instance, consider which products complement each other. Which items could be sold together? How do products enhance your brand image?

Pricing strategy refers to how you will price the items you display. Products need to generate a profit while still being a competitive buy for consumers. You can use merchandising to promote pricing strategy, such as showing a sign with a sale price on it.

Ecommerce merchandising refers to your company's digital platforms. Tactics include quality product descriptions with images, recommendations under products, and seasonal collections.

Loss prevention involves placing intelligent devices on products to prevent theft. For example, adding unique tags on clothes. The tags alert the store if someone tries to take them without paying.

Store upkeep and cleanliness are crucial elements of any store, regardless of its merchandising strategy. Your space should look clean and organized, with your most popular products front and center.

Benefits of merchandising

High-quality product displays, stocked shelves, and innovative strategies will make your merchandising efforts pay off. Below are just a few benefits of merchandising and merchandising automation.

Increased customer traffic

Ecommerce is growing more popular, but you can still leverage foot traffic from in-person customer experiences. Effective merchandising throughout your store and in your windows will encourage people passing by to browse.

One popular merchandising method for increasing your foot traffic is putting a well-designed folding sign in the front of your store. As people walk by, they'll see the sign and glance at your displays.

Better use of retail space

If you've ever found your store to be too large or too small for the number of products you're selling, then you need new merchandising tactics. Effective merchandising means that your space gets maximum use from every square foot. At the same time, the area seems filled and comfortable. Customers will see your products better and more likely interact with them.

Consider when you walk into a grocery store. Shelves are often filled from the floor to the top shelf. Doing so makes good use of the space and creates a more visually appealing experience.

Inventory turnover

Customers are more likely to buy products when they are easy to find. With strategic merchandising, you draw consumers toward displayed items.

As a result, products will sell faster. Stores struggling to sell slow-moving pieces may need to rethink their merchandising strategy. Special, new, or featured items should always have a visible display at the front of a store.

Also, using the right promotions and competitive pricing will help products sell faster. Merchandising should reflect the budget of a store's target customer.

Customer loyalty

Merchandising can boost your customer loyalty (PDF) by creating an exciting brand experience. If your displays look different each time customers walk in, they'll look forward to visiting your store more frequently.

The more they visit, the more exposure they have to your products, likely resulting in higher sales. When they enter your store each time expecting new items, they'll probably want to walk out with something new.

Great merchandising should change over time so that customers are excited to enter your store and see something new. But it should maintain some consistent elements to strengthen your brand image. For example, displaying the same core color palette or theme that identifies your brand.

Future of merchandising

The future is digital, and merchandising is no exception. Online shopping will become more common. Then, AI software will replace many tasks in a retail store.

Research by McKinsey says leading retailers soon will automate several core merchandising responsibilities. Many retailers already have undergone this process.

Human decisions remain vital for merchandising. Examples include selecting design touches and messaging to write on signs. But automation could streamline the analytical and time-consuming merchandising tasks and operations in the back office. IDC recently evaluated our technology that supports merchandise operations management.

Learn how these retailers leverage modern merchandising solutions to grow their business:

Leveraging merchandising for success

Strategic merchandising is a crucial element of a successful brand. Regardless of how you sell your products, creating positive customer interactions with them will help drive sales.