What Is Merchandising? Definition & Strategies

Cody Cromwell
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What Is Merchandising & Why Is it Important?

Merchandising is the process of marketing products to consumers. It includes merchandising strategies, tools, and processes that help retailers increase their market share. It involves using marketing techniques such as displaying, merchandising, advertising and pricing to develop a brand image and encourage brand loyalty.

Merchandising highlights important features about a product so that consumers will have a better idea about the product before they buy it.

Merchandising helps retailers to sell products quickly without any customers' complaint. Suppose you have a product which is on sale for a week, that means you can sell the product only for short period of time. But for a product which is popular and useful, the retailer can sell the product for longer time because the customer can sell the product after using the product.

Merchandising techniques are often used by retailers to promote and sell their products to customers. Examples of merchandising include sale items, special offers, displays, promotions, displays, price drop and alternate pricing.

For retailers, merchandising offers many advantages. It helps to maintain the customer base, gain their trust and increase their loyalty. Because of the increase in loyalty and trust, the retailers can keep selling their products during promotion events.

Merchandising is a part of advertising. Advertising is the media through which retailers present their products to the customers.

Benefits of Merchandising

To understand the purpose of merchandising, you must first understand the basic principles and benefits of marketing and marketing strategies and tactics. Merchandising is the act of placing products on display both in front and inside a store. It can be very effective when a retailer utilizes it for the selection and placement of products to increase sales. Merchandising can also increase the amount of time a customer spends in your store, which can be a major factor in higher sales, because many people who walk out of a store have buyer’s remorse, believing that they didn’t get enough time to examine all of the product choices and take advantage of other specialty sales items. Merchandising is fast becoming an industry standard and must be implemented if you want to stay competitive in your retail business environment. For a now-budding marketing career, professional experience in merchandising management can be of great value. Merchandising can be a significant marketing tool to increase sales, service satisfaction and strengthen brand loyalty. Successful merchandising can dramatically impact business growth and an increase in sales. It goes beyond just adding inventory to an inventory to create an experience.

Retail Merchandising Strategies

Merchandising is one of the most lucrative of retail marketing activities, and can be easily done by many retail stores.

A large part of men and women's role in the retail industry (consumer market) is to ensure that the retail fixtures and store are in a good condition. Merchandising refers to the promotion activities which are done by the retailers to increase the sales.

Merchandising can be defined as any activity done by the retailer to promote the sale of goods and services. It includes the four categories:

Signage or Signage Visuals

Signage is the physical place in the store which depicts the logos or the names of the products. The charts placed near the shelves to tab the product image and also the signs outside the store help the customers to take a look and understand the items.

Placement of Fixtures and Exhibits

Showcasing and display of the products in various ways are the other important part of store merchandising and attracts the customers to the store.

Pricing

If the prices of a product is higher, it is likely to be an attention grabber. If a product does not look or sound appealing, displaying it well is important for the customers to take some interest.

Promotion

With the increase in the competition, the retailers have to uplift the sales to increase the customers’ numbers.

Effective Store Designs

Merchandising may or may not be associated with your store’s name, but in most cases, having merchandise in your store is synonymous with a fully functioning retail store, which is why it’s a vital component in store design. But the merchandise lining the store is not a direct reflection of the store’s performance.

Your store’s merchandise, more than anything else, is a reflection of your store’s brand. It’s one of the most visible factors in advertising your company’s brand, and it is often something consumers don’t really think about.

But even though it may not be the first thing that consumers immediately associate the store’s name with, displaying quality and aesthetically appealing merchandise is important. You want to convey a positive impression to the customer as soon as they enter the store. And if your customers like what they’re seeing, chances are they’ll be more inclined to buy something right away.

Compelling Product Selection

A compelling product selection is vital to your business, and product merchandising plays an important role. A product selection program is a comprehensive approach to capturing customer, store employee, and internal merchandising requirements.

A merchandising program should reflect product selection policies, asset criteria, and internal specifications used in managing products in the store. It is vital to understand the product selection machine and how it works.

The product selection process should be streamlined to minimize the amount of time it takes to receive an opinion on the quantity of items to be purchased. The goal is to ensure that the best possible product selection is made in the shortest possible time and with as few customer errors as possible.

A merchandising program should highlight and update the policy that guides your product selection. The most important component of a merchandising program is your product selection policy.

This policy defines how you will select products based on the total amount you need to purchase and the KSU (key sales unit).

A well-run product selection program includes the following elements:

A store policy and guidelines for how the merchandise is to be selected.

An efficient and effective manual system to accumulate the total amount in stock and the amount used in order to provide a basis for all future selection planning.

A structured product selection system that works to establish a basis for all future selection planning.

A tool or system used to facilitate product selection planning.

Powerful Product Displays

Strategic Product Pricing

Steep price hikes are not something that a typical business or retailer tends to use as a strategy to gain market share. Although price hikes could temporarily knock competitors out of the game and lead to a market share gain, chances are that the market share gained will be short-lived. This is because competitors will be able to lower their prices and reach customers faster.

Rather than raising prices to gain market share, it’s much better to use the old –hit them where it hurts” strategy. By strategically setting or raising prices for particular items, price discrimination can be achieved.

This in turn boosts sales without directly impacting the price of all the other items in the store.

Price discrimination can be achieved by taking into consideration several factors. These include placing items with higher profit margins on the back wall, offsetting low profit margin items with additional services or discounts, and applying price matching (from the competitor’s retail price) to a particular product, and much more.

Strategic pricing also involves discounting rather than raising prices. Discounting gives your customers sufficient reason to purchase a product but at a lowered price. The key to effective discounting is to provide reasons to purchase using the product’s qualities, attributes, and features, not by simply reducing the price and hoping for the best.

Targeted Product Promotions

Targeted product promotions are in-store displays or promotions that aim to attract a specific audience via their known buying behavior, age, tastes, and shopping preferences.

Merchandising is done specifically to encourage impulse buys, and retailer have adopted different strategies over the years for increasing their overall profit margins. It is important to pay attention to what type of products the customers tend to buy, keeping trends in mind.

The following chart is one of the most popular methods retailers use to determine the merchandising game plan … the Price Perception Matrix.

This chart can be used to determine the most appropriate product placement for your company’s product. The chart will help you further understand what type of produc…t placement will move the most merchandise.

A Price Perception Matrix is a bar chart that measures the overall perceptions of price across various demographics.

The range from the lowest price to the highest price is wide, but the mid range is the sweet spot … where 50% of your target customers will perceive the product as being priced appropriately.

The matrix is a graphical representation of your target audience…their age, gender, income, and other factors that affect their buying decisions. By analyzing the matrix, you can determine which of your products are the most highly valued, and where you should place them in the store.

Loss Prevention in Retail Merchandising

Merchandising is not something new and has been around for a long time. As the number of stores increase and the competition increases, retailers are also moving into the online world. If you are in the retail business or planning to get into the retail business, loss prevention is really important.

You need loss prevention for putting a higher profit in your business. Nobody wants to buy from anybody who doesn’t care about their business. You are paying your hard earned money, and you expect everything to be the way you want it to be. As a marketer, if you are already selling online, the above matters.

Merchandising is a strategy to help store managers prevent physical loss from store shrinkage and shoplifting. Loss prevention helps to identify potential theft in the store. It helps them to detect signs of possible shoplifting that needs to be dealt with immediately. It makes store around the world more efficient. It saves the company money.

Merchandising is not all about prevention. It is also about prevention and recovering from the loss. It is about a reduction in the loss rate and also the reduction in the loss of goods merchandise, brand image, customers and profits.

Store Upkeep and Cleanliness

Cleanliness and neatness are essential in stores. Store owners must pay particular attention to cleanliness and tidiness to appeal to customers. Store owners must maintain a clean environment by keeping the store appearance neat, clean, and in good shape. Store owners must also be careful to avoid unsightly trash, especially near the entrances, entrances counters and cashier stations, where customers often leave items before paying. Grocery item prices should be clearly marked at eye level so customers can be sure they are getting the best deal possible. Store owners should use improved lighting to emphasize products and make the environment brighter, more inviting, and more customer-friendly.

Store Maintenance:

To be a successful retail owner, it is important to maintain a professional appearance inside the store. Appearance -such as good lighting, correct store displays, good location of merchandise, and adequate cleanliness- is important to both store owners and customers. For store owners, a professional appearance shows customers that the business cares about quality and service. Substandard appearance, such as unclean floors, dirty walls, dusty shelves, or creased clothing, can give customers a bad impression of the store.

To avoid giving customers a negative impression, building owners must address potential problems immediately. For example, if a grocery store displays rotten produce, store managers must take immediate action to remove or sell the produce before it can give customers a negative impression of the store.

Advertising and Marketing:

eCommerce Merchandising Strategies

Online retailers and wholesalers seek to find ways to differentiate themselves in the market and increase awareness of goods and services they offer. In this way, they seek to turn a profit through better placement of products on online search and comparison sites.

Ultimate Guide to eCommerce Web Store Design

In the context of marketing indoors, certain merchandising methods can be quite effective and provide the right guidance to e-tailers and wholesalers. In this way, certain merchandising strategies aim to differentiate a product and position it on the screen of the computer screen sitting in front of the customer.

Some of the methods that are part of ecommerce merchandising include product descriptions, product categorization, and product images, to name a few.

Product Description

The product description is the single most important element that influences the customer’s decision on whether to purchase the product or not. The primary objective of a product description is to inform the customer as to the features and functionality of the product.

The description must also highlight all the positive and negative aspects of the product. The description must contain enough information to make sure that the customer understands the features and functionality of the product.

Merchandising Frequently Asked Questions (FAQs)

A merchandising program consists of a variety of tools and strategies designed to boost the retail store’s sales. Merchandising includes all the marketing and advertising methods that you would use on a retail floor to increase your sales.

Merchandising programs can be effective for a variety of reasons. First they can help increase your sales simply by improving your store’s appearance. They can also help you attract profitable customers to your store. Merchandising may also help you keep your most loyal customers in the store by providing them with an opportunity to purchase new products or additional products and services. These rewards can help keep your best customers around.

However, the benefits of merchandising can also be limited. For example, if a customer is interested in buying a product on sales, you may not want to sell the product at a loss to continue your program. So it’s important to understand the pros and cons of merchandising before implementing it in your store.

In this post, we’ll take a closer look at the most asked questions about merchandising in the retail business. After reading this post, you will understand the answers to questions like:

  • What is merchandising and what is its main purpose?
  • What are the basic merchandising tools and how do they work?

What are the benefits of merchandising?

Merchandising is a creative endeavor to create experiences that add value to a customer’s life and needs. It’s also creates solutions for organizations. It is a major tool of marketing that helps maintain company credibility, growth in customer satisfaction and loyalty.

Merchandising helps in creating overall impression that a product or service is good and meets an existing human need. These experiences can include cinemas, cashiers, guests, retail staff, sales reps and distributor employees and so on.

Merchandising can include strategies for both direct and indirect contact with customers through content and communication technology. Customer experience is most important in retail businesses, though merchandising can provide relevant information to other businesses as well. It is also helpful in providing product or service information to trade media, such as magazines and retail trade publications.

Merchandising can provide information that directly meets the needs of an organization and generates revenue for the company. These benefits can include improving customer satisfaction/loyalty, reducing customer defections, improving profits, reducing costs and maintaining company image.

What is the difference between merchandising and sales?

Merchandising (also referred to as product placement) is a form of marketing and advertising that involves the placing of products in a particular environment to increase brand awareness, brand consideration, and purchase consideration.

Merchandising has been around since the 17th century. Merchants would place their goods in prominent locations and take advantage of the human eye to increase sales. Merchants would occasionally place ‘snake oil’ as well to make the experience even more amusing.

Today, merchants use a variety of techniques to place their goods in prominent locations in an attempt to increase sales. Merchandising is the practice of placing merchandise in storefronts, malls, and trade shows in an attempt to increase sales. The placement of merchandise can take one of several forms. Some examples include:

Fixtures … In this case, merchandise is hung on the inside of the store so it is readily visible from the outside. Placement of merchandise in fixtures often results in a higher rate of impulse buying and typically increases sales by 30%.

Countertop merchandising … In this case, merchandise is placed on countertops that are visible from the outside and are intended to increase brand knowledge and consideration. If placed near registers, POS systems, or cash registers, the placement has been documented as increasing sales by up to 28%.

What does a merchandiser do?

Merchandisers are individuals or organizations that purchase items they can sell to individuals or businesses for a profit.

The U.S. Department of Labor has the position of Merchandise Manager in the Retail Sales sector. Merchandisers work with manufacturers, wholesalers, advertising agencies, and retail stores to determine the best price and best selling point for items that will be placed on shelves throughout all of the different stores that sell them.

The Merchandisers position is a long-term position, and generally requires at least 4 years of experience. In order to be promoted to a Merchandiser, a person must be in charge of numerous aspects of the department like production, inventory control and sales.

Who merchandises retail stores?

Merchandisers – also known as salespersons – are the individuals who move through retail store during store hours to help shoppers find products, often called product placement. Their main job is to identify merchandise products that will best meet the customer’s needs, and then help the customer find that merchandise with the goal of making a sale.

Overall, the human element (merchandisers) contributes more to sales than either the product, the store layout or any other type of marketing. This is why some retailers are choosing to store merchandise more efficiently in order to maximize their space.

So who are the merchandisers? Merchants and sales staff who work in your retail store help you find merchandise and serve as the point of contact for a sales transaction. Merchandisers are those individuals who sell promotional merchandise, organize promotional materials and help product placement.

There are many merchandisers responsible for a single store. Merchandisers are the individuals who are at all times responsible for the most active bay or drawers. They are also the individuals who are responsible for product placement in each department.

Typically, merchandisers are the individuals who are making store visits every day. At times, merchandisers may run out of merchandise or promotional materials. Merchandisers are also those individuals who appear on a daily basis to appreciate any promotion.

What is the difference between merchandising and marketing?

Merchandising is defined as "The action or process of promoting or selling merchandise".

Marketing, on the other hand, is the broader term which describes the activities concerned with charting, planning and inspiring the sale of products or services.

Merchandising is often looked at as a necessity for different businesses, but it is a concept that has been around for many centuries. In fact, in ancient Egypt in 2600 BCE, Egyptians used that word to describe how they treated their mortal enemies. A proverb quote from that time period reads, "Merchants are always going to market".

Merchandising can be used as a part of marketing for small to medium-sized companies. Those companies may not have the resources that a large company can afford, so they might decide to use an outside consultant on their marketing efforts.

Another way that merchandising is used is as a greater extension of marketing. In this case, an organization that has all of the resources it needs gets a consultant that specializes in merchandising and the two will work together to form a comprehensive approach to attracting customers.

As a business concept, merchandising is used to help businesses sell products or services and to target their customer base. It is often used in combination with marketing, but it can also be used independently.

Bottom Line

Merchandising is a marketing technique that employs unique displays, displays outside the store and communications marketing tool to increase product visibility and attract customers.

Merchandising (or sales promotion) is a form of advertising that involves placing products or services out to be seen, sampled or purchased. By strategically placing products in display cases or on carts, sales people can encourage customers to touch, try and buy.

But just what is Merchandising? Is Merchandising a sales technique, POS or retail strategy? Merchandising is all three. Merchandising involves increasing the visibility of products or services and encouraging consumers to purchase.

Merchandising is the ultimate application of the principle of –positioning… the strategic placement of your goods or services in the mind of a customer. Merchandising is the perfect strategy when selling your product in an environment where you don't own it. It can be used when you are selling your products or services through a variety of outlets such as a block party, open house, retail, wholesale, gift shop, cruise ship, trade show or a garage or flea market.

Merchandisers use multiple channels to display their items. They might place promotional items in public storefronts, dedicate a given product sojourn location, make special promotions at different locations during the launch phase, or place promotional items in established and targeted areas to reach prospective buyers.