What Is Merchandising? Definition, Benefits & Cost

Merchandising is a way to market products through the use of online advertising, retail stores and other offline marketing channels. It provides retailers with an opportunity to connect directly with consumers who are in search for their next shopping experience.

Merchandising is the process of buying and selling a company’s products. It can be done by either an individual or a company. The benefits of merchandising include increased sales, higher profits, and reduced costs. Read more in detail here: what is merchandise.

Merchandising refers to all of the nonverbal techniques that merchants employ to exhibit and promote their products in-store. This covers the structure of your business, the things you offer, how you organize them, and even your pricing strategy. In order to grow their brand image, enhance customer experience, and boost sales, retailers utilize merchandising in their shops.

What if I told you that

Although sales and merchandising are comparable, they are not the same. Merchandising is a strategy for encouraging in-store purchases, while sales refers to the act of buying something.

Merchandising Elements

Different parts of retail merchandising are combined to produce a full merchandising image in your business. These are some of the elements:

• Store design and layout: Your store’s layout functions as a tour guide, guiding customers through all of your merchandise.
• Product displays: Make temporary or permanent displays to show off your most important items to your consumers.
• Product selection: In order to get customers to purchase, businesses must provide appealing items that compliment one another and create a unified brand image.
• Pricing strategy: Product pricing should be high enough to generate a profit, yet low enough to appeal to customers. Retailers frequently run discounts to persuade customers to spend more.
• Merchandising on the Internet: To build a captivating online presence, your company’s online shop should use merchandising tactics.
• To avoid losing inventory, use clever product positioning and theft prevention merchandising.
• Store cleaning and upkeep: Merchandising will need frequent maintenance and rotation to keep your images fresh and your greatest goods in the spotlight.

Merchandising’s Advantages

More consumer interaction and product exposure is promoted by well-stocked shelves, clear pricing, neat displays, and clever merchandising tactics, which will help increase sales. Here are a few ways that merchandising may help your business.

Products sell quicker when they are simple to discover, accessible to consumers, beautifully presented, and reasonably priced. I can’t tell you how many times I’ve moved a slow-selling item to its own display space or featured it in a more fitting location in my store, only to have it sold out within a week. Making things visible and exhibiting them in a pleasing way boosts their attractiveness and the number of people who notice them, resulting in more sales.

Promotions and competitive pricing can also help you move through your stock quicker by making your items more desirable to clients. According to a Valassis survey, 88 percent of buyers will utilize discounts on purchases in 2020. Smart pricing and promotional methods are the way to go if you want to boost sales and get customers buying.

Effective merchandising means that every square foot of your shop is put to the best possible use, and that no space is wasted. This will improve client exposure to your items while also encouraging visual stimulation and product engagement in your business.

Assume you went to the grocery store and found that many of the shelves were empty or sparsely stocked (see picture on the left), and that most of the floor area was unoccupied. This is an example of a poorly stocked shop that did not adequately use its space, resulting in a less appealing supermarket alternative for consumers.

Consider going to the grocery shop next door, which was bursting at the seams with goods and vegetables (image on the right). This is a shop that is well-stocked and makes good use of its available space. You’re also more likely to stick around and make a purchase.

(Image courtesy of VPR.org)

There are a few techniques to improve consumer return rates via merchandising. For starters, changing up your retail display will keep people interested in purchasing with you. They will return to your business more often to search for new things if it is different every time they visit. Don’t worry, we’ll cover recommended practices for maintenance later in this post.

Second, merchandising may assist create brand loyalty among consumers if it is consistent and offers individuals a good feeling of your brand. Customers will be more likely to build a relationship with your company and more inclined to spend money with you rather than your rivals if they know what to anticipate from you and feel like they have a feeling of your brand. In reality, an average of 65 percent of retail sales comes from current, loyal customers rather than new ones, according to a widely quoted customer loyalty figure.

Finally, clients will be more likely to visit your business for time-sensitive buying if you appropriately market your store around holidays or seasonal changes. Customers will be more motivated to spend their spring shopping there and then return in the winter, when the area has taken on a more frigid air, if a clothes boutique merchandises its store for springtime.

Merchandising Resourcing & Cost Considerations

When it comes to launching a retail company or managing an existing one, all of your choices, including merchandising, are based on your budget. The expenses of merchandising might vary significantly, but you don’t have to break the bank to have a beautifully merchandised shop.

You’ll need to figure up your budget before you start merchandising. Begin with a fixed budget or a “target figure” for how much you want to spend. Add a “flex number,” or the maximum you would pay to make things work, to this objective amount to allow yourself some leeway in case of unanticipated complications.

There is no specific amount for your merchandising budget; it will mostly rely on the amount of money you generate. Historically, the US Small Business Administration has advocated allocating 7%–8% of total sales to all marketing activities, including retail. According to the CMO Survey, marketing expenses for business-to-consumer (B2C) companies should be between 8% and 14%, while marketing budgets for business-to-business (B2B) companies should be between 6% and 8%.

What if I told you that

Marketing is a sort of merchandising. Marketing refers to all promotional activities that take place both inside and outside of a business, while merchandising refers to promotional efforts that take place inside a retail store or on a website.

Here’s a checklist of items to think about, as well as some budgeting advice.

• Consider your materials: Often, the same aesthetic may be achieved with other, more cost-effective materials. Plexiglass, cardboard, veneer wood, and some plastics are some of the least costly materials you may work with, so be creative and incorporate cost-effective elements inside your environment. Customers are less likely to notice whether you used genuine mahogany or mahogany veneer if they can see the aesthetic you were looking for.
• DIY: You don’t have to hire a professional for everything. Use Pinterest or the HGTV website to locate DIY projects that will allow you to get your hands dirty while still saving you money.
• Keep track of your supplies: You can frequently reuse your décor and fixtures season after season without having to buy anything new if you keep track of them.
• Order in quantity to save money and avoid paying shipping costs on items like lightbulbs, hardware, and cleaning products.
• Keep everything on-brand and harmonious: If everything you use for merchandising is on-brand and cohesive, you can reuse things in fresh ways over and again without having to buy anything new every time.
• Identify potential investment opportunities: Think on where you’re going to invest your money. The entrance and window displays are where you should invest the most money since they will generate the most revenue. The rear of your business should have the most basic merchandising—flashy displays and design will help it the least.
• Hire a professional merchandiser: If your budget allows it, businesses such as Retail Merchandising Services can assist you in locating the most cost-effective materials and educate you about cost-effective merchandising solutions from merchandising specialists.
• Cooperate with your vendors: Make contact with your suppliers. In return for promoting their goods, they often provide free temporary POP displays.

Store Upkeep & Cleanliness

It may seem self-evident, but keeping your business clean and tidy is critical for boosting sales and making a positive impression on customers. Detail-oriented attention to things like gleaming floors and clutter-free checkout counters informs clients that you care about your company and that you will treat them with the same care and respect. Scuffed floors and dusty corners, on the other hand, indicate a lack of care, and customers will infer your level of service is similarly unresponsive.

Adopting a cleaning routine is the greatest method to keep your shop clean. To do this, divide your business into zones and allocate each day’s cleaning to a separate zone. Keep in mind that some locations, such as the entrance and exit, restrooms, and checkout areas, may need more regular cleaning than others. Dill Cleaning Service provides a complete cleaning zone checklist that may be downloaded.

Updating your merchandising is a crucial element of retail care, in addition to keeping your store clean. But how often should you update?

For improving your shop merchandising, here is a list of best practices and recommendations.

• Follow the six-month rule: Redo your store’s space and category allocations every six months as a general rule of thumb. This will encourage returning consumers to revisit your store and be exposed to new goods as part of their typical purchasing routine.
• Outside of business hours, merchandise: Merchandising is a large operation that often entails ladders and messes. Keep your merchandising tasks until before or after your shop opens, since you want to make sure it’s ready to go once it’s open.
• Window displays should be updated at least once a month: Your business’s window displays are the most visible aspect of the store, and they should be changed often to attract consumers and keep regular traffic engaged.
• Remember to refresh your business with the seasons: Most retail stores profit from adding seasonal design and merchandising into their storefronts, so do so.
• Rotate entrance displays as often as possible: The displays just outside the decompression zones should be cycled regularly and highlight your newest goods so that even regular clients are captivated the moment they walk in.

Zone of decompression:

Customers psychologically move from the world outside to your business atmosphere in this region straight inside your retail store. It allows clients to take in the displays, acquire a feel of your brand, and get a first impression of your business.

• Weekly refresh: To keep your business looking fresh, update items like mannequins, table displays, rack arrangement, and shelf displays on a weekly basis. On slower days, this is a fantastic chore to outsource to store staff throughout their shifts.
• Use an integrated POS system like Lightspeed or observational data to evaluate which merchandising methods are most successful so you may deploy more effective tactics as you make your improvements.

Merchandising on the Internet

Merchandising on the Internet is the practice of displaying and promoting products on your online store. All the basics of in-store merchandising—layout, design, pricing, and displays—apply to your ecommerce website. And, just like with merchandising your storefront, your online presence should speak to your brand voice and align with your products and customer base.

Here are some effective Merchandising on the Internet strategies.

• Clear design: Your online presence should be simplified with minimum sidebars, flashing text, and moving elements so that visitors can concentrate on the items, much as the displays in your shop should be focused and simple.
• Homepage storytelling: Your homepage, like your storefront’s window display, will be where people form their first impressions of your company. Make sure yours communicates your brand’s narrative and encourages people to explore your website further.

Display an offer on your homepage as a tip. This will pique people’s attention enough for them to visit your site and begin browsing.

Including an intriguing promotion on your homepage might assist to captivate visitors and encourage them to purchase. (Image courtesy of ASOS)

• Simplified purchasing path: Having too many steps during the checkout process leads to abandoned carts, similar to how in-store consumers may abandon carts if the queue is too long. Simplify the procedure as much as possible by including a progress indicator at the top of the page that indicates how many steps customers should anticipate throughout the checkout process.
• Easy navigation: Great in-store merchandising makes it easy for customers to locate what they want; online consumers should be able to find things quickly as well, with menu bars displaying various product categories and a search option that allows them to sort and filter results.
• Product descriptions that are more than just descriptions: Instead of merely describing each product, your online product description should work as a virtual shop clerk, detailing the advantages of each item.
• Provide a lot of visuals: Provide a lot of photographs of the things you’re selling to give clients peace of mind. This will make customers feel more confident about their products and increase their purchasing confidence.

• Allow consumers to create an account with you to encourage them to return, simplify their purchase history, and keep a constant channel of contact open.
• Use banners to show offers: Placing a banner at the top of your website will enable you to flash specials and messages to your clients regardless of which page they are on. When clients are on product pages or making purchase choices, all of your offers will be displayed.

Customers will notice your deals if you place a banner at the top of each page of your website. (Image courtesy of Thrive Market)

Conclusion

Merchandising will impact how you utilize your area, price methods, display approaches, and product selection, among other things. Not only that, but good merchandising decisions can help define your brand, provide a positive consumer experience, and increase sales. Understanding how merchandising works can help you establish an attractive shop that keeps people spending and returning.

Merchandising is a marketing strategy that uses the product to generate sales. This can be done through in-store, online or other methods of promotion. It also includes the benefits and cost associated with each method. Reference: types of merchandising.

Related Tags

• benefits of merchandising
• what is merchandising in marketing
• what is merchandising in retail
• merchandise examples
• product merchandising