A Guide To Merchandising and How It Works (With Tips)

Merchandising includes all the non-verbal tactics retailers use for presenting and promoting their goods in-store. This includes your store layout, the products you choose to sell, how you arrange them, and even your pricing strategy. Retailers use merchandising in their stores to cultivate their brand , improve customer experience, and drive sales.

When products are easy to find, accessible to customers, displayed attractively, and priced well, they sell faster. I cannot tell you how many times I would move a slow-selling item in my shop to its own display area or feature it in a more appropriate spot and it would be gone within the week. Making products visible and displaying them in an appealing manner increases their appeal and the number of customers that see them, ultimately helping sell them.

Additionally, promotions and competitive pricing will make your products more appealing to customers and will help you turn over your stock faster. For example, a study from Valassis found that 88% of customers used coupons on purchases in 2020. If you want to drive those sales and get people shopping, smart pricing and promotional strategies are the way to go.

Say you were visiting a grocery store, and when you entered, many of the shelves were empty or minimally filled ( on the left below), and much of the floor space was vacant. This would be an example of a poorly merchandised store that did not effectively utilize its space, and thus became an unattractive grocery option for customers.

Now imagine you visited the grocer next door, and its store was filled to the brim with merchandise and produce ( on the right). This is a store that has been merchandised well and is utilizing its space effectively. Not to mention, you are more likely to stay and make a purchase.

There are a few ways that merchandising can increase customer return rates. First, changing up your retail display will keep your shopping experience exciting for customers. If your store is different every time they come in, they will visit more often to look for new items. Don’t worry, we will look at upkeep best practices further down in this article.

Second, if your merchandising is consistent and gives people a good sense of your brand, merchandising can help foster brand loyalty among customers. When customers know what to expect from you and feel like they have a sense of your brand, they will be more likely to form a bond with your business and more incentivized to spend money with you as opposed to your competitors. In fact, a commonly cited customer loyalty statistic is that an average of 65% of retail revenue comes from existing, loyal customers as opposed to new ones.

Finally, if you effectively merchandise your store around holidays or seasonal changes, customers will be more inclined to visit your store for time-sensitive shopping. For example, if a clothing boutique merchandises its store for springtime, customers will be more inclined to do their spring shopping there and then return in the winter, when the space has taken on a more wintry feel.

Visual Merchandising Basics

How does merchandising work?

Marketing professionals focus on the customers needs and on visual design to create appeal and encourage a sense of urgency to acquire the companys products and services. Here are some of the main components of merchandising and how they contribute to the larger act of merchandising products and services:

Supply chains

The companys supply chain is an integral part of the merchandising process because it determines the availability of products. A company with an organized supply chain can provide products for all of its outlets, including physical and e-commerce stores, which helps establish a reputation of reliability for the brand. Reliability helps reinforce customer trust and solidifies the brands image in its industry.

Product, packaging and promotional designs

A products design, along with its packaging and promotional materials, plays an important role in the merchandising process. Designers can help make a product seem more appealing by incorporating design elements that align with customers preferences. For example, a customer who prefers an environmentally conscious lifestyle may appreciate products with minimalist, recyclable packaging.

Marketing techniques

How the brand promotes its products to the customer is the core of merchandising. Marketing techniques are the methods the brand uses to reach its target audience. These methods can include online advertising, social media campaigns, billboards and search engine optimization (SEO) strategies. The brand might adopt new strategies for different products to reach specific audiences or overcome challenges presented by unique markets.

Customer service

Customer service can play a significant role in merchandising efforts when it acts as part of the brand experience. If the company is trying to establish a reputation for good customer experiences and high-quality products, it can include better customer service in its merchandising strategy.

Creating a better customer experience can make customers more trusting and encourage their loyalty, helping them make quicker decisions in purchasing the companys products.

Brand image and identity

The brand image represents how the customer views a brand and its products or services, whereas the brand identity is how the brand itself wants customers to view it. By focusing on having a positive brand identity, the company can establish a positive brand image in the minds of its customers, making merchandising synonymous with the quality, honesty and authenticity of the brand. Ideally, customers see the companys products and subconsciously think about the brands core values.

Competitive analysis

Effective merchandising also depends on a thorough competitive analysis. The brands competitors might use different strategies to reach the same audience, sometimes with more success. An organization can study how its competitor reaches that audience and draw from those techniques to create its own, establishing a more competitive and thorough merchandising strategy that can attract customers from the competitors.

What is merchandising?

Merchandising is a term that covers all of a businesss efforts to market its products. These efforts include ad campaigns, price promotions, special events and the costs associated with such activities. Marketing professionals study merchandising to learn more about how promotional efforts affect brand image and customer interest and track how much the company spends on marketing its products and services. Merchandising strategies are specific techniques that marketing professionals use to convince customers to purchase a product. Here are some examples:

These techniques help the company appeal to customers and create a sense of urgency, encouraging them to buy something. They also help establish a positive brand image through cleanliness, positivity and meeting the customers needs with products and services.

Who uses merchandising?

Merchandising is a technique used by companies of all sizes, from small business owners to international corporations. Often, individuals and businesses within the retail industry use merchandising to enhance their brand or encourage customers to purchase their offerings.

These entities sell many types of products, from clothing to business software, and can have physical or digital storefronts. Professionals outside the retail industry also use merchandising to market their services. For example, a hair salon focuses on cutting and styling clients hair, and it can also sell hair care products or use visual advertising methods to increase profits and customer engagement.

Five effective merchandising tips

You can use the following helpful times to make your merchandising efforts more effective:

1. Engage customers senses

One of the core components of good merchandising is engaging the customers five senses: sight, smell, hearing, touch and taste. Your ability to engage these senses varies depending on the product or service your organization provides.

If customers online cant touch your products, eye-catching or appealing packaging can help engage their interest. Or you can create videos to show how a product works, helping customers better understand how it might fit into their lives.

When developing merchandising strategies for physical stores, create layouts that are friendly to the eye and focus on developing a stimulating shopping experience. You can incorporate music that evokes particular feelings and build displays that attract interest.

For example, a clothing store might use mannequins to display how the clothes fit various body types. The store might also create an atmosphere of positivity with upbeat music, bright colors and organized displays that tell a story of friendship and body positivity.

2. Pay attention to signage

In physical stores, signs can direct customers to products and promotions. Creating simple yet appealing signage can increase the effectiveness of your merchandising efforts and tell the customer everything they need to know with a glance. Simple signs might contain action words like “sale,” “buy one get one,” “1/2 off” or “limited time.” These phrases create a sense of urgency, encouraging customers to take action.

You can also incorporate visual elements, such as colors and fonts, that attract attention or align with your branding or desired mood. For example, a clothing store might have a summer sale that offers 50% off all shorts and skirts. The company displays signs with red, yellow and orange backgrounds and thick, black lettering. The color combination helps the words stand out and establishes a sense of warmth that customers can associate with the summer heat.

3. Engage customers with excellent customer service

Whether youre running an e-commerce store or a physical storefront, customer engagement via in-person or online communication forms the basis of your customer service reputation.

For example, if customers interact with your brand frequently on social media, its important to meet their inquiries with quick, helpful service. A commitment to engaging with and listening to your customers demonstrates strong customer service because it shows you value their thoughts.

When you engage with customers, you learn more about how they perceive your brand and organization. This engagement helps you understand what they expect from the brand and what they look for in products or services.

You can use these insights to enhance your merchandising efforts and ensure they align with customer needs or preferences. When possible, seek direct feedback from your customers about your brands merchandising techniques, such as its store displays or packaging design, to identify areas for improvement.

4. Establish credibility through honesty

Honesty helps strengthen companies relationships with customers because it shows they can trust the brand to create quality products and an authentic brand experience. Honesty establishes your brands credibility in the industry and also helps separate it from competitors. The trust you establish with customers can encourage loyalty and potentially lead them to refer your offerings to other people.

Try to incorporate this honesty as often as possible in your merchandising efforts. For example, a clothing brand might use sustainable materials for its clothing and focus on recycling old clothing from its customers.

It can set up an area for customers to drop off used clothing in stores and display images of the facility where they recycle these items or examples of clothing made from recycled materials at the store and on its website. This transparency establishes trust in the companys sustainability practices and encourages customers to continue supporting these efforts.

5. Create a clean, organized space

A clean, organized retail space can help improve the brands image and encourage customers to shop in the store. Cleanliness helps establish trust in the customer because it shows the brand commits time to maintain its retail spaces to create a clean, safe environment for customers to shop in. This tactic also involves rotating old displays and creating new signage or displays to attract customers attention to specific promotions or products.

For example, a clothing store might clean the store each night and wax the floors to create a clean, shiny environment that accentuates the high-end clothing the company sells. The same company might rotate displays and create new promotions weekly to keep things new and exciting for the customers.

FAQ

What does a merchandiser do?

Merchandisers are responsible for everything that happens to a product from the moment it is delivered to the store to the moment a shopper picks it up off the shelf. They monitor product appearance and supply in various stores throughout their designated geographic area.

What is an example of merchandising?

Any good for sale is merchandise, some examples include groceries in a supermarket, clothes in a retail store, electronics on a website or raw materials in a manufacturing warehouse. If someone can sell the item or purchase the item, then it’s merchandise.

What is the merchandising business?

A merchandising firm is a business that purchases finished products and resells them to consumers. Consider your local grocery store or retail clothing store. Both of these are merchandising firms.

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