It is no secret that today's retail landscape is more competitive than ever. In the age of digitalization and being able to buy anything with just a few clicks, customers do not have to step foot in retail locations if they do not want to. They can simply purchase products while sitting comfortably at home. So why do they still go and visit stores anyway? The truth is that they simply want to interact with the product, and that interaction has to bring value to their experience in order for them to purchase it. Though physical consumer interaction is unlikely to disappear anytime soon, the consumer’s purchasing experience is quickly evolving, and in order to remain a competitive retailer, you will need to adapt and evolve. And you better start right now. Many consumers believe they are purchasing products when they go shopping, when in fact they are often purchasing the experience of shopping. A great merchandising strategy is a valuable tool in retailer’s arsenal against competitors. It is one of the most impactful ways you have to influence a brick and mortar shopper and get them to pause and consider buying something from you. Sometimes, it is not about the items you are offering in your store – it is more about the way they are presented. On this website, you will learn everything you need to know about merchandising.
At its most basic level, merchandising is the practice and process of displaying and selling products to customers. It is basically everything you do as a retailer to sell your products once the potential customer enters your store. Merchandising is all about attention to detail when it comes to the product’s in-store placement.
The concept of merchandising is based on presenting products at the right time, at the right place, in the right quantity and of course at the right price to maximize sales. And since the sales process often starts with the eyes, merchandising typically involves display techniques, on-the-spot demonstration, pricing, shelf talkers, free samples as well as special offers and other point-of-sale methods. Besides attracting customers, good merchandising can increase your traffic, increase your sales, and last but not least – increase the brand loyalty.
The quicker you can cut down on a shopper's choices, the quicker you can make them relax and consider purchasing products from you. The less time you devote to how you arrange your store and display your products, the more overwhelmed your shoppers will feel when trying to know what to look at. And an overwhelmed shopper never becomes a customer – they just leave.
And think about it, with all these choices nowadays, what will grab the consumer's attention? You have invested the money to get that expensive high traffic location, but how will you keep the customers from walking right past your door? How will you encourage them to return? What is unique about your store? When using merchandising you can influence customers intent and reach your sales goals!
The purpose of any business is to bring in customers and make sales, because in today's competitive retail world, getting results is what counts. All the successful retailers you have read or heard about are not necessarily any more talented or intelligent than you are – they simply have learned to do things in a different way and make money in the process. If you are a retailer, there should not really be any debate about the importance of merchandising your store.
Effective merchandising has a significant positive impact on sales. Every single person who walks through your doors should spend money in your store. Easier said than done, right? Yes, you will never get hundred percent of your visitors to spend, but by providing the best in-store experience possible, you will at least maximize your chances to acquire new customers and boost sales in the process. Merchandising truly defines retail. It is what makes a retailer unique, it provides the retailer with its “identity”.
There are no doubts that the main purpose of any business is to establisih a brand that people know. These days senior marketing executives know that merchandising also has a high-value means of making an impact for attracting more customers and generating sales. But when talking about merchandising, you should keep in mind that merchandising is no longer just about ads and logos. When used successfully, merchandising can actually establish a powerful, personal and long-lasting experience between brand and consumer.
When talking about retail merchandising, we have to mention that it is something that is constantly evolving in nearly every industry. Technology and changing opinions influence how producers design the packages which secure and promote their products. Packaging is a key element in merchandising. When shoppers walk into a store to buy a product, the first point of physical interaction they have with that product is its packaging. As the single greatest media vehicle, the package has long been understood as a brand's most valuable resource. Packaging is what the consumer sees, feels and reads. While some packages only make sense for the brands that they are built around, the ideas and direction behind the packages should help to fuel innovation in going forward with your own design. From high-end electronics to packaged foods, companies are increasing their focus on incorporating more distinctive packaging that attracts a loyal customer base and adds value for the brand and customer alike. In some cases, packaging is so unique that the product is known by its package rather than its features.
Everyone is the star of their own story. That’s the reason that personalized packaging works so well. Selling your product to specific people or geographic areas makes consumers feel an instant connection to your product in the same way that people who are from the same place often feel a sense of camaraderie even if they are meeting for the first time. Have you ever experienced that? It feels good, doesn’t it?
Whether the consumer realizes it or whether the impact is simply subconscious, packaging makes a difference in determining what gets noticed on the shelf and ultimately purchased. The truth is that the package becomes an extension of the product itself.
Customers’ packaging choices are constantly evolving. Today however, creativity reigns more so than ever before. People do crave something different, either through activity, unique statements, or humor. This is where interactive packaging comes in.Interactive packaging is not only well designed in the visual realm but also serves a purpose, such as entertainment or functionality. As the name implies, interactive packaging stands out on the shelves by establishing the so-called “cool” factor by giving customers something to do or showing them an easier or funny way to use the product.
A great example of an interactive and fun package is the one Corona provides its customers with. Corona has come up with a clever board game that comes with the package. When you open up the beer box, it turns into a board game where you can you use the bottle caps as gme tokens.
Successful merchandising is the substantial growth driver of any business. There are some techniques, besides an attractive package, such as visual merchandising which can turn into an important way for you to build a strong brand and consumer association. But what is visual merchandising anyway? In the retail industry, visual merchandising refers to all techniques used to highlight the appearance and benefits of the products and services being sold. A customer forms an impression of a store very quickly, even before stepping into the store sometimes and whatever a customer “sees” in a store falls under the category of visual merchandising. This includes the store’s exterior appearance and interior as well. They should be designed such that they create a positive image of a brand or mechandise in the customer’s mind. They must be able to trigger attention, interest, desire and action on the part of the customer. It includes the presentation of merchandise as well as other important, subtle features that create the store’s overall atmosphere.
Visual merchandising is more like an art in the sense that there are implicit rules which they may be broken for striking effects. The main principle of visual merchandising is that it is intended to increase sales, which is not the case with "real" art. Visual merchandising is one of the final stages in trying to set out a store in a way that customers will find attractive and appealing, and it should follow and reflect the principles that underpin the store's image. And remember, if it does not sell, then this is not visual merchandising!
When creating that great shopping environment for your customers, you must realize that making it easy for them to shop is essential for profitable growths. If products are presented and sized well, your customers will have a great shopping experience and possibly buy more products. And that is exactly what you want!
At retail, presenting a consistent message to consumers is paramount in building brand loyalty. The strategy involves creating continuity in all retail locations. Imagine for a second that you have stores in numerous locations on a national or even on an international level – it would be wise for you to incorporate a field team to execute your visual merchandising strategy. Let’s say if a customer goes to one of your stores located in Berlin, Germany, and then visits a store in London, United Kingdom. Best-case scenario: they will have the same shopping experience in both stores. They just have to if you have done your job properly. And if your brand is perceived as a leader in the retail marketplace by consumers, sales will follow.
Have you ever heard that old adage that says: ‘‘You get one chance to make a first impression“? That is absolutely right. And do you know what is the first impression your customers have when entering a store? Well, the answer here is completely clear – they see your displays and shelves, of course. For any store striving to be the best at what they do, shelf merchandising is of utmost importance. Regardless of how much effort went into promotion or product design, the shelf is the point where the consumer meets the retailer, the brand, and the product itself. Putting each product in the right spot on a shelf, and making those shelves attractive to the buyer, is key to sales, regardless of what kind of products you might be selling. Good shelf merchandising and management make products easy to find and, as a result, increase orders per customer and keep customers coming back to your store over and over again.
The shelf may well be the most precious real estate in the consumer-retail value chain: At the shelf, consumers are primed and ready to make a decision. Now, we can argue that there is a lot to be done in advance of this to make sure you are the one consumers are picking, but all your hard work up to this point could have missed the target, as it were. Often the problem is not just that products are missing but that orientation and structure on the shelf is just not there. This leads to the inability of the shopper to identify a product on the shelf or recognize a brand.
Product availability from the point of view of the shopper is a deciding factor for more success at the point-of-sale. Effective self-management strategies can be used to communicate a consistent message to your customers, highlighting your commitment to meet their needs. It can differentiate you from your competition. All consumers want stores that are user-friendly and easy to shop in, and they want their favorite brands at a fair price.
Product placement is critical. The highest converting positionon a shelf is between the height of a customer’s head and hands. Ideally, the main products should be merchandised between 0.5 meters and 1.6 meters above the floor – unless you are targeting children, in which case the ideal height is between 0.3 and 0.9 meters. For example, have you noticed that many supermarkets are actually using this particular trick for the sweets. This is because they are trying to attract children’s attention to the sweets. This then encourages the children to “sell“ the sweets to their parents and it is totally working!
Segmenting breaks up the category to make it easier to shop by quality, color, scent, style, type, etc. For example, mothers may find it easier to shop the diaper category if it is segmented by economy, premium and super-premium. If the customer is looking for a cat food, he would probably feel more comfortable in the store if the food is categorized depending on cats‘ age or even their breed.
Another useful tool to not only attract more customers but to keep them loyal to you is the product assortment. Customers want the top items available in the market in addition to specialty or niche items that meet their needs. The goal is to have a broad assortment without too many duplicates because customers make judgments about retailers based upon assortment: for instance, too few items and they perceive the assortment to be poor, but too many items cause confusion. Keep in mind that the successful formula includes top-selling items available as well as specialty items that differentiate your store.
The science behind impulse purchases: This is how important POS displays are Did you know that most of our consumer behavior is controlled by our unconscious mind. This area of the brain is a vault for automatic skills, information processing and intuition. In some categories, around eighty percent of all purchase decisions are made at the point of sale. When it comes to advertising, you are required to spend a lot of time talking about targeted and relevant placement. However, nothing is as relevant as the point of purchase (also called point-of-sale or POS).
When walking into a retail store, you will likely notice tidy, curated product displays that visually highlight their items for sale. A customer will be attracted to a display in your store literally within three to eight seconds (that is the time a customer spends to determine interest in a product). Regardless of all the technical innovations, analog retail displays, i.e., physical display stands, continue to be an important sales promotion tool at the point-of-sale. The benefit of displays is that they stand out from a variety of similarly presented products on the shelf. And no, those products are not arranged that way by accident – visual merchandising best practices are used to help the products sell themselves.
Both science and statistics prove that peoplе divert from their curated shopping list and that they are more likely to do it more often when stepping into physical stores. It is just a matter of experimenting with the best stimuli to encourage those spontaneous purchases. It might be difficult to get time-strapped shoppers to peruse every inch of your store, but there are tactics you can employ to encourage them to make a purchase on the fly to further benefit your bottom line.
Whether it is a shelf display, counter or floor display – displays provide additional space to grab the customer’s attention with the brand name, logo, and design. This type of product presentation is meant to have a communicative effect on potential consumers. The objective is to influence customers to make impulse purchasing decisions at the POS, rather than just strictly buy only the items they have listed at home. And yes, as you may guess, the discipline requires a sense of aesthetic, but it is also a science — visual merchandising is a tried-and-true strategy with results you can replicate in your own retail store.
Every display should be planned and have a theme. Good design makes a visual presentation come together. This means the design attracts attention in a way that strengthens the store image, as well as introduces merchandise to the customer. Before designing good displays, you may answer few questions which help in making a good display:
What is the store's image?
What type of customer is being attracted?
What is the concept of the merchandise to be presented in the display?
Where is the display going to be set up and how will the location determine the design?
Why is this merchandise being put on display as opposed to other merchandises?
The principles of display used in design include: balance, proportion, rhythm, emphasis, lighting, harmony and last but not least, colors. Colors actually matter more than you may probably think. Each color helps in drawing attention, and also creates an overall impression. People respond in specific ways to different colors. For example, colors like red may catch one’s eye, but when mixed with hues of yellow-green, they trigger a feeling of happiness. To execute a display that will bring you higher profit, it is necessary to have a working knowledge of the principles of design. When applied appropriately, all parts of the display are pulled together to create a purposeful, effective and aesthetically pleasing presentation. An understanding of these principles will make it easier to design a display for all types of merchandise.
In order to give customers what they want and need you also need the right equipment in your store. No matter what style of shelves you have in your store, it is vital that they are helping to sell your product. And if you ever feel insecure about how to proceed with your in-store displays and your products, do not worry. There is an answer to each question. Nowadays, there are many good design and manufacturing companies offering merchandising equipment solutions to a wide variety of retailers, operating in many different industries. They offer consultation visits and will also find the best in-store equipment for you.
Shelves are where you only have a few seconds to capture your customer’s attention and you have to use it in a smart manner. For now, what's important is that somewhere on a shelf in your target retail channel, your product is sitting, waiting for a consumer. The question is – are you ready?
There is probably not one retailer out there who would not like to see some extra lines on the bottom of their ledger each day. It is safe to say that the process of pricing is, again, both an art and a science. It requires an experimental attitude coupled with an intuitive feel for how you want your brand and by extension your products to be perceived. Many retailers consider the optimal price setting of their products a major challenge. In doing so, they often give away valuable margin potential while striving for additional profits. There are two options here:
Imagine you price your products too low. You might get many sales but you might also find yourself going under when you tally up your expenses at the end of the month. But if you price your products too high, you might give off an aura of luxury, prestige and exclusivity, thereby attracting a more well-off clientele which is smaller in number but makes up for volume by purchasing your products at the higher price. However, what if you are in an area where the demographic is especially price-sensitive, what will you do to make profit? Ultimately, you will have to decide whether you want higher prices for your products and a lower volume sold or lower priced products and higher volumes sold in order to achieve profitability. Keep in mind though that when you have a range of products, you can sometimes risk lowering prices for one product as long as you also sell products that are marked up higher.
It is very important, before determining your price, to first consider where you sit in the market. Do some research on all the competitors in your location and decide whether you want to offer products to customers at a lower or higher price point than they do. For small retail stores, you might have trouble competing in price because it would hurt your income potential. However, setting prices lower than your competition does allow you to tap into a customer base that is looking for a good deal. Make sure if you аre choosing this pricing strategy that you can still cover your cost of goods and expenses while turning a profit; there is no use having the cheapest merchandise around if you cannnot stay in operation.
How can you identify the right price for your retail items? A mark-up price strategy is used by many small retail business owners in order for them to price their merchandise correctly. A mark-up equals to the amount of money added to the cost of your goods in order to make a profit and cover your overhead. Your overhead is basically the cost of obtaining the goods and all of the operational expenses. The mark-up usually is a percentage or flat rate added to each item. Small retail shops most typically use the fifty percent mark-up (it is also known as the Keystone strategy) for pricing their merchandise. How much you decide to mark-up your merchandise is entirely up to you. What's most important is that your mark-up always covers the cost of doing business. If you charge anything less, your business will be in the red and you definitely do not want that to happen.
The standard fifty percent mark-up is essentially doubling the cost of your goods. Here's how to calculate it and any other mark-up percentage that you choose.
[(cost of item) ÷ (100 - markup percentage)] × 100 = retail price
[(5.00) ÷ (100 - 50)] × 100 = retail price
[(5.00 ÷ 50)] × 100 = 10
Remember, the fifty percent standard is only a benchmark. You can still choose to increase or decrease your mark-up percentage based on your competitive strategy at any time.
Any change in variables including competition, the cost of goods, distribution costs or operational expenses will affect the amount of money you should charge for your merchandise. For this reason, reviewing your pricing strategy regularly and making adjustments throughout the whole year is important if you want to run a profitable business.
Promotions are also a very important factor for the success of any retail business that should not be underestimated. And now, keep in mind that this is not the twice-a-year markdown sale your store has when you place all the season's leftover items on a table and smack a "reduced" sign on the front. No, it is about a specially orchestrated promotion that can have a significant impact on product demand and sales. By planning several of these exciting events each year, you are practically giving customers a reason to return to your store on a regular basis. This is actually a way to make them loyal to you and your brand.
But how would customer know about that special promotional event going in your store? Your point-of-sale dislays will help you send a message to your customers and make sure you are doing it right. Visual features leave stronger impacts on customers‘ behaviour. Of course, in-store merchandising during a campaign or promotions period is most effective with a strategy. New planograms dictate reset layouts and may require fixture swapping, fixture relocation plus moving and replacing merchandise. All of the old stickers, labels, price signs and point-of-sale material have to be removed and everything cleaned before any products are positioned. After completing the move, employees must install new signage. This means to first determine where to place racks, cubes, platforms, mannequins, and especially your well-designed signage in order to best display your current promoted products to increase the chance for customers to buy them. The main high-traffic areas are: doorways and cash registers. Remember, if customers are unable to spot the difference in the deals quickly, you are not doing it the right way!
From reasonable prices to special promotional events – everything retailers do is aimed for their business‘ success, generally meaning generating profit from sales. Retailers prepare for months for the all-important holiday season. The holiday season can account for as much as fourty percent of an individual retailer’s total sales, usually from September through December. However, there is another side of the coin. Besides the good part with the increase of sales, the holiday returns process also accounts for fourty to sixty percent of returns for the entire year. For the return process, it is all about January, February and March. That is when the post-holiday returns hit: damaged, unwanted, spoiled, or counterfeit merchandise that pours back into retail stores.
Retail product returns (i.e., reverse logistics) are a crucial component of the overall relationship between customer and retail, and businesses often see returns as a drain on their profits. Issues include the costs for handling the returned products, shipping replacements eventually depending on the type of business) or crediting the customer, as well as paying employees needed for the job. All this can have a negative impact on the efficiency and profitability of your business. Even though you probably cannot influence hundred percent of the return cases, there is something else you can do. Instead of looking at returns as a problem, you can look at it as another opportunity to add value to your business. To do that, however, your business needs to develop efficient processes that will be able to handle returns at the logistical level as well as extract as much value as possible from the returned products.
Another important factor to consider is the relationship with the customer. An efficient and hassle-free returns process is an important factor in fostering customer loyalty, which results in repeated business and increased profits. Also, listening to your customers will help you assess the situation, pinpoint the reasons for returns, and provide you valuable information that will help you improve your products and service for the future.
Besides everything mentioned, another common practice for increasing sales among retailers is customer relationship management. But the truth is that many initiatives do not have the customer-centric focus that today’s market requires. In their rush to make the next sale, many retailers have lost touch with the very first step to success: understanding what customers really want from retailers. In these tough times, customers are more and more likely to reject bad service when a competitor can offer the same products and price without the hassle. Person-to-person and store experience are inseparable components in creating the ultimate customer experience and driving customer satisfaction.
While retailers look for a silver bullet for how to fix brick and mortar stores, it comes down to basics that anyone who is running a retail business should know that treating associates the right way and motivating them is important. The team should be trained and highly motivated, as well as committed. Have you ever felt that growing frustration when waiting in a store queue unnecessarily, facing inefficiency when shopping, or even worse – being ignored. Each interaction is an opportunity for you to serve your customers, nurture a relationship, and make a sale. The key is to test new greetings and new opening lines when welcoming customers. Find out what works for your store and constantly iterate based on sales data and customer feedback. You have to be hundred percent sure that your employees are doing their best to treat each and every customer the way he or she deserves. Remember, it is more important than ever to give the customer coming in a pleasing and satisfactory experience. Every customer has to feel like he can find the merchandise he is looking for.
Above all else, your mission at this stage of the funnel is to provide an irresistible customer experience, coupled with incredible customer service. There is almost nothing that is not worth trying. For as long as time, retailers have been experimenting with design, layout, color scheme, music, smell, signage, staff uniforms, and more — to delight customers and encourage them to take out their wallets. If customers come through your door, you are safe to assume they want a unique experience. It’s up to you to figure out how to give them exactly that. And keep in mind the fact that you will never know if something works until you try it out. So, take up the challenge and see what you can do to make your customers say, “WOW!”.
Measuring the performance of merchandise is necessary in order to gain an understanding of the products which have performed well and which have not performed as per target. Moreover, the performance can be as per plan, below the plan, or above the plan. Measuring productivity and performance calls for more than simply checking to see if the business made a profit each month and if that profit is increasing. It is more detail-oriented, because sometimes small things are what actually matter the most.
The following methods are commonly practised to analyze merchandise performance and have a clearer idea of how your business is doing:
ABC analysis
ABC analysis is a process of inventory classification in which the total inventory is classified into three categories:
Extremely important items: Very crucial inventory control on order scheduling, safety, prompt inspection, consumption pattern, stock balance, refill demands.
Moderately important items: They require average level of attention.
Less important items: inventory control is completely stress-free.
This way of segregation gives different level of importance to each item in the inventory. For example, the telescope retailing company might be having a small market share but each telescope is an expensive item in its inventory. Thus, a company can decide its investment policy in some particular items.
Sell-through analysis
In this method, the actual sales and forecast sales are compared, and the difference is analyzed to determine whether to apply markdown or to place a fresh request for additional merchandise to satisfy current demand. The method is very helpful in evaluating fashion merchandise performance.
Multi-attribute method
This method is based on the idea that customers consider a retailer or a product as a set of features and attributes. It is used to analyze various alternatives available with regard to vendors and to select the best one, i.e. the one which satisfies the store requirements.
Yes, it is imperative to know what about your product delights customers and pushes them to purchase. But, understanding why exactly they do not buy can sometimes be even more valuable. Is it because the customer connects more with a competitor next to you on the shelf? Is it because he or she does not get the answers from your packaging that are of high importance for him or her, or abandons the purchase cycle all together? If you can answer these questions, you will be better at filling the gaps in your purchase funnel. Before you make any changes to your retail merchandising strategy, look at your product, packaging and display tactics. Do they engage, entertain, educate?
One of the exciting things about retail is that it is dynamic. If you don't grow and change, customers assume you have nothing new to offer them. Retail merchandising may have a lot of components to it, but it does not have to be tricky. The more makeshift work you do now, the more work you are making for yourself later. You do not have to overhaul the entire store, but rotate merchandise, change displays, and change signage to make the customer feel that there is always something new for them to see or experience. Putting in the time now to set a solid retail merchandising foundation will lead to more customers choosing you over your competitors. Stop wasting time and make your business great again!
