Merchandising definition
Merchandising, a key factor of marketing
Merchandising is essentially done to make your customer purchase more.
The 5 key elements of merchandising are:
- windows ;
- global store layout ;
- product ranges and inventory ;
- emotional feeling (music, scent, lighting…) ;
- advertising and signage.
A good merchandising can, for example, help you avoid «cold areas» on your floorplan. These areas are the places in your store that are less visited in the customer journey and thus have to be promoted with merchandising techniques.
Among the different parts of your store, windows are an essential component as, obviously, it is the first impression the customer get, even before entering your store. A nice and inviting window will surely attract more customers than an old dusty one and an attracting display of special products at the entrance gate should help you to sell products your customer didn’t think of primarily. When working on your window display merchandising you will have to put a strong focus on the products you want to promote, the way they are displayed, and the lighting. Make sure it is inviting, clean, with products visible from all angles, from the sidewalk and from people driving in front of your store (when possible). As the first visible element, your storefront display is the first thing to improve for retailers. It is an essential element of visual merchandising.
Creating a good store layout
A strategic component in a point of sale is the way you design and implement your store layout. Your store design must optimize the way your customers interact with your products inside your store. Make sure your customer flow is well conceived and that people can easily access your products. A good design will ensure you have no or little «cold areas» in your shop and that your customers are able to follow the customer path you have designed to show all your products (IKEA is a good example).
Of course, depending on the business you are in, the logic behind your store layout might be different. For example, a supermarket will address the customer path in a more logical way with departments organized in food/non-food, fresh etc. department then shelves, visually organized to show the products accordingly (kids products at the bottom of the shelves, best-selling in the middle and higher prices on the top) when a fashion store will have a more emotional layout with products gathered by collections, colors, ages then sizes etc.
In brief, your merchandising and store layout must be conceived to create value, optimize your space, influence and impact the purchase behavior of customers to maximize sales.
A good merchandizing is also about advertising
A successful merchandising also consists in an excellent interior advertising and signage. Whether printed or digitized on screens, all advertising media used in a point of sale to draw customers in and encourage them to buy a product must be carefully done.
Advertising media can be folding cartons, displays and corrugated boards, printed brochures or digital displays but also sales operations and special prices signage. In order to maximize your sales, all advertising materials must be up-to-date and consistent with the store branding (no hand-written or back-office printed papers…), the period, and even the weather.
It sounds obvious than no-one would want to buy rain coats during summer or that you would better display backpacks and pencils in the back-to-school period.
Merchandising management
Visual merchandising is definitely the visible part of the iceberg but as a whole, merchandising management and making sure you get all the analytics to optimize your inventory and promote the right products is another crucial part.
Merchandising management is all about the return on investment of the space allocation within your stores, throughout the shelves and the $/efficiency ratio.
It thus includes your product inventory management and shelves replenishment, not only because you don’t want to miss sales due to understock but also because you want to maximize the “abundance effect” of your store display.
Merchandising is not an exact science
Promoting stores and products with merchandising techniques is a pre-requisite to optimize your impact on visiting customers. However, as every experience related to creation and emotion, it is not an exact science. Merchandising is a necessary (but not sufficient) condition for brick-and-mortar commerce companies, and must answer 3 different needs from:
- consumers ;
- suppliers ;
- distributors.
When customers enter a physical store they expect a large choice of products, a large inventory, an immediate availability as well as the best prices and a clear and precise communication. Besides, suppliers want to sell volumes and, sometime, difficult-to-sell products. In the end, the retailer is in charge of turning these different expectations into an optimal instore value proposition.
Merchandising, although effective and efficient as shown by a large number of studies, is not an absolute guarantee as other factors may be taken into account like competition, store location, prices…
In the end, merchandising techniques are not an exact science but the result of years of experience on the field, strong customer behavior analysis and a large part of creative thinking and intuition.
