The Art And Science Of Retail Merchandising (Guide)

Retail merchandising is subtle. When customers walk into the store, they don't consciously think about the sensory experience. Rather, the colors, sounds, smells, temperature, and the way the merchandise feels combine to deliver an experience to the customer psyche that they may not even realize. 

Retail merchandising is an art and science. Decades of customer research, driven by the overwhelming economic importance and growth of the retail industry, arm retailers with actionable data for effective merchandise strategies and best practices.

What Is Merchandising?

Merchandising activities may include display techniques, free samples, on-the-spot demonstration, pricing, shelf talkers, special offers, and other point-of-sale methods. According to American Marketing Association, merchandising encompasses "planning involved in marketing the right merchandise or service at the right place, at the right time, in the right quantities, and at the right price."

In the broadest sense, merchandising is any practice which contributes to the sale of products to a retail consumer. This includes disciplines and discounting, physical presentation of products and displays, and the decisions about which products should be presented to which customers at what time.

Although sales and merchandising are two closely related functions, they are not the same thing. Merchandising is the process of leading a customer to a sale, while the term “sales” refers to a consumer actually selecting a product and completing a purchase transaction. 
For example, a prominently displayed banner leading to a special gift guide can inspire and entice a consumer to add a product to their shopping basket (that’s merchandising) and when the customer completes checkout, it’s classified as sales. 

Merchandising can take on different and more specific definitions in regard to different aspects of retail sales. For example, in marketing, merchandising can refer to the use of one product, image or brand to sell another product, image or brand. In the United States, the routine retail cycle starts in the beginning of January. During this time, merchandising includes the promotion of Valentine's Day and St. Patrick's Day products and related items or services. Shortly following , Presidents' Day is represented through special sales and discounts.

The next major holiday in the United States is Easter. During this time, not only the holiday is promoted, but springtime and associated warmer weather is accounted for. Most promoted products at that time of year include clothing items appropriate for warmer weather in addition to tools and other items suited for outdoor activities, such as gardening and picnics. These items are typically made available mid-winter and heavily marketed and promoted to move such items from shelves to make room for the next batch of products.

The cycle continues through the rest of the year in the same manner, accounting for Mother's Day, Memorial Day, graduation season, Father's Day, the Fourth of July, Labor Day, Halloween, Thanksgiving and Christmas.


Merchandising typically varies within retail chains, but will varying greatly depending upon the region of the country. While many retailers may carry the same merchandise, it is the merchandising strategies that distinguish retail competitors. How branding, packaging, and visual display is or isn't used in a retailer's merchandising strategies has a direct impact on foot traffic, sales, customer loyalty, and general popularity.

Merchandising can make a retail store a place where shoppers want to be - or not. It's not just about what products a retail store makes available to its customers, it's also how those products are merchandised that determines how successfully a retailer is able to sell the merchandise. By using merchandising best practices, a retailer can motivate customers to want to spend money.

With a sufficient variety of merchandise, retailers can engage shoppers in an "either-or" buying decision rather than a "yes-or-no" decision. For instance, if Best Buy carried only one brand and one model of a laptop computer, the consumer would have only a "yes-or-no" decision. 

 Yes, I want this computer or no, I don't want this computer. But since Best Buy carries computers from Dell, Samsung, Apple, etc., consumers are immediately engaged in making a decision about which computer is best, bypassing the "yes-or-no" debate altogether.

Apple Stores, on the other hand, carry only one brand of computer, which is Apple, of course. But the variety they provide comes from many different shapes, sizes, and capabilities of a wide variety of Apple computer models. No matter what the merchandising mix, retailers that provide variety to their shoppers are using a merchandising best practice to motivate customers to make a purchase before leaving.

Using merchandising fixtures and strategies that are flexible is important in order to rotate inventory and keep a retail store looking fresh and new. Rotating merchandise around the store gives shoppers the feeling that there is always something new to discover. Showcasing new arrivals in the front of the store lures shoppers in the door. 

Displaying clearance merchandise in the back of the store directs foot traffic past merchandise displays they might otherwise miss.
Using merchandising flexibility best practices, retailers can focus the attention of shoppers on seasonal merchandise, holiday-specific merchandise, and special promotional deals. 

The better a retailer is at capturing the attention of shoppers and focusing them on the newest merchandise, the most popular merchandise, and the best limited-time deals, the faster they will be able to make sales and move inventory out the front door. Similarly, attractive packaging and popular branding can enhance the visual appeal of both specific merchandise and the look of a retail store overall. 

Grocery stores use packaging to preserve the quality and safety of fresh foods. Department stores like Macy's and Nordstrom group branded merchandise together into their own mini-departments. Barnes & Noble Bookstores dedicate a portion of their stores to coffee shop brands like Starbucks.


Benefits Of Merchandising

It is important to note that, merchandising goes beyond just moving inventory around, space planning and product staging. Effective merchandising yields:
  • Higher sales
  • Faster inventory turnover
  • Buyers who spend more time in the store
  • More satisfied customers
  • Increased customer loyalty

In a retail setting, some of the most popular methods to compel shoppers to buy include:

Interactive displays that use scent, sound, and motion technology.
Well planned, eye-level product placement.

In an eCommerce setting, the most effective ways to entice people to make purchase Include:
  • Live chat support to aid customer purchase decisions
  • Placing the search bar in a prominent position on the site
  • Offering free shipping
  • Status bar to show progress during checkout
  • Season-specific and holiday-based collections, curated landing pages and special offers

Product descriptions that use images, copy, attributes, videos and other digital data.

  • Product recommendations
  • Advertising banners
  • Ratings and reviews
  • Cross-selling, upselling and bundling
  • Effective product categorization

Ribbon overlays that visually accentuate something special about a product (bestseller, free shipping, sale, newly added, etc.). 
Since merchandising is all about selling, the ultimate benefit of effective merchandising is higher sales and better profit. Stores that manage to create a seamless shopping experience and effectively guide consumers to purchase completion, enjoy an array of benefits including:
  • Higher profits
  • More satisfied shoppers
  • More engaged buyers (longer on-site time)
  • Increased brand loyalty
  • Increased brand recognition

The way that merchandise is displayed should provide customers with easy access, which makes it easy for them to choose just the right merchandise that's right for them. If merchandising displays make products difficult to reach, difficult to find, or difficult to sort through, customers might get frustrated and leave without making a purchase. 

Merchandising best practices should always make it easy for customers to make a purchase. Coffee shops like Starbucks for example merchandise coffee bean grinders and insulated travel mugs next to the coffee beans. Discount department stores like Kohl's merchandise oven mitts next to the cookie sheets. 

By grouping related products together, retailers remind consumers about to purchase products they might need A or B as well. Special discounts, seasonal clearances, and limited-time marketing campaigns are all supported by merchandising best practices. By showcasing and featuring merchandise with special sales prices, customers are motivated to make purchases for no other reason than to get a good deal.

The goal of retail merchandising activity is to support a retail strategy that generates revenue for the retailer and value for the customer. The selection of retail merchandise and the type of goods and services a retailer decides to stock are key retail strategies. According to author Michael Levy in Retailing Management, the decision to carry particular merchandise is tactical rather than strategic. 

Merchandise management, along with store management principles, is the "tactical decisions" that help implement retail strategy. The packaging of the merchandise goes a long way in improving the brand value of the product. A product kept in a nice box would definitely catch the attention of the customers.

Since the sales process often starts with the eyes, merchandising typically involves presenting products in a visually favorable light, to try and encourage purchases.


Popular Ways To Entice Buyers To Buy
  • Window and in-store displays
  • Grouping related products together
  • Shelf signage
  • In-store ads featuring the merchandise
  • Samples and giveaways
  • In-store demonstrations
  • Well-stocked shelves
  • Spotlighting promotional items

Making sure your products look appealing is key to effective merchandising, but how does the rest of the space look?
  • Clean floors and aisles
  • Dust-free shelves and products
  • Products that are neatly stacked or hung
  • A sense of organization, rather than overwhelming chaos
  • Vignettes of related products set up together to suggest how they might be used
  • Enough elbow room to move about comfortably

It is the key responsibility of the merchandiser to create an attractive display to pull customers into the store. Once the customer steps into the store, he/she would definitely buy something.


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