Business Glossary

What is merchandising?

This article is for educational purposes and does not constitute financial, legal, or tax advice. For specific advice applicable to your business, please contact a professional.

If you’re in retail, you’ll know what a competitive business it can be. Gaining that all-important advantage over other retailers can be just what you need to appeal to the consumer and make more sales.

And when it comes to gaining a competitive edge for your retail store, the best approach isn’t to simply dump a load of merchandise in the middle of your store and hope for the best. You need quality retail merchandising to make your stock appear maximally attractive to the consumer, thereby increasing sales.

Definition of merchandising

The definition of merchandising is broad, encompassing many different elements of sales, advertising and marketing.

In short, merchandising is the retail practice of displaying your merchandise in an appealing way to encourage customers to buy more products. The theory goes: create a favorable retail environment, and increase sales.

But while the dictionary definition simply defines it as the activity of promoting the sale of goods, the term merchandising actually covers a whole gamut of things, including visual merchandising, advertising, brand awareness, in-store display, product displays, window displays, in-store layout, shopping experience and product promotion.

Merchandising strategies

When it comes to merchandise management, there’s no “one size fits all” approach. What works for your competitor could be a disaster for you – and vice versa. To some extent the merchandising techniques you employ will depend upon your goals, whether that’s increasing sales, raising brand awareness, building customer loyalty or increasing footfall. Some of the more popular strategies in retail include

  • Unique, eye-catching window and in-store displays

  • Cross-merchandising – where complementary products are displayed next to each other to increase sales of both

  • Free trials and in-store customer experiences such as tastings, giveaways, interactive displays and other promotions

  • Well planned, eye-catching, eye-level product placement

  • Keeping shelves well-stocked with effective inventory management

Benefits of merchandising

Shopping is a visual and tactile experience, so it makes sense to ensure your retail store appeals to their senses. Effective merchandising should do this, giving you an edge over your competitors. It also offers a host of other advantages:

  • Brand building – leading to increased brand recognition and greater brand loyalty

  • More engaged shoppers who spend more time in-store

  • Increased profits as a result of increased sales

  • Greater customer satisfaction

  • Faster inventory turnover – meaning a reduced chance of dead stock and better inventory management

  • Positively contributes to a wider marketing strategy to promote your store and increase product sales

Hiring a merchandiser

If you run a brick-and-mortar store, you can arrange the retail merchandising yourself. However, some retailers prefer to hire a specialist merchandiser. They will use their experience in merchandising management to build retail displays which resonate with your target customer. They’ll have previous retail experience as well as plenty of ideas on how best to showcase your merchandising inventory favorably.

They’ll know the right products in the right quantities to display to influence shoppers and increase sales. Better still, they’ll create a merchandising plan you can implement throughout your retail outlets to maintain consistency.
Hiring a merchandiser is an added expense, but one which many retailers think is well worth the money.

Merchandising FAQs

How important is visual merchandising?

Visual merchandising is a branch of merchandising in retail which involves making your store visually appealing so as to attract customers. Visual merchandisers will consider the look of the store layout, signage, lighting, product displays, shopping experience and window displays to maximize the impact on your target customer and influence them to buy.

What is considered merchandise?

Merchandise is simply any products or items a retailer sells to shoppers. In retail, product merchandising – the practice of promoting merchandise to your target audience – is essential in order to entice customers to buy and maximize sales.

What is an example of merchandising?

In retail, a common merchandising example would be creating an eye-catching display at the store entrance. If it’s a clothes store, this will likely involve mannequins. For other retailers, like bookstores or kitchenware suppliers, relevant props and products should be displayed.

Imagine the launch of a new Harry Potter novel with the books piled high and set against the backdrop of a Hogwarts castle with wands and spiderwebs scattered in between to make it really atmospheric. This will pull in the target audience (Harry Potter fans) far better than simply displaying the book series in the window.

Ultimately, smart merchandising can make a huge difference in sales volumes and attract swarms of new customers. As a result, retailers looking to grow and outcompete similar stores should aim to optimize their merchandising.

What is Visual Merchandising?
Retail Definitions, Terms & Abbreviations

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