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Merchandising: What It Is, Strategies

What is Merchandising?

Merchandising is the strategic presentation and promotion of goods available for purchase, catering to both wholesale and retail sales. This comprehensive approach involves crafting marketing strategies, designing displays, and implementing competitive pricing, including discount offers. For retailers, effective merchandising is vital to fostering brand identity, enhancing customer experiences, staying competitive within the industry, and ultimately, boosting sales.

Key points:

  • Merchandising entails the marketing and sales efforts of products.
  • Typically associated with retail sales, merchandising involves businesses selling products directly to consumers.
  • More specifically, merchandising may involve the marketing, promotion, and advertising of products intended for retail sale.
  • The landscape of merchandising is evolving with technological advancements, from electronic point-of-sale terminals to targeted mobile ads tailored to individual preferences.
  • Categories of merchandising span product, visual, retail, digital, and omnichannel strategies.

Understanding Merchandising

Merchandising encompasses various tasks such as determining inventory quantities, establishing price points, designing displays, crafting marketing strategies, and implementing promotional offers like discounts or coupons. Broadly speaking, it also encompasses the entirety of retail sales, from sourcing goods to delivering them to end consumers.

The cadence of merchandising activities is intricately linked to cultural and climatic factors. These cycles often align with school calendars, regional and seasonal festivities, and anticipated weather patterns.

Furthermore, the concept of merchandising can take on nuanced meanings within different facets of retail. For instance, in marketing, it can denote leveraging one product, image, or brand to promote another product, image, or brand.

Fact: The term “merchandise” originates from the Old French word “marchandise,” derived from “marchand,” signifying “merchant.”

Benefits of Merchandising

Effective merchandising plays a pivotal role for retailers, directly influencing sales and customer loyalty. Regardless of whether a retailer operates in physical spaces, online platforms, or both, the presentation of the store and its products holds paramount importance. In a brick-and-mortar store, factors like cleanliness, organisation, accessibility, and strategic usage of discounts and promotions can transform a casual browser into a repeat customer. Successful merchandising enables retailers to elevate their brand, contend with competitors within their niche, and maintain competitiveness even during economic downturns.

Types of Merchandising Companies

Merchandising efforts are split amongst two classes of sellers.

Retail

Retailers are the final link in the chain, interacting directly with consumers. They curate and stock products, manage storefronts (physical or online), and facilitate sales to individual customers. Retailers focus on understanding consumer demands, preferences, and shopping behaviour to tailor their product offerings and services accordingly. 

Wholesale

Wholesalers buy goods in bulk from manufacturers, often at discounted rates, and then sell these products in smaller quantities to retailers. Wholesalers play a crucial role in distribution, logistics, and inventory management, allowing retailers access to a wide array of products without directly engaging multiple manufacturers.

Merchandising Strategies 

A store with a lot of products for sale will use a strategy aimed at optimising the presentation, arrangement, and promotion to enhance sales and customer experience.

Window and In-Store Displays

Strategically designed displays both in storefront windows and inside the store, capture attention and entice customers. These displays showcase featured products, seasonal items, or promotions to attract passersby and draw them into the store. For example, a scale model hobby store’s display will comprise finished models of warships or aircraft presented in dioramas, along with the associated cards showing information about the item and price.

Strategic Grouping of Products

Arranging related or complementary items together encourages additional purchases. Grouping products based on themes, usage scenarios, or convenience helps guide customer navigation and facilitates upselling or cross-selling opportunities. Examples of these include a shelf of pasta sauces and noodles next to the deli section, which may already have a raft of gourmet meat and cheese items.  

Well-Stocked Shelves

Maintaining fully stocked shelves ensures that products are readily available for customers. It reduces the risk of stockouts, enhances visual appeal, and fosters a sense of abundance, encouraging purchase decisions.

Clear Signage

Effective signage communicates product information, prices, promotions, and directions within the store. Clear and concise signage aids in guiding customers, highlighting offers, and providing necessary details, improving the overall shopping experience. Impact advertising may also play a role with signs such as “30% OFF!”. 

Promotional Products

Highlighting products through promotions, discounts, or special offers attracts attention and stimulates purchasing behaviour and may even drive sales of rare items. Take the case of a Japanese grocery store in Australia, called Red Sun Down Under, that sells various types of made-in-Japan food products.

If you’re going there to buy curry roux, that store will usually have products from Japan’s most notable curry manufacturers such as House Foods and S&B. What if you came there one day and found stocks of the unique “Kaigun Curry,” a special type of curry formerly served as mess food in the Imperial Japanese Navy? The store may even carry a small batch of curry products made from recipes provided by mess officers of select warships and shore units in the Japan Maritime Self-Defence Force. 

Samples and Other Freebies

Offering product samples or freebies allows customers to experience a product firsthand, potentially leading to increased interest and eventual purchases. It creates a positive impression and encourages engagement with the product. You may have seen a small kiosk at your nearest supermarket offering samples of certain food items. 

In-Store Product Demo

Live demonstrations or interactive experiences showcase product features, benefits, and usage, engaging customers and providing firsthand insight into product functionality or quality. Take the case of a telco store’s electronic gadgets – the vendor will have samples of the machines on display, encouraging customers to give them a try before deciding to buy.  

In-Store Advertisements

Using in-store advertising mediums such as posters, digital screens, or audio announcements reinforces brand messaging, promotes ongoing offers, and informs customers about new arrivals or promotions within the store. These advertisements capture attention and reinforce brand identity.

Four Types of Retail Merchandise

There are essentially four primary types of retail merchandise, and most retailers will focus their product line in one of these categories. There are some retailers, though, who curate their stores with products from all four classes:

  • Convenience Goods They comprise everyday, low-cost items like food, toiletries, and newspapers that consumers regularly purchase without much thought.
  • Shopping Goods Often labelled the “main type” of retail merch, shopping products constitute items that consumers actively seek, research, and compare, catering to both individual customers and businesses.
  • Impulse Buys Usually positioned at the checkout aisles in supermarkets or big-box stores, impulse purchases include candy, batteries, toothbrushes, beverages, and magazines or tabloids (hence a noted movie character’s dig at “supermarket tabloids”).
  • Specialty Goods Unique, high-quality items that consumers actively seek out, often due to brand loyalty or specific preferences. 

Merchandising vs. Service Company

A merchandising company specialises in selling physical goods to consumers, involving expenses like labour and materials in the process of showcasing and selling these products.

Service companies meanwhile derive income by offering activities based on their innovation and expertise, with the adequate payment terms within. Consultancy firms, accounting firms, financial planners, and insurance providers.

Merchandising Companies in Australia

Aussie merchandisers play a vital role in ensuring that products are effectively presented and promoted to consumers. They work closely with retailers to create enticing displays, manage inventory, analyse sales data, and implement merchandising strategies. The job of a merchandiser is dynamic, requiring a keen understanding of consumer behaviour, market trends, and retail operations. The team at Randstad claims a merchandiser role in Australia will involve liaising with suppliers and distributors to guide the retailer in determining the appropriate amount of product stock to purchase and ensure it is sold within a certain period.

Australia is home to numerous merchandising companies that offer services to retailers. These companies provide a range of solutions, including visual merchandising, planogram development, inventory management, and promotional strategies. Some well-known merchandising companies in Australia include the Active Display Group and Sparfacts.

Conclusion

Merchandising is a fundamental aspect of the retail industry, impacting customer experience, sales, and brand image. It involves strategic planning, product selection, pricing, visual merchandising, and inventory management. Effective merchandising strategies can lead to increased sales, enhanced customer loyalty, and a competitive advantage in the market.

DISCLAIMER: This article is for informational purposes only and is the opinion of the author. BARTERCARD is not affiliated with any merchandising outlet and does not endorse any branded products mentioned.

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