What is merchandising?

Merchandising in the broadest sense refers to the management and promotion of products within a retail environment.

The term is commonly used to describe the practice of creating enticing store displays to maximize profit. To be more specific, this is called visual merchandising.

Behind the scenes of a retail store, merchandising can also refer to the planning of a product’s lifecycle. This includes forecasting sales and monitoring stock levels.

Merchandising – both visual and planning – is used in eCommerce businesses as well as in brick-and-mortar stores.

Overall, merchandising is about:

• Presenting products to consumers at the right time
• Positioning these products in the right place
• Selecting the right quantity of product
• Selling them at the right price

Merchandising strategies

Strategies in merchandising should be adapted to suit whatever objective a retailer is trying to achieve.

That could be to drive footfall by attracting new customers into the store. Or, it might be to sell through a particular product line or even to boost sales of a complementary product.

Product development teams work closely with all types of merchandisers to ensure products are correctly and effectively communicated to customers.

Merchandising strategies include:

• Categorizing similar products together. Seeing a clear range can persuade a customer to make add-on purchases.
• Highlighting seasonal products. Items that have been ranged specifically for a holiday should be placed front and center to optimize their short selling window.
• Making it interactive. Encouraging customers to engage with products or store staff is a great way to build a connection.
• Selling key lines at eye level. This is common in grocery stores, where customers are drawn to look at brand names over cheaper alternatives.
• Keeping shelves or inventories well-stocked. Customers won’t often be prepared to wait.

What does a merchandiser do?

Ultimately, a merchandiser’s role is to boost sales for a retail business. The role varies depending on which business area the merchandiser is focused on. 

Visual

With a focus on promoting products on the shop floor, visual merchandisers are expected to:

• Manage and frequently reorientate the store layout
• Create effective signage to help customers see products available to buy
• Design visually striking displays, particularly around the holidays and new launches
• Understand market trends and customer habits
• Analyze sales figures and performance for each individual store

Planning

The future-tellers of retail businesses, the merchandising roles behind the scenes involve:

• Forecasting profits and sales for each product and category
• Controlling inventory levels
• Working closely with visual merchandisers to produce effective displays
• Managing a commercial pricing strategy
• Setting up promotions and culling weak performing products

Digital

Tailored more specifically to eCommerce retail environments, these merchandisers are also tasked with:

• Analyzing site performance and making the customer journey more effective
• Establishing email marketing strategies based on user habits
• Personalizing the shopping experience for customers
• Testing out tweaks to the site, like new layouts, button placements, or thumbnail imagery

What is the difference between sales and merchandising?

Sales and merchandising are closely related, but they’re not the same. Instead, one leads to the other.

Where merchandising is used to draw the customer in, ‘sales’ refers to closing the deal: this is where the customer picks a product, and purchases it.

For instance, merchandising could be used to categorize festive decorations and to display them beautifully as soon as the customer enters the store. When the customer finds and pays for decorations, and checks out, that’s sales.

Types of merchandising

Retailers will use different types of merchandising depending on their type, size, and needs.

Here are some examples of the terms businesses use, and how they differ.

Visual merchandising

This role is dedicated to making sure products look good and make sense.

Visual merchandising is used in both eCommerce and physical stores. In a store, visual merchandisers have a huge influence on the overall design of the shop floor.

They will use elements like lighting, the shop windows, and sale fixtures to their advantage. Online, elements like impactful photography and vibrant color palettes help items look cleverly merchandised.

While this is a really creative role, visual merchandisers will use thorough analysis to understand customer shopping preferences.

Merchandise planning

Often referred to as just ‘merchandising’ or ‘planning,’ merchandise planning is used to forecast which items to buy or display for sale, and to identify poor performers.

Merchandise planning is all about getting products in at the right time, to the right place, in the right quantities, and at the right price.

Depending on the size of a business, the person in charge of developing products might also take on the responsibilities of the merchandise planner.

Digital merchandising

This term is gaining more significance as more businesses take their retail offers online.

While a digital merchandising role shares a lot of the same responsibilities as visual and planning roles, it has some added marketing and advertising elements.

Digital merchandising includes activities like email marketing, social media advertising, and website promotions.

The role of a digital merchandiser includes analyzing the website by using tools such as heat maps to customer journey trackers.

Omnichannel merchandising

Where a business uses multiple selling platforms, omnichannel merchandising is used to ensure that a unified approach is maintained.

If a retailer has an online store and a physical store, omnichannel merchandising will ensure the transition between both environments feels seamless to a customer.

This is not to be confused with multichannel merchandising, where the company is at the center of a strategy to communicate messages outwards to several channels.

Omnichannel puts customers at the core.

Cross merchandising

This is one of many marketing tactics used to encourage customers to buy more.

With cross-merchandising, products from different categories are placed together in the same place.

The aim is to inform the customer of the benefits of a new product, save them time, and to help them see how it complements the product they are interested in.

As a strong convenience strategy, this can be used to capitalize on unexpected opportunities.

A great historic example is the placement of beer alongside diapers in UK-based store Tesco. Realizing that men were buying diapers more often than anticipated, they implemented cross-merchandising to take advantage of this.