There’s a science to successful merchandising — and the better you are at it, the more sales you‘ll make. It starts with capturing your customer’s attention, fulfilling their desires, and finally, motivating them to purchase.
Admittedly, it’s easier said than done, especially in retail and e-commerce markets, where customer demand can fluctuate rapidly.
That’s precisely why a merchandising strategy is indispensable. It serves as your guide to harmonize all elements of your business, from product placement and pricing to marketing campaigns and promotion, with what your customers want.
What is a merchandising strategy, and why is it important?
A merchandising strategy is a plan of action for physical and digital stores to showcase their products, aiming to attract buyers and enhance customer experience. Its ultimate goal is to boost sales and drive profits.
Merchandising isn’t a one-size-fits-all strategy, so you can’t simply mimic a generic plan from another retail business.
For instance, the merchandising strategy for brick-and-mortar stores might be focused on optimizing physical store layout. How should the window displays be curated? Does the lighting create an inviting ambiance? What in-store promotions will streamline shopping in-store and capture visitors’ attention?
On the flip side, the merchandising strategy for online retailers is centered on completely different elements, such as designing intuitive landing pages, presenting product images and descriptions, and streamlining the checkout process.
When executed correctly, retail merchandising strategies can help you:
- Showcase an enticing array of product options for customers to choose from.
- Strategically place your products within your customers’ reach, encouraging them to make a purchase.
- Generate a buzz that sparks interest, making people more inclined to browse and ultimately buy.
6 benefits of a well-crafted merchandising strategy
An effective merchandising strategy is a strategic investment that pays dividends in both customer satisfaction and business prosperity.
Below are some advantages of having a retail strategy for your business:
1. Attracts and engages customers
Merchandising strategies are a powerful driver for increased retail sales.
By artfully presenting items and creating visually appealing displays, they draw in potential buyers to retail locations and websites. Their goal isn’t merely to display goods but to engage customers in an enticing shopping experience, setting the stage for positive interactions.
2. Enhances customer experience
Going beyond routine transactions, a merchandising strategy transforms store visits into enjoyable shopping experiences.
Each product contributes to a curated narrative, which includes building easy-to-navigate layouts and incorporating interactive product demos. Online, it translates to intuitive website design, high-quality product images, and customer testimonials, fostering a lasting connection and brand loyalty.
3. Reinforces brand recognition
A retail merchandising strategy reinforces brand identity, conveying a commitment not just to quality products but to delivering an exceptional overall shopping experience.
What’s more, specific elements like color schemes, fixtures, shelf stocking, and packaging aligned with brand values create a memorable in-store and online experience, setting your brand apart and driving brand loyalty.
4. Ensures adaptability to dynamic market trends
Retail success hinges on understanding the target audience, their preferences, and the trends that shape their choices.
A strategic approach to merchandising allows merchants to stay agile in the face of changing market dynamics. This includes showcasing winter wear during colder months or highlighting trending products on platforms like TikTok to maintain relevance.
5. Optimizes inventory planning and management
Effective merchandising seamlessly integrates with improved inventory planning and management.
Identifying high-performing items, anticipating demand, and employing techniques such as Open-to-Buy (OTB) can help prevent stockouts of popular products and identify slow-moving ones. Even for e-commerce, real-time inventory tracking becomes crucial, informing customers when a product is available and sending businesses low-stock alerts.
This proactive approach ensures a balanced and efficient inventory, preventing missed sales opportunities and reducing excess stock.
6. Maximizes profits
Simply put, implementing strong merchandising strategies brings in additional money for the business.
When products are displayed strategically and in the right places, customers buy more, leading to increased profit. This boosts the average order value from each customer’s shopping trip.
The 6 key components of a successful retail merchandising strategy
Rather than delving into specific tactics such as cross-selling and upselling, we’ll help you create a merchandising plan tailored from the ground up. This way, you’re likely to better meet your business’s unique needs and customer expectations.
Here’s how to build an effective merchandising strategy for your business:
1. Target audience
The first step is to know who your customers are and what they want.
Analyze customer demographics, preferences, and behaviors. For instance, if your target audience is tech-savvy millennials, consider incorporating interactive retail displays or digital signage to enhance engagement. Conversely, for a more mature demographic, focus on classic and timeless presentations.
2. Product assortment development
Developing a compelling product assortment requires a balance. And to achieve this balance, you need to pay attention to the curated products you offer, taking into account:
- seasonal trends
- current demands
- valuable customer feedback
Don’t overload shelves with similar items; instead, aim for a mix that caters to various needs. For example, as a clothing retailer, you can pair trendy items with timeless classics to appeal to a broader customer base. Another good tactic is to showcase complementing items (e.g., putting smartwatches next to fitness trackers).
3. Store layout and visual merchandising
Building an inviting store layout is crucial for a seamless customer experience. Ensure that high-traffic areas feature eye-catching displays, but avoid overcrowding, as they may overwhelm and confuse shoppers.
Additionally, use visual merchandising techniques, such as color coordination and focal points, to guide customers through their shopping journey.
4. Inventory management and replenishment
Efficient inventory planning and management is the backbone of a successful retail operation.
To start, leverage dynamic inventory planning software and data analytics to identify fast-selling products, anticipate demand, and optimize stock levels. Regularly update inventory to prevent stockouts, but be cautious of excess inventory that can lead to markdowns, dead stock, and profit loss.
Consider investing in an inventory planning system that specializes in retail sales forecasting and inventory purchasing planning. This way, you’ll get reliable, data-driven insights on how to match your merchandising strategy with your inventory ordering processes, something most inventory management systems don’t provide.
Take Inventory Planner, for instance. It offers insights such as forecasted profit, past lost revenue, forecasted lost revenue due to out-of-stock items, overstocked items, and over 200+ other metrics help you optimize your inventory planning processes. Try it for free.
5. Promotional strategies and pricing
Strategic promotions can boost product sales, but you have to align them with your brand and customer expectations. This might mean bundling complementary products for a discounted price or offering limited-time promotions to create a sense of urgency.
Also, be sure to set competitive and strategic prices that appeal to your target market while maximizing profitability. Avoid misleading pricing strategies that may erode loyal customers’ trust, such as inflating original prices before applying discounts.
To learn more about pricing products, read our comprehensive guide on inventory stock and stock cost value.
6. Omnichannel merchandising
In today’s retail landscape, a cohesive shopping experience across all channels is imperative. Integrate your online stores and offline presence, ensuring a seamless and consistent customer journey, whether they’re in-store or browsing your website.
For example, if online shoppers see a product on your eCommerce store, make sure they can easily find it in-store. Avoid inconsistencies in product information between online and offline platforms, as this can lead to confusion and frustration.
Continuous merchandising strategy evaluation and improvement
The key to sustained retail success is adapting and refining your strategy based on ongoing customer feedback and evolving market trends.
You see, a static merchandising strategy risks becoming outdated, missing sales opportunities, and losing touch with the ever-changing needs of the target audience.
Agility in the face of change
Market trends are fluid, and customer preferences can shift unexpectedly. It’s why your merchandising strategy should not be rigid, but adaptive.
Regularly assess customer feedback and monitor market trends. Be ready to pivot when necessary. This agile approach will keep your strategy relevant, ensuring it resonates with your audience’s current demands.
Data-driven decision-making
Leverage data analytics to inform and refine your merchandising strategy. Track sales data, customer behavior, and market trends to identify areas of strength and opportunities for improvement. Use the collected insights to optimize product assortments, layouts, and promotional efforts.
Customer-centric evolution
Prioritizing a customer-centric approach to merchandising helps businesses align their strategies with the ever-changing expectations of their audience. So, put the customer at the center of your strategy evolution. Solicit feedback, conduct surveys, and actively listen to customer preferences to learn what works and what needs adjustment.
Takeaway thoughts
A strong merchandising strategy is more than just a part of successful retail—it’s the key driver that propels businesses towards lasting growth and customer loyalty.
When you strategically place items, create appealing displays, and understand what your customers prefer, your business goes beyond simple transactions. It enables you to create a shopping environment where customers feel valued and are eager to return.
Not only does it set your business apart, making it stand out among others, but it also leads to more satisfied and returning customers. And when you execute it well, the result is increased sales and a thriving business.
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