Imagine you’re walking through the grand entrance of a high-end department store, the fine fragrances ushering you in. Modern mannequins are adorned with the latest fashion stylings, while coordinating accessories and footwear are conveniently nearby to create the complete look. These are classic examples of a merchandising strategy at work.
Merchandising strategy goes beyond aesthetic appeal and extends into strategic product placement that taps into consumer psychology. Here’s what you need to know to make smart merchandising decisions that pique customer interest, satisfy their needs, and, ultimately, drive them to make a purchase.
What is a merchandising strategy?
A merchandising strategy is a comprehensive plan that outlines how a business will present its products to consumers to enhance customer experience and maximize sales. In today’s omnichannel retail environment, the approach may vary between physical and digital stores.
In a brick-and-mortar store that sells tangible goods, a merchandising strategy centers around the store layout, including product placement, window displays, signage, lighting, optimal shelf stocking and facing, and in-store promotions.
For online retailers, ecommerce merchandising involves intuitive website design, enticing landing pages, clear product grouping on category pages, product images, compelling product descriptions, personalized recommendations, user-generated content, and a seamless checkout process facilitated by a point-of-sale (POS) system.
5 benefits of a merchandising strategy
- Increase retail sales
- Boost brand recognition
- Enhance the customer experience
- Improve inventory management
- Drive customer retention and brand loyalty
A well-formulated merchandising strategy serves as a blueprint for the shopping experience, guiding customers through your retail offerings. Let’s explore five core benefits of implementing a retail merchandising strategy—both for retail stores and online stores.
1. Increase retail sales
An effective merchandising strategy can influence customer behavior and have a significant impact on the bottom line of your business—encouraging customers to make a purchase and increasing your profit margins, sales volume, and customer retention rate. By arranging products in a visually appealing and intuitive way, your business can spark customer interest and make it easier for customers to find and purchase items. Additionally, regularly rotating in-store displays and updating your digital storefront keeps your offering fresh, encouraging customers to return frequently and discover new products.
2. Boost brand recognition
Merchandising offers an opportunity to visually showcase your brand identity. This includes the use of specific color schemes, fixtures, signage, and packaging that align with your brand’s values and image. A cohesive retail merchandising strategy that aligns with your brand ethos can create a more memorable in-store and online shopping experience, distinguishing you from your competitors.
3. Enhance the customer experience
The way you present your products can enhance the customer experience by fostering seamless interaction with products. In-store, this might mean easy-to-navigate store layouts and interactive product demonstrations. Online, this could be an intuitive website design, high-quality product images, and authentic customer testimonials. A well-executed merchandising strategy minimizes customer effort while maximizing engagement.
4. Improve inventory management
Effective merchandising can lead to better inventory management, allowing retailers to spot slow-moving items and prevent stockouts of popular products. For instance, using ABC analysis to categorize your inventory—and prioritizing the placement of your bestselling products or highest-rated products—is a common merchandising technique. For ecommerce, an effective merchandising strategy often incorporates real-time inventory tracking, displaying product availability to customers and alerting you when stock is running low.
5. Drive customer retention and brand loyalty
A well-executed merchandising strategy that understands the needs of the shopper can enhance customer satisfaction and encourage repeat visits, fostering customer loyalty (and, in turn, increasing sales). From in-store displays that showcase popular items to exclusive online discounts for loyal customers, tailored experiences make customers feel valued and understood. Ultimately, this leads to an emotional connection with your brand that encourages repeat business.
5 types of merchandising strategies
Merchandising strategies help retailers boost sales and enhance the customer experience. Consider contracting a consultant to provide pointers to help you create a tailored merchandising strategy for your business. Five merchandising strategies that can increase sales at your retail business are:
1. Upselling
Upselling is a sales technique where you encourage customers to purchase a higher-end product, upgrade, or add-on to boost sales. The objective is not just to increase the sales value, but to genuinely enhance the value the customer receives. For instance, if a customer is considering a basic model of a digital camera, a sales associate can explain the benefits of a higher-end model with more features.
2. Cross-selling
Cross-selling promotes related or complementary products to customers. This increases the total purchase value by encouraging customers to buy more than they originally intended. For example, if a customer is buying a suit, that suit might be styled on mannequins or in digital photography alongside a tie, a shirt, or cufflinks that complete the look. This strategy works at both brick-and-mortar stores and ecommerce stores to move more inventory, increase sales, and give customers a feeling of added value.
3. Seasonal merchandising
Seasonal merchandising revolves around adjusting retail displays and promotions to align with seasons, holidays, and events. It capitalizes on customers’ changing needs and preferences throughout the year. For example, in warm-weather months, a clothing store might prominently feature patio furniture, pool toys, or other relevant seasonal inventory. Similarly, during the winter holidays, retailers often create festive displays that inspire gift purchases.
4. Themed product bundles
Themed product bundles are groupings of related products that are sold together at a discounted price to encourage customers to buy more items. The theme could be based on the product type (such as a moisturizing skin care set), an occasion (a back-to-school bundle), or even customer preferences (a vegetarian food crate).
5. Limited-time offers
Limited-time offers are promotional discounts or special deals available for a predefined duration, designed to encourage immediate shopping decisions. For example, a retailer might offer a “deal of the day” promotion, creating anticipation and a sense of urgency that motivates customers to make a purchase today or watch out for an upcoming sale tomorrow.
4 tips for merchandising
- Research merchandising trends
- Conduct ongoing customer research
- Keep track of inventory
- Optimize your website for mobile
A robust retail merchandising strategy can help increase sales, improve customer experience, and differentiate your brand in a competitive marketplace. These are four ways retailers can optimize their merchandising strategies to meet their business goals:
1. Research merchandising trends
Stay informed about the latest merchandising trends, from sustainable signage to augmented reality—interactive experiences blending real and digital worlds. Trending visual merchandising tips can help you create a store environment that aligns with your business strategy and resonates with your customers. Subscribe to industry newsletters, attend trade shows, follow merchandising companies online, and regularly read popular retail news blogs to keep your finger on the pulse of retail merchandising best practices.
2. Conduct ongoing customer research
Regularly gather feedback from your customers through surveys, user feedback forms, or even informal conversations. You can also observe customer behavior in your store. What areas of the store do they spend most time in? What items do they often purchase together? This shopper research is key to your merchandising efforts, providing invaluable insights into shopping behaviors and enabling you to tailor your retail management strategy to improve customer experience.
3. Keep track of inventory
Keep a close eye on what products are selling well and which items are lingering on your shelves to make better-informed decisions about product placement, promotions, and markdowns. A product that isn’t selling well isn’t necessarily an undesirable product—it may just need better visibility or a more compelling display.
4. Optimize your website for mobile
A customer may use their mobile device to research a particular product, compare prices, or look up store information while shopping in-store. A mobile-friendly website that integrates your ecommerce platform and POS system can be a valuable extension of your physical store.
Merchandising strategies FAQ
What business metrics are tied to a merchandising strategy?
Implementing an effective merchandising strategy will ultimately lead to higher revenue, which affects numerous business metrics. Two business metrics that are closely tied to your merchandising strategy are average order value and customer lifetime value.
What is the most effective ecommerce merchandising strategy?
Personalization is an effective ecommerce merchandising strategy, using data collection to understand customer data, preferences, and shopping behavior in order to personalize product recommendations, emails, and the entire browsing experience.
What is the most effective brick-and-mortar merchandising strategy?
Product placement is one of the most effective merchandising strategies in physical retail. It involves carefully planning where products are positioned in your store to maximize visibility and appeal.
Can I tie my merchandising and marketing strategies together?
Yes, it’s best to align your merchandising and marketing strategies to ensure that the products you promote across your marketing channels are also displayed strategically in your physical or ecommerce store to provide a cohesive customer experience.
Are all merchandising strategies ethical?
Manipulative pricing strategies, misleading packaging, and aggressive upselling techniques are considered unethical and can take advantage of consumers as well as damage a retailer’s reputation.
