Merchandising: Meaning, Elements, Benefits and Types

What is Merchandising?

Merchandising in its most basic sense, means the promotion of specific products or categories of products. Depending on the goals, merchandising offers recommendations to the users, highlights the best products, and follows trends. Merchandising refers to how shops and businesses organize their products. It increases sales by making a store appealing to the customers, improves profitability by generating a higher margin price, and controls costs by improving the productivity of the sales floor and each employee.

Geeky Takeaways:

• Merchandising is important for retailers looking to promote and expand their brand, improve the experience of customers, and ultimately increase sales.
• It may refer to the marketing, promotion, and advertising of products intended for retail sale.
• Merchandisers employ several different strategies to attract buyers to make purchases.
• Various kinds of merchandising include product, visual, retail, digital, and omnichannel merchandising.
• Effective merchandising helps a retailer in many ways such as maintaining its brand, in competing with other businesses established in the same category.

History of Merchandising

1. Origin of Merchandising: The concept of merchandising started in the late 19th century by Jasper Freemont Meek. He is known as the founding father of merchandising who created the first branded tote bag for a shoe shop. This started when he owned a newspaper in Ohio, and later in 1881, he had a pioneering idea to start creating printed burlap bags to give to the children to keep their school equipment safe.

2. Mid-20th Century: In the 1960s branded merchandise history was about to be made. It was an era to create band merchandise. The concept of take-home concert goods was created when musicians and bands started traveling across the globe on world tours.

3. Late 20th Century: From the 1990s into the 2000s, businesses and brands got more creative with their work uniforms. Merchandise history shows us that there was more experimentation with workplace uniforms during this time. With work uniforms, branded apparel and drinkware from television shows came to light and became the next best-brand merchandise. The product trade has come a long way since the introduction of tote bags resulting in the growth of promotional products since the end of the 20th century.

How Merchandising Works?

• Merchandising plays a crucial role in the overall success of the business. There are two simple factors for effective and successful merchandising which are visibility and appeal. The more visible a product is, the more likely it is to be seen and bought, and the more appealing a product is, the more likely it is to be purchased.
• Merchandisers conduct market research to understand the tastes of the consumers, market trends, and competitive landscapes. Analyzing this data helps to identify consumer behavior and guides the merchandisers to make appropriate decisions.
• Generally, brands create visually appealing displays to showcase products in-store or online. They utilize elements of merchandising such as lighting, signage, layouts, and other elements to gain attention and enhance the overall shopping experience.
• However, effective merchandising also demands discipline and proper planning. It needs attention daily. The marketing team mainly focuses on the customers’ needs and creates a sense of urgency to acquire the company’s products and services.
• To reach the target audience firms use various channels of communication including social media, e-mail, advertising, etc. They also collaborate with marketing teams to conduct promotional events and campaigns.
• It is all about having the product in front of the customer that they want to purchase.

Elements of Merchandising

There is more to merchandising than just displaying the products attractively. Various factors altogether make merchandising effective and contribute to the ultimate growth of the organization. Various elements involved in good merchandising are discussed below.

1. Store Layout: A well-merchandised store is also a well-organized store. Customers like organized stores because they can find merchandise very quickly and easily. A proper store layout leaves a great impression in customer’s minds. There are many layouts that a store can apply to it such as grid layout, racetrack layout, cube displays, project centers, etc.

2. Store Design and Presentation: In addition to the layout of the store, the store’s interior design and presentation also play a crucial role in good merchandising. Store design and presentation involves creating exclusive departments for similar products and their arrangement in an attractive way. Further, it includes interior signing. Interior signing is an important part of merchandising because it makes shopping easier for customers and gives them the information to make buying decisions.

3. Product Selection: It is known as “cross-merchandising” which means choosing the right complementary products. It is a strategy to display the right set of products at the right place and time. This encourages the customer to buy more products.

4. Use of Colours and Lighting: Colour is an important part of creating an attractive and effective display. It makes the appearance of the product more captivating and positively changes the environment. Bright and well-lit stores are more appealing than dim ones.

5. Pricing: Pricing plays a huge role in convincing a customer to purchase. Many stores introduce various discounts to attract customers, such as stagnant discounts, seasonal discounts, volume discounts, etc. which encourage customers to buy more products in a shorter period when they are sold at lower prices or with different offers.

6. Interactive Technology: Using interactive technology helps to draw the attention of the customers and increase curiosity among them. Apart from gaining attention, technology such as kiosks and touch screen computers are used to provide information regarding the product such as its availability at the store, pricing, and other details, and help the customers to place their orders on their own.

Merchandising Strategies

To promote a product or a brand and make the merchandising process effective, it is necessary to have a proper strategy. Some merchandising strategies that help in brand promotion and attract customers are :

1. Window and in-store Display: A window display is a creative arrangement of products in a store’s front window, designed to captivate passersby and tempt them to enter the store. In contrast, in-store display means showcasing the products inside a store and communicating with the customers directly when they are in a store and encouraging them to purchase the product by specifying its features.

2. Samples and Giveaways: This is when the seller or the store owner offers free samples of a product to customers to use it and check the quality and usefulness of the product. Sometimes free products are attached to another product. Due to this, people feel valued and happy, which eventually increases the repeat rate of customers.

3. Ads Featuring: Advertisement is one of the best ways to promote a product or brand. It involves ads featuring on various online platforms, billboards, and in other forms as well. It targets a huge population for promotion.

4. Grouping Products: Cross merchandising which also means grouping related products. It is a merchandising strategy that involves displaying complementary products next to each other. It is also known as secondary product placement. It makes shopping easier for customers as it helps remind them of other products that they might need.

5. Spotlighting: Lighting influences the moods of customers and is attractive as well. A bright and alluring spotlight can make promotional items pop and demand attention, creating a buzz around the products.

Benefits of Merchandising

1. Increase Productivity: Good merchandising increases the productivity of both the sales floor and employees. Productivity improves when retailers can increase sales using their space which is designated for the sale of merchandise. Employees increase their productivity when the time of employees is used in a better way rather than spending most of their time guiding the customers toward the product they are looking for. That is when various elements of merchandise come into action.

2. Increased Sales: The primary motive of merchandising is to attract more and more customers. Effective merchandising leads to a positive effect on retail sales. Clear pricing, well-stocked shelves, simple displays, and prominent sale signs can help drive profits while improving the shopping experience of customers.

3. Profitability: Merchandising also allows retailers to make strategic pricing decisions. It can increase the sales per customer if it’s arranged to promote add-on sales. With the increase in sales, the profit margin will increase simultaneously.

4. Ease to Customer: Good merchandising makes shopping easier for customers and gives them reasons to come back often and spend more money. It can also create customer loyalty and might show growth in the repeat rate of customers. The key element is to make customers satisfied with the services. An increase in customer satisfaction can also lead to ‘word of mouth promotion’ of brands and stores.

5. Getting the most value out of products: Clever visual merchandising could help one market products that are hard to sell without having to reduce their price. Sellers put high-margin products in a place that is more visible to encourage sales and increase profitability.

Types of Merchandisers

1. Fashion Merchandiser: Fashion merchandising means doing all the activities required for fashion forecasting. After forecasting, they develop and design according to the demand of the future. Fashion is set according to the demands of consumers and the primary objective of merchandising is to create a stock of products that consumers are likely to accept. The roles of fashion merchandisers include forecasting, design, and sample development.

2. Export Merchandiser: Export merchandising means selling retail goods in a foreign consumer market. Export merchandisers do all activities right from order receiving to shipment. These are directly related to retail merchandising. The merchandiser must ensure timely line development to market needs and the company’s capacities and capabilities.

3. Retail Merchandiser: Retail merchandising means arranging all the required raw materials and making the goods ready to sell to end users. They ensure that products appear in the right store or website, at the right time, and in the right quantities. This includes the sale of goods at the retail in-store level. Retail merchandisers are crucial in working very closely with company buyers. They ensure maximizing profitability through controlling and managing the stock levels. Responsibilities of retail merchandisers include giving good service to customers, giving information, creating demand, managing risk, etc.

4. Wholesale Merchandiser: Wholesalers are the intermediaries between producers and retailers. While the retail merchandiser directly connects with customers, wholesale merchandise provides goods to retailers for further distribution. They directly connect to producers or manufacturers of products and retail shops.

5. General Merchandiser: General merchandisers determine the best products to stock by analyzing market trends, consumer demand, and sales data. They work with both the suppliers and manufacturers. A general merchandiser works for both retail stores and chain stores. The responsibilities of a general merchandiser include monitoring sales, analyzing trends, and making products available at retail stores.

Difference Between Merchandising Company and Service Company

Basis	Merchandising Company	Service company
Main Product	A merchandising company buys tangible goods from suppliers and then resells them to the ultimate consumer.	Service companies are not engaged with tangible goods to produce income; rather, they provide services to customers and charge fees for the services rendered.
Cost	These businesses incur production costs, such as purchasing new materials and labor for producing goods.	For service business expenses are mainly overhead focused and labor is the main and largest expenditure.
Types	Merchandising companies are broadly classified into retail and wholesale companies. Retail companies sell products directly to consumers, and wholesale companies sell products directly to retailers or other wholesalers.	Service companies are those whose main agenda is to provide services. These may include consultants, accountants, financial planners, and insurance providers.
Income statements	Merchandising statements are more complicated as they hold an account for product inventory.	An income statement for a service company does not include the cost of goods sold.

Frequently Asked Questions (FAQs)

What is Merchandising?

Merchandising refers to the activities and strategies employed to promote and sell products. It involves planning, buying, displaying, and selling products to maximize sales and profits.

How does Merchandising differ from Marketing?

Marketing focuses on promoting products and creating awareness, while merchandising involves the actual process of selecting, buying, and selling products. Merchandising is a part of marketing that deals specifically with the placement of products and sales strategies.

What is the role of a Merchandiser?

A merchandiser is responsible for selecting and buying products, negotiating with suppliers, managing inventory levels, and creating displays to attract customers. Their goal is to optimize sales and meet customer demand.

What are the different types of Merchandising?

Merchandising is divided into 5 categories, which are as follows:

• Product Merchandising
• Retail Merchandising
• Visual Merchandising
• Digital Merchandising
• Omnichannel Merchandising

How can we make Merchandising effective?

There are many ways through which a person can make merchandising effective. Some of the ways are engaging customers with excellent services, paying attention to signage, creating a clean and organized space, and establishing credibility through honesty.