What is Retail Merchandising: A Complete Guide

While digital has become a key driver in retail, it seems people still like to shop in-store. 74% of shoppers say they have missed the traditional brick and mortar experience during lockdown in the UK, for instance. 

So, while it’s important to ensure to deliver a great virtual customer experience (by investing, for example, in high quality call center technology), retailers also need to concentrate on store design and providing customers with exciting options when they’re physically in-store.

This is where retail merchandising can help. 

Retail merchandising involves organizing merchandise in an appealing way in order to engage and inspire shoppers to buy more items than they initially intended. The term covers everything from how merchandise is visually arranged in store, to how items are displayed to incite buyers to purchase add-ons, and how signage helps along the way. 

For clothing retailers, the arrangement and lighting of fitting rooms can also help to increase the likelihood of customers purchasing more items. Visual merchandisers are also tasked with analyzing all the behind-the-scenes data and understanding the principles of inventory management in order to work out what’s working and what’s not. 

Retail software can help with behind the scenes activities

Merchandising software can help to simplify in-store merchandising and improve compliance with planograms (detailed plans for organizing merchandise in a retail outlet). Software can also help distribute tasks between teams, streamline communication, and boost visual verification, reporting, and transparency. Armed with in-depth retail intelligence, businesses can swiftly adjust their operations in response to changing requirements. 

In this post we’ll look at the basics of retail merchandising and offer up some effective  merchandising strategies, as well as a few product merchandising ideas. 

Why is retail merchandising important?

Retail merchandising helps to encourage customers to shop in your store rather than a competitor’s. It’s an effective way of helping to convert more browsers or window shoppers into customers, by removing their confusion and helping them choose between multiple products more quickly. 

The better the merchandising and messaging, the less overwhelmed shoppers will feel, and the less likely it is that they will leave without purchasing. 

Just like SEO on web pages, when done well retail merchandising isn’t obvious. Shoppers should not notice it, but it should act to focus their attention. The lighting, for example, should draw them towards fixtures, while signage should make them curious to find out more. 

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Good visual merchandisers also understand which colors are on trend and how to tie into them. They should also have knowledge about the importance of the supply chain, and of having fast-moving products rather than unprofitable dead stock. Merchandisers must also be creative and able to make shoppers feel excited by creating a sense of serendipity when people are browsing in a brick and mortar store. 

What to include as part of an in-store merchandising plan

Having the following elements will provide a good basis for a merchandising plan:

  • A layout plan of the instore customer journey – how traffic should move through the store
  • A department plan that’s used to change store layouts according to season and holidays
  • A budget for lighting, signage, props, and fixtures
  • A merchandising planning system geared towards maximizing turn, limiting out-of-stocks, increasing margins, and minimizing markdowns
  • An ‘open-to-buy’ system with predictive analytics to determine the variety of merchandise shoppers have available

How long it takes to merchandise a store will vary – just as it varies when you’re creating a website – according to the differing circumstances. These will include the total number of SKUs involved, size of window displays, and any special requirements for individual displays (e.g., for items needing extra security). Also involved is the ability to be able to move fixtures from place to place easily. 

Larger chain stores have teams of merchandisers to call on, whose task it is to organize the four separate areas of retail merchandising. Small businesses on the other hand, sometimes struggle to simply get the merchandise on display and priced accurately, let alone action a practical plan for merchandising. But this is a big mistake and it could be time to look at using professional merchandising services. 

Because, when someone arrives in your store, they’re expecting to get an experience they can’t get online. And, no matter how good your real-time video conferencing software, customers like to see and feel products before they make decisions. 

This is where the art and science of retail merchandising comes into play, and where it can give brick and mortar retailers the advantage over their competitors. Which is precisely what physical retailers want, just as exemplifying convenience and ease of shopping online is ecommerce 101.  

The basics of store merchandising

1. Start with the storefront

When shoppers arrive at your store they need to understand what to expect, so make sure the entrance is inviting and explain exactly what they will find when they enter. 

2. Get the directional signage in place

If someone is new to your store they need to know where they can find things, so use signage to ensure shoppers can easily navigate the space. Shoppers generally want to proceed clockwise throughout a store, so counterclockwise signage could be creating friction. 

3. Lighting

People like to shop in energetic and bright spaces, so make sure you light the store adequately. 

4. Create divisions

Visual barriers between departments can help to make the store appear more intimate. Interesting barriers and backdrops can help draw shoppers towards them. Also, make sure the relationship between your different displays are obvious. 

5. Set up a merchandising calendar

There are several aspects to a marketing plan from affiliate marketing to advertising. Similarly, there are various aspects to your merchandising plan (current promotions, new products, upcoming events, and reviews of previous plans). You must take those into account and adopt a full year calendar set up. This will help you keep abreast of holidays, seasons, local events, and promotions. 

Now we’ve covered some of the basics behind retail merchandising, let’s look at two crucial aspects: firstly, store displays and visual merchandising.

Is visual merchandising the same as retail merchandising?

Visual merchandising is everything a shopper sees in-store that will hopefully give them an inspiring shopping experience. For retailers with a digital presence, it should also connect to the online shopping experience as part of an omnichannel marketing strategy. That way, customers have a seamless and consistent experience of the brand both on the web and in the physical store. 

Visual merchandising isn’t the same as retail merchandising, however. It’s part of the broader marketing strategy. Visual merchandising involves arranging merchandise, shelving, and fixtures designed to maximize sales. Cleaning and ensuring store fixtures, signage, and lights are functioning are other aspects of visual merchandising. 

Good visual merchandisers can design eye-catching displays, create planograms for window displays, and use signage to the best effect. They must be business savvy above all else, in a bid to stimulate customer behaviors and ensure they buy extras and add-ons, as well as their planned purchases. 

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Questions to ask in order to create effective, interesting retail displays

Before you get started creating your retail display merchandising displays, it may pay to ask the following questions, so you don’t focus on the wrong products:

  • Is the merchandise high net worth enough to display (e.g., video conferencing hardware)? And will it deliver more profit for you if you pull it off a shelf and feature it in window displays or other prominent positions?
  • Is the product a limited-time item? I.e., can it only be sold for a short period of time? Maybe this could be a good product to place at POS
  • Is the item something that’s not on a shoppers’ list, but is something they secretly covet?
  • Can the item be bundled? This can be a good way to catch the eye of target customers. 

Tips and tricks for visual merchandising

  • Avoid putting a display table at a perpendicular angle just inside the entrance, in order to entice shoppers to move into the store. 
  • Regularly move products around from their regular shelf locations to the end of aisle display points. This has been shown to increase sales of products considerably. 
  • Make sure digital displays support, but don’t overtake, the main displays. 
  • Walk around your store to identify distracting elements. Are there too many messages thrown at shoppers? Are products placed at eye-level to encourage interaction? Streamline a shopper’s experience to make them stay, rather than head for the door in a bid to avoid the confusion. 
  • Feature your best-selling items at the front of the store. Shopper interest tends to dwindle as they move around a store. 
  • Place sales items to the back of the store, so shoppers have to move around the shop in order to reach them. 

Create product displays that will stop customers in their tracks

Just like the pages on a good ecommerce store draw potential customers in, in-store displays should stop customers from walking past. Not to mention giving them good ideas that will help them envisage items in their home or imagine how they could use or wear them. Displays should give shoppers a reason to buy items they hadn’t necessarily considered before. 

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It makes sense to put complimentary items together rather than putting, for example, cleaning products, biscuits, and mixed salad in the same display. Placing similar items, such as toiletries and skin care products together in end of aisle displays will help customers make better – from a store’s point of view – decisions. Complimentary displays tell customers they have all the items in one place that they need. 

Placing items in displays in their usual environments can also remind customers of their use. For example, placing a lawn mower, grass seed, and fertilizer together can help shoppers see how they should all be used (and therefore purchased) together. 

Surprise pop up displays are where a totally unrelated item is displayed. For example, placing a teddy bear on a chair next to a barbeque can help customers feel at home. The important aspect of a good display is not the props used, but the fact it’s helping to tell a story. 

When setting up displays, vary the height of items and add a prop to add interest. Create attractive lighting around the products and keep things simple, don’t group too many different products together. Think Instagram or Linkedin when you’re creating beautiful displays; how would the display come across on social media?

Set rules around retail merchandising

Don’t be tempted to get everyone involved in the merchandising process – unless you’re committed to teaching them everything about retail merchandising and display planning. Otherwise, staff could be tempted to create their own displays when footfall is slow, with the result being ill-thought out, uninspiring endcap displays that don’t entice shoppers in. 

Make sure your retail merchandisers know that when something is sold off a display, it needs to be replaced with new stock. Empty tables or mannequins are not productive. If items are taken from another department, write down where they came from so other employees can tell shoppers where to find it. 

Take pictures of displays so everyone knows what the display should look like. That way, they can keep it consistent. 

Now that we’ve looked at display merchandising, let’s move onto another important element of retail merchandising strategy: Signage.

Signage tips

There are three types of signage in a store:

  1. Directional
  2. Informative
  3. Invitational

Directional signage is used to identify what can be found in different locations around the store. Informative signage informs customers of elements like customer service points, the checkout, click and collect areas, or toilets. Invitational signage entices a customer to come closer, pointing out the benefits of a display of products or even words to amuse a shopper. 

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When you’re creating signage think about what customers would like to know and how they can get to the departments they’re seeking. Many of the questions shoppers ask in-store are around how to find things or for store information. 

While creating invitational signage is harder than simply slapping sales pricing on a posterboard, they can create lots of sales opportunities and lead to increased sales. 

Retail merchandising can revitalize your retail store

The recent pandemic has undoubtedly accelerated the move to online shopping. Consumers, however, are still drawn to brick and mortar stores. Retailers need to be thinking omnichannel, by providing customers with top level digital experiences and communication through tools like the best quality business VoIP service, as well as focus on improving the customer experience in retail stores. 

Even for companies with years of experience, changing times mean having to rethink tactics. Luckily, there are lots of opportunities to increase footfall and keep customers in-store. For example, more customers are indicating they want to increase their use of Buy Online Pickup In Store Services (BOPIS), so this could be a real opportunity to maximize revenue by encouraging more cross sales as customers pick up their items. 

Time is of the essence when it comes to retailing. Retailers in all sectors, from grocery stores to clothing chains, need to be thinking right now about how to drive retail sales when shoppers are in-store, by applying best practices around retail merchandising.