Introduction to Merchandising

What is merchandising? Merchandising is the practice and process of displaying

and selling products to customers. Whether digital or in-store, retailers use
merchandising to influence customer intent and reach their sales goals.

Establishing the right merchandising strategy can depend on a variety of factors,

such as sector, product qualities, available space, and whether the retailer is
displaying in a physical or digital store. Additionally, there are various schools of
thought on which types of merchandising are most effective in particular industries
and departments.

Merchandise types:
1. Convenience goods:
There are products in our lives which we simply cannot do without. This is not in
regards to products we love like our phones or our favourite pair of shoes, but
more in regards to products which are staples and essential to daily living. These
products are classified as convenience goods, items which are widely available and
regularly bought with very little effort. As they are often purchased, customers
should not need to go through a rigorous decision-making process. Demand
transfer is also very common with convenience goods, where customers will select
an alternative brand if their choice brand is not available.
Convenience goods are usually inexpensive and have a low opportunity cost for
customers, but this also means a higher sensitivity to price. In this case, the main
objective for retailers is to balance out price and demand, ensuring that incremental
price increases don’t have a negative effect on quantities of goods sold. As a result,
to make maximum profit retailers need to ensure they sell large volumes of
convenience goods at a fast pace. Examples of convenience goods include food,
newspapers, cleaning products, and personal hygiene products.

2. Impulse goods:
“Two-thirds of the entire economy is impulse buying.” - Paco Underhill, author of
the book “Why We Buy: The Science of Shopping”.
Have you ever tried to shop according to a strict list? Odds are you budgeted
carefully, but after browsing the store, there were extra items which you had to add
to your shopping cart. If that’s you, have no fear, you’re not alone – 9 out of 10
shoppers make such purchases. This is a merchandising strategy implemented by
retailers where they stock impulse goods – goods which are purchased
instantaneously without significant thought process – to great effect.
Impulse purchases are never planned – customers simply see them, pick them up
and head to checkout. The most important factors for impulse goods to sell
however lies in display and location. If not well displayed or located in
unassuming sections of the store, they will be missed. These products are often
displayed at till and check out points to entice customers to quickly add it to their
purchases. They include magazines, sweets, or complimentary products.

3 Shopping products:
If you’ve ever spent hours researching a particular product and comparing brands
before you purchase, you are looking at merchandise that is referred to as shopping
products - goods that customers want ample product information on and have the
ability to be compared to other brands. Because of the intensive research and
multiple comparisons, these products are often purchased less. Customers normally
compare a number of alternative brands based on price, quality and content, etc.
before making a final decision. There are also psychological and emotional aspects
of this purchase such as acceptance, appreciation or belonging. For example, many
people purchase the iPhone not just for the utility of the phone but for the
association it has with being a status symbol. Examples of shopping products
include clothing, electronics, and furniture.

4. Speciality goods:
Imagine travelling to another town or locale to a particular store for a particular
purchase. In this case, the store is known as a speciality store which carries
speciality goods. For speciality goods, customers are prepared to do extensive
research, pay much more and travel long distances if necessary. These products
also have a much higher cost attached to them, causing customers to be much more
selective. Regarding demand transfer, customers are often not willing to go with
another offering – they will not compare products because they know exactly what
they want. An alternative offering is not acceptable. Speciality products do not
need to be conveniently located either. Examples may include luxury cars,
expensive alcohol, and service experts.
For the successful merchandising, a healthy mix of product types can play a pivotal
role in the profitability of their stores.

TYPES OF MERCHANDISING
1)What is product merchandising?

Product merchandising involves all promotional activities used to sell a product.

Product merchandising can refer both to in-store or online products.

Although often incorrectly used as a synonym for service merchandising (the

promotional activities used to sell services), product merchandising can also refer
to either physical or digital products.

For example, the definition of product merchandising applies whether you are
merchandising shoes in-person or online, and even if you are merchandising a
product that isn’t physical, such as an eBook.

Additionally, because product merchandising refers to both in-store and digital, it

includes all promotional activities that take place in a store (such as shelf displays
and end caps) and online (such as web design and on-site search).

2)What is retail merchandising?

Retail merchandising refers to all promotional and marketing activities that in

some way contribute to selling products to customers in a physical retail store.

The definition here is limited to the physical, but it can be applied to a variety of
merchandising venues—from traditional brick-and-mortar malls to annual pop-up
events.

However, with the continued rise of digital merchandising, the term retail
merchandising is increasingly being used to describe digital merchandising as well.
This trend is likely to continue, especially because research suggests that 2017 will
be the first year in history that digital retail sales will surpass in-store retail sales.
3)What is visual merchandising?

Visual merchandising in the retail industry refers to all of the display techniques
used to highlight the appearance and benefits of the products and services being
sold.

Visual merchandising can include elements of spacing, lighting, and design, and is
a term that can be applied both to in-store merchandising and online
merchandising.

In regards to the in-store retail experience, visual merchandising includes aspects

such as floor plan layout, color palette selection, three-dimensional displays, and
product and banner alignment.

In regards to the digital retail experience, visual merchandising includes aspects

such as web design, the use of GIFS and video, and any other visual design
element used to highlight the features and benefits of a product or service.

4)What is digital merchandising?

Digital merchandising involves all promotional activities used to sell a product

online. Often referred to as eCommerce or online merchandising, digital
merchandising can include everything from site performance and digital product
displays to digital marketing and email marketing initiatives.

Unlike terms such as retail merchandising, which were originally used to describe
the in-store experience but are now expanding in their definition, digital
merchandising is rooted 100% in the digital retail experience.

That said, as the in-store and digital experiences continue to merge, the digital
experience may also occur in physical stores.
5)What is omni channel merchandising?

Omni channel merchandising refers to creating a unified customer experience

across all possible touch points of the customer journey.

For retailers with physical and digital stores, omni channel merchandising involves
creating a seamless customer experience—even if the customer moves from one to
the other (as in the Bonobos example above).

Omni channel merchandising (also referred to as omni channel retailing) is a topic

of increasing interest and research—especially because physical stores are
increasingly embracing digital.

Additionally, omni channel retailing is often used to describe all of the elements
within a single customer journey—regardless of where each element takes place.