Ron Lach, 2021, via Pexels
Merchandising refers to the mechanisms a business uses to advertise and sell their products to customers. According to the Mirriam Webster definition of Merchandising, this includes “(...) market research, development of new products, coordination of manufacture and marketing, and effective advertising and selling.” The goal of merchandising is, of course, to generate sales and revenue for the company based on the provision of physical goods and, more recently, digital products as well. This article covers both.
How does Merchandising work?
Once a new product is produced, it must be priced, released, and advertised to customers. Merchandising strategies slightly differ between brick and mortar locations and online storefronts, but the core attributes are the same: product development, research, manufacturing, pricing, marketing and advertising.<sup>1 </sup>First, we will use the example of an in-person retail location. Merchandise is received from the manufacturer, tagged, and priced (if needed) so that it is ready to be displayed on the sales floor. Organizing new products in accordance with other store displays and ensuring their visibility to customers is paramount. According to Oracle, a store’s maintenance and layout are key aspects of merchandising that improve a customer’s shopping experience. Similarly, this maintenance and layout is key in online stores and services, which we will address shortly.
First, picture yourself entering a store that is cluttered, and has narrow and confusing aisles. To top it off, it is difficult to view clothing items because they are tightly packed on the display racks. On the contrary, imagine entering a well-organized store that is easy to navigate and has aesthetically pleasing displays of merchandise; the items also have great visibility and are easy to access. Based on experience alone, a shopper would generally gravitate toward the better organized store. In turn, this results in an increase of customer satisfaction, potentially spurring a higher number of sales.
In addition to store layout and organization, coordinating product selection and displays with the seasons and time of year is also significant. For instance, if a store’s products are predominantly winter gear and the season is shifting into spring, there will be a disconnect between what the customer is looking to purchase and what is being offered leading to a decline in interest and sales. Retailers rotate merchandise and generate seasonal sales to ease transitions. When conducting a sale, a retailer frequently places banners, signs, and displays throughout the store. Promotions are another merchandising strategy where retailers create deals on certain products, offer bundlers, or free gifts. These techniques spur customer purchases and satisfaction while increasing revenue.
Merchandising in the Digital World
Digital merchandising alters strategies in-person businesses use to fit an online platform. In online retailers for example, the website design, organization, and layout are essential. Visiting a site that is fast, operates smoothly, and easy to navigate is going to generate a more positive experience than one that crashes, is confusing for customers, or disorganized. Product websites of larger corporations display the entirety of a store’s inventory, rather than being limited to smaller, curated selections in-store. The goal is for a customer to find products they are interested in as quickly and easily as possible. Many companies will create a clickable graphic banner or headline for sales and new arrivals that bring the customer directly to the products.
The implementation of new strategies such as customer review sections offer an advantage over in-store retailers where users can see how a product fits, overall quality, and if other customers would recommend the product. Beyond company websites, independent and incentivized reviews involving product demos on social media platforms further promote products to consumers. Merchandising tactics which further entice potential customers to purchase items include free samples, and free shipping after spending a certain dollar amount.
To increase website traffic, clicks, and purchases, businesses also utilize targeted ads. In essence, a user’s metadata is obtained and analyzed, indicating what types of products a customer views or purchases and displaying similar products or companies that may interest them. These clickable ads are strategically placed in social media newsfeed on major platforms. Although websites mobilize digital merchandising, the core concepts and strategies are extremely similar. As consumers pivot toward online shopping and have access to retailers through their smartphones, merchandising has never been easier from a company standpoint to reach the maximum number of potential customers. It should be noted that in addition to physical products, similar merchandising techniques also apply to digital products including, but not limited to: online music and video streaming services, e-books, and digital products such as templates, graphics, and even virtual goods in video games. Merchandising allows customers to locate and connect with products, both physical and digital, that best suit their interests and needs.
Key Takeaways
- Merchandising involves the advertisement and sale of products to a consumer.
- The goal of merchandising is to generate sales of company products and goods.
- Merchandising strategies slightly differ in-person and on digital platforms.
- Digital merchandising has utilized targeted advertisements through the collection of user metadata
- Online stores have allowed companies to display all of their inventory rather than being limited to a smaller, in-person selection.
- Social media platforms have made merchandising easier and more accessible to a wide array of users
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