Damien Deem, Implementation Specialist
Anthony Henry, Customer Program Manager
Julia Gongora, Implementation Specialist
In our post Off the Rack: What Is Effective Merchandising? we talked about effective merchandising and how to utilize direct or indirect merchandising to drive sales. In this entry, we will discuss merchandising patterns and how, combined with the effective merchandising techniques discussed in the previous post, they can further increase sales and basket size. Understanding customer flow, and the common patterns that emerge when customers interact with merchandise based on the store layout, is critical to your organization’s retail merchandising strategy.
There is a clear annual cycle in retail. Upticks or spikes in activities throughout the year are primarily driven by patterns associated with recurring yearly events such as school schedules, weather, and seasonal patterns and holidays.
But 2020 retail merchandising patterns are unlike any other year. We saw how the purchasing power of e-commerce and in-store patterns changed and may never return to pre-pandemic conditions. In order to understand and implement a strong merchandising strategy, retailers must have strong sales and merchandising departments with personnel that understand the science and forecasting behind these changing patterns, what trends they tie into, the cause and effect of fast-moving or dead products as well as have the creativity to create excitement for customers shopping brick and mortar establishments. In this installment, we examine the spike in e-commerce, its effect on the usual patterns and give examples of how it may have impacted your merchandising effectiveness.
The “old” normal
In previous years, retailers merchandised their stores to allow shoppers to proceed in a counterclockwise direction. Some used large visual barriers between departments to make a large store appear more intimate. Well-placed, well-worded signs helped intrigue, answer questions, and entice shoppers to look, touch or hold products before purchasing. In addition, assortment strategies dictated variations of a particular product, as well as how many types of products to carry overall was essential to overall merchandising patterns. For example, electronic stores would build large TV displays as their silent sales associate, because they can show an entire system or series of add-ons to lift average ticket prices during football season and especially during continuity merchandising programs such as football championships. There was a predictable annual cycle. Grocery stores might utilize cross-merchandising at the sports heavy start of the year to create massive chips with dip theme displays. For Valentine’s Day, we would generally see chocolate-dipped strawberries in close proximity to floral arrangements. Summer holidays brought big waterfall displays of product, like soda merchandised next to chips and condiments grouped together.
This would carry over into the holidays when retailers would see their biggest spike in sales and would give the opportunity for great merchandising. The one thing we could always count on was consumers awaiting the Black Friday ads. Stores would splash their front covers with “Doorbuster” sales to get consumers into the store. We are sure everyone reading this post has seen videos of the massive number of shoppers lining up in the front of stores trying to get whatever hot item might be in the store that Black Friday. But driven by the pandemic, 2020 has seen major changes to the retail industry and the old patterns, and almost every retailer has changed how they merchandised this year and will have to consider such changes for years to come.
Merchandising patterns in 2020
This year has brought plenty of changes to our lives. They may be temporary or could be permanent. Only time will tell. One thing is for certain, and that is retailers had to make changes and fast. Cleanliness and organization were top of mind, and retailers advertised their cleaning methods to help ease shoppers’ minds.
Consumers were more likely to shop at a retailer that could meet all their needs. In the past, consumers may have made multiple trips. Now they shop where they can fill their baskets in one trip. Retailers that might have offered large platters and party favors for extravagant birthday or graduation parties changed their merchandising strategies to accommodate smaller parties that consumers were still comfortable hosting and attending.
Digital enhancement of e-commerce sites
Retailers saw a huge spike in e-commerce shopping at the beginning of the year. Many consumers were anxious about going out into the public and relied on online shopping or used third-party companies to do their shopping. During this time, many also switched brand loyalty. It did not matter if the stores had the brand they preferred if it was the product they wanted. During the summer months, e-commerce sales slowed down a little bit, but all signs are that it is increasing as the predicted surge in virus cases has arrived. Stores that may have advertised Black Friday sales doorbusters switched to mostly online promotions. Stores that were open on Thanksgiving in the past closed on the holiday, and also started their sales weeks in advance.
The change from large displays near the entrance to smaller is also due to e-commerce. Merchandising patterns must change to keep attracting shoppers. Retailers must change their merchandising patterns and create new online merchandising patterns.
Even with the increase in e-commerce and technology-enabled retail solutions, there are still people who are unfamiliar with or don’t like online shopping. Retailers need to find a way to reach these customers. Having an attractive, user-friendly platform is a good start, but what else can convince people to explore outside their safety bubble? Here is where merchandising patterns and strategies come into play that focus more on creating online merchandising, such as paid advertising to display discounts that will appear on social media, advertising offers available online only, and free shipping.
Online shopping also brings a strong tool for merchandise. Data from online transactions provides an advantage if they learn how to use it correctly to modify merchandising patterns. Targeted advertising can be displayed online, as we are all familiar with by now. Mary wants to buy a hairdryer. She navigates online retail sites she already knows looking for one. This information is gathered and advertising from different stores with discounts on hairdryers start appearing in her online experience. If she finds a better deal than one at the regular stores she shops, she might get it. E-commerce provides these merchandising opportunities to attract new customers, and we can expect these changes in merchandising patterns to continue.
Even with the pandemic and the unemployment it has brought on, retailers were able to change their merchandising with the times. It remains to be seen if this is permanent or if retailers revert to previous merchandising techniques as the pandemic ends. Have customer expectations changed given their exposure to new shopping alternatives like curb-side pickup and delivery, or were these temporary expedients for dealing with the pandemic? Time will tell.
In the conclusion to our series, we will be exploring what effective fresh department merchandising might look like as an example of the factors we have been discussing.