4 minute read

Off the Rack: What Is Effective Merchandising?

Damien Deem, Implementation Specialist
Anthony Henry, Customer Program Manager
Mauricio Guerra, Implementation Specialist 

What is effective merchandising? Effective merchandising means getting the most out of your retail selling space, whatever type of retailer you are, whether grocery, convenience, apparel, you name it. Your merchandise—the products you offer for sale—are not only your biggest cost and most important financial asset; they are why you exist. If you are not effectively arranging these products, communicating their value, and creating an optimal customer experience, you are literally leaving money on the table.

“Advertising moves people toward goods; merchandising moves goods toward people.” – Morris Hite

In this series (see part 2), we will discuss how you can improve your merchandising to drive sales and realize other benefits such as reducing shrink. Effective merchandising, together with precise forecasting, will allow you to minimize backstock, resulting not only in a reduction in shrink but also less labor having to handle excessive backstock. We begin this series by examining the differences between direct and indirect merchandising, giving examples of both, and how they can impact your merchandising effectiveness.

Direct merchandising

By “direct merchandising” we mean actions that relate to specific items offered for sale. Examples include planograms that establish usable space within the store that optimizes the placement of the items and accommodates likely purchasers. Merchandising endcaps create a one-stop shopping location, making it easier for customers to quickly scan and make selections. Optimal placement of sale and companion items on endcaps and or standalone displays can be the difference between success or failure to your sales strategy. Other examples and aspects of direct merchandising include:

Indirect merchandising

Indirect merchandising means general operating procedures and strategies that improve the overall customer experience, making shoppers more likely to purchase a product. Examples of indirect merchandising include:

In summary

Whether you utilize direct or indirect merchandising techniques, the main purpose is to drive sales. Through proper product and item placement, you will be able to tell a story about your offerings. You will make your products more attractive, improve customer service and reduce shrink. Effective merchandising is not just instinct or art. Having systems in place to work collaboratively with your merchandising teammates will help you achieve higher sales and profitability. In the second part of this series, we will discuss this systematic approach, focusing on merchandising patterns and their importance to effective merchandising.

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