Retail Terminology Definition: Merchandising

Meaning and Examples of Merchandising Used in Retail Stores to Increase Sales

Retail terminology definition for Merchandising - What is Merchandising

What is Merchandising?  

Merchandising is part of retail industry specific terminology that describes an aspect of retailing that is much larger than a mere definition of the term can explain.  The meaning of the term "merchandising" and examples of the many ways that merchandising is used in retail stores to increase sales is explored in this retail glossary explanation.

RELATED:  Visual Merchandising Job Description and Job Openings >>

Definition of Merchandising

In the broadest sense, merchandising is any practice which contributes to the sale of products to a retail consumer. At a retail in-store level, merchandising refers to the variety of products available for sale and the display of those products in such a way that it stimulates interest and entices customers to make a purchase.

Also Known As: visual merchandising, visual display, marketing

Common Misspellings: mershandising, merchantising, merchandizing, merchandiseing

Examples: When petite-sized clothing in an Old Navy store was hung on a bar that was out of reach for short people, it was bad merchandising.

Merchandising is a term that is used to refer to a wide scope of business and marketing strategies which involve the use of tactics by retailers in order to present products or services to consumers in the most attractive and convincing way possible.

Who Uses Merchandising?

Merchandising is mostly used by brick-and-mortar retail stores, whether the retailer is independently owned or part of the largest retail chains.

 While many retailers may carry the same merchandise, It is the merchandising strategies that distinguish retail competitors.  How branding, packaging, and visual display is or isn't used in a retailer's merchandising strategies has a direct impact on foot traffic, sales, customer loyalty, and general popularity.

 Merchandising can make a retail store a place where shoppers want to be - or not.

Why is merchandising important?

It's not just about what products a retail store makes available to its customers, it's also how those products are merchandised that determines how successfully a retailer is able to sell the merchandise.  By using merchandising best practices, a retailer can motivate customers to want to spend money

Merchandising Best Practices

Merchandising Variety

With a sufficient variety of merchandise, retailers can engage shoppers in an "either-or" buying decision rather than a "yes-or-no" decision.  For instance, if Best Buy carried only one brand and one model of a laptop computer, the consumer would have only a "yes-or-no" decision.  Yes, I want this computer or no, I don't want this computer.  But since Best Buy carries computers from Dell, Samsung, Apple, etc., consumers are immediately engaged in making a decision about which computer is best, bypassing the "yes-or-no" debate altogether.  

Apple Stores, on the other hand, carry only one brand of computer, which is Apple, of course.  But the variety they provide comes from many different shapes, sizes, and capabilities of a wide variety of Apple computer models.

 No matter what the merchandising mix, retailers that provide variety to their shoppers are using a merchandising best practice to motivate customers to make a purchase before leaving.

Merchandising Flexibility

Using merchandising fixtures and strategies that are flexible is important in order to rotate inventory and keep a retail store looking fresh and new.   Rotating merchandise around the store gives shoppers the feeling that there is always something new to discover.  Showcasing new arrivals in the front of the store lures shoppers in the door.  Displaying clearance merchandise in the back of the store directs foot traffic past merchandise displays they might otherwise miss.

 

Using merchandising flexibility best practices, retailers can focus the attention of shoppers on seasonal merchandise, holiday-specific merchandise, and special promotional deals.  The better a retailer is at capturing the attention of shoppers and focusing them on the newest merchandise, the most popular merchandise, and the best limited-time deals, the faster they will be able to make sales and move inventory out the front door.

Merchandising Packaging and Branding

Attractive packaging and popular branding can enhance the visual appeal of both specific merchandise and the look of a retail store overall.  Grocery stores use packaging to preserve the quality and safety of fresh foods.  Department stores like  Macy's and Nordstrom group branded merchandise together into their own mini-departments.  Barnes & Noble Bookstores dedicate a portion of their stores to coffee shop brands like Starbucks.  The Sephora brand has established stores within JCPenney stores.  These are all examples of common packaging and branding best practices.  

Related Product Displays

Sporting good stores like Dick's Sporting Goods merchandise socks in the shoe department.  Coffee shops like Starbucks merchandise coffee bean grinders and insulated travel mugs next to the coffee beans.  Discount department stores like Kohl's merchandise oven mitts next to the cookie sheets.  By grouping related products together, retailers remind consumers about to purchase products they might not have known they needed or wanted.  

Easy Access in Merchandising

The way that merchandise is displayed should provide customers with easy access, which makes it easy for them to choose just the right merchandise that's right for them.  If merchandising displays make products difficult to reach, difficult to find, or difficult to sort through, customers might get frustrated and leave without making a purchase. Merchandising best practices should always make it easy for customers to make a purchase.

Promotions Merchandising

Special discounts, seasonal clearances, and limited-time marketing campaigns are all supported by merchandising best practices.  By showcasing and featuring merchandise with special sales prices, customers are motivated to make purchases for no other reason than to get a good deal.  Sometimes the display of promotional merchandise is referred to as "merchandising."  While merchandising and promotional displays are seemingly one in the same, promotional displays are just one aspect of merchandising.  

Retail Merchandising Jobs and Careers

Retail job hunters wanting to work in the field of retail merchandising might choose one of these popular retail merchandising jobs:

Visual Merchandising - Visual Merchandisers design, develop, and take charge of the visual look of the store and its merchandise. Members of the in-store merchandising team execute merchandising strategies by creating and maintaining visual displays in the store windows and on the sales floor. 

Sales Merchandising -  A Retail Sales Merchandiser is employed by a manufacturer of products to interface with a number of different retail outlets that carry the manufacturer’s merchandise. After a sales contract has been created, it is the responsibility of the Retail Sales Merchandiser to create and maintain the visual display of the manufacturers' products on the shelves, coolers, and special display fixtures of a retail store, as per the sales agreement.

Merchandising Analyst - A Merchandising Analyst streamlines the flow of merchandise through a retail outlet by providing the organization with trend analysis, inventory allocation, and management guidance.

NEXT:  What is Visual Merchandising?