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Merchandising

Merchandising is an activity aimed at demonstrating products to customers more effectively. It is one of the steps in marketing and its purpose is to increase sales in both retail and wholesale shops. This process is divided into the following stages: the display of goods in a shop, creation of marketing strategies, and selection of the right pricing strategy. Merchandising is of a high importance for business owners who strive to develop the brand, improve consumer loyalty and increase sales of particular products.

Merchandising explained

Merchandising defines product range, prices of goods and services, ways of displaying goods, retail space management, marketing strategies, discounts, etc. It is a way of communicating the product's features and delivering goods to consumers. 

Different cultures and countries with multiple climate zones have their own specific merchandising cycles. These cycles are influenced by holidays, regional events, seasons, and even weather conditions. The products are promoted, put up for sale or at discounts, displayed at a particular part of the shop during a certain merchandising cycle.

Merchandising can also be defined as the use of one product or his description to market another good in terms of marketing. 

Special considerations

It is known that retailers may or may not manufacture the products they offer and tracking the gross value of sales enables them to evaluate the performance of the business. This bears on the C2C market where the retail shop becomes a third party – an intermediary who serves as a trading platform for buyers and sellers and may be the guarantor and/or the executor of the payment .  

Merchandising can be of value for retail shops in the consignment sector. Consignment is a form of sale of goods by its owner with the help of the third party. Here the seller delivers his goods to the consignment warehouse, from which they are sold by the intermediary to specific buyers. It means that retailers don’t buy the goods and they don’t own them, the goods can be returned to the owner at any time. 

Gross merchandise value is the total value of goods sold on the trading platform over a certain period of time, excluding refunds and discounts. It indicates the success of the company and its growth. 

Merchandising is constantly changing and the USA can be an excellent example of it. The goals and rules of merchandising also undergo great changes. The responsibilities of chief merchants now include marketing, sales promotion activities, carrying out customer satisfaction surveys, etc. 

Retail Cycles in the USA

Retail stores, like goods, go through stages of growth and decline. Here we can’t but mention retail cycles. In the USA it usually begins at the beginning of January. Marketing goods related with Valentine's Day and St. Patrick's Day becomes one of the tasks of merchants. Then retail shops are preparing for Presidents' Day and offer goods at discounted prices. 

Easter and days before Easter are a great time to get maximum revenue in the USA. This is the time when retailers sell spring clothes and other goods connected with warm weather, such as camping and outdoor goods. They can be displayed on the shelves starting the middle of winter to sell excess inventory. 

The next holidays in the USA are Mother's Day, Memorial Day, the Fourth of July and others. The cycle ends with Christmas eve and Christmas when consumers purchase Christmas gifts for family members. 

Retail is the most important part of the US economy, both in terms of turnover and the number of employees. Over 2.4 million retail stores compete in the US market. About 52 million people are employed in the retail industry, almost as many as in manufacturing.

Merchandising and service firms

Merchandising companies interact with various types of goods that are intended for sale to individual consumers or businesses. They are also engaged in the delivery of goods to customers. Such companies meet labor and material costs in order to provide customers with goods and services.

Service companies don’t provide clients with goods to get profit, instead, they offer highly-specialized services to customers. Such companies are accounting and consulting firms, insurance companies and others. 

Strategies of Merchandising 

Merchandising strategies are an integral part of the success of any retail store. Among effective merchandising strategies are displaying products on shelves the right way, placing them in the most relevant categories, promoting new and must-have goods, attracting customers with freebies, running with well designed in-store advertising campaigns, etc. Maintaining cleanliness in the shop and understanding the importance of clean employees’ uniforms also demonstrate a professional attitude. This is true for online stores. 

Advantages of Merchandising

This practice is of a high importance for retailers as effective merchandising schemes influence sales volume and help a company turn customers into repeat buyers. The main objective of merchandising is promotion of products and brands in particular. It analyzes how to highlight product features to attract more customers. All these tasks can be done not only by a retail shop, but also by an online store. 

In a store, the goods that need to be promoted are usually displayed on a separate rack, while in an online store, a special banner is usually made and placed on the main page to catch a customer’s eye. 

Effective merchandising strategies give an opportunity for a retailer to be competitive in the market and stand out among the competitors. 

Types of Merchandising firms

In a broad sense, a merchandising company can be understood as the entity that offers goods. They are broken up into two types: retailers and wholesalers. Retail shops engage in selling goods directly to its end customers, bypassing any third parties. Wholesale companies purchase from the manufacturers and provide retailers with the goods. 

Types Of Merchandise

There are 4 main types of merchandise and most retail shops focus on selling one of such goods. Experienced retailers display all types of goods on the shelves and expand the product line to widen the target audience. 

  • Shopping products are goods that consumers buy after they evaluate the product line, compare with other goods in quality and price, and take into account information about the manufacturer.
  • Convenience products. These are products that are relatively cheap and retailers sell them quickly. There is high demand for such products.
  • Impulse purchases. This term refers to goods that were purchased under the influence of emotions. Among them are candies or mints that are located next to the checkout desk. 
  • Specialty products are unique items. Although consumers can live without them,  such goods have special features that make customers buy them. 

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