How merchandising helps increase revenue in retail

Merchandising is an important element of marketing that defines the way merchandise is presented in a store. It covers product selection, shelf placement, use of promotional materials and pricing.

Quality merchandising increases customer loyalty to a product and encourages purchases. Studies show that about 80% of consumers choose products that appeal to them because of their packaging, price and ease of purchase, while only 20% pay attention to product features, such as composition or nutritional value. This underscores the importance of merchandising today.

Merchandising newbies mistakes that cost money

To begin with, you need to know the basic principles of laying out the goods on the shelves, and then resort to so-called "tricks". But first things first.

One such marketing area is visual merchandising. Some novice merchandisers tend to make two basic mistakes:

1. laying out merchandise in a way that is convenient for salespeople rather than customers
2. guided by their own vision of the beauty of the goods on the shelf.

It has to be understood that the layout is not about how the merchandiser sees the goods on the shelves, and how he thinks they should be, but about a set of quite concrete tools. In this regard, there are some unspoken rules of merchandising.

The first says that good merchandising is invisible to the end consumer. Such a marketing move cannot be shouty and intrusive. The consumer must make the decision to buy on his own and not notice that he has been pushed to that decision.

The second rule is that retail merchandising must be based on a buyer's movement map. It is made on the basis of an analysis of the movement of the client at the point of sale. This analysis also includes the average time of the client at the control points. On the basis of this analysis the goods should be laid out on the shelves.
Basic principles of merchandising

Basic principles of display in merchandising

What recommendations should be considered when organizing the arrangement of products in the store?

1. The Golden Triangle rule: according to this rule, the most popular product should be placed in the far corner from the entrance and the cash register in the opposite corner. An example of this arrangement is the placement of bread in the supermarket, which is often placed in the far corner in order to attract the attention of customers and make them pass other products on the shelves. Checkout counters, on the other hand, are usually placed in the opposite direction so that the customer walks through the entire store and perhaps buys something else on the way to the checkout.
2. The "Blind Spot Rule": less popular items are often placed in the area that the customer passes immediately after entering the store. This zone is considered a "dead zone" because the customer is in adaptive mode to the arrangement of products on the shelves and may pass by these items without paying attention to them.
3. The "Clockwise" rule: Since most people are right-handed, they unknowingly turn their head to the right when entering the store and start moving counterclockwise. To account for this, the entrance and exit of the store should be positioned so that the customer, moving counterclockwise, can pass all the racks and see all the products.
4. Rule of thumb: it is recommended to place promotional goods directly at the entrance to the store. This allows you to interest the customer immediately after entering and prepare him to buy.
5. Rule "Placement at eye level". To attract the buyer's attention to the product, it is necessary to place it at eye level. This will keep the product in the customer's field of view and increase the likelihood of selling it. If you want to draw attention to a stale product or a new arrival, place it 15% below eye level, as people tend to look slightly down when walking around the store.
6. Highlighting Rule. Merchandisers use a variety of tools to draw a customer's attention to a particular product. For example, price tag markings, which can be bright and highlighted to grab a customer's attention, even if the price is not the lowest in the product group. In clothing stores, items can be sorted by color, and in jewelry stores, special items can be highlighted with lights. Pharmacies also use merchandising to put certain product categories on separate displays, such as skin care products.
7. The Separation Rule. It is a generally accepted rule that merchandise should be divided into groups according to its type and function. Canned goods should not be in the dairy department and wines should not be in the bread department. The division of goods into groups helps customers to find the right product in the store faster and more conveniently.
8. The rule of "use of POS materials". POS materials, also known as point of sale, are an effective tool for drawing attention to a product with additional signage. They can include wobblers - small signs on flexible legs that are attached to the shelf above the product, mobiles - suspended information posters under the ceiling, and giant product layouts mounted in the center of the hall. Other POS-materials include shelf talkers - panels for separating groups of products, shelfstoppers - panels for separating a product range, and dispensers - constructions in the form of racks for demonstration of goods.
9. The rule of "transposition". This method is used to avoid so-called dead zones in stores, where visitors know where certain goods are located. To do this, it is not necessary to move rows around the hall, sometimes it is enough just to swap the products on the upper and lower shelves.

How to use merchandising in the checkout area?

The checkout area is considered the most advantageous for impulse purchases, because here shoppers waiting for their turn have the opportunity to look at products they don't particularly need. These shoppers often buy on impulse, thoughtlessly. Most stores place small items in the checkout area, whose margins from sales are high. The rules for displaying goods at the cash desk are the same as in the main sales area.

Merchandising: Useful tricks and tips

In conclusion, it is worth noting some important merchandising tools, such as store design (internal and external), its planning, the placement of promotional materials at the point of sale, the range of goods, the communication skills of salespeople and many others. Especially important is the ability of salespeople to interact with customers and inspire them to buy.

Studies show that about 65% of purchasing decisions are made right in the store, often under the influence of emotions. Consequently, it is worth paying attention to the emotional motivations of customers when placing products to increase the average check.