An introduction to merchandising

What is merchandising and why does everyone need it?
Merchandising is a marketing tool. It is a set of activities designed to turn the process of product selection and purchase into an enjoyable experience for the customer and, ultimately, to increase sales.

Merchandising is based on the rules of presentation of goods in the retail chain, formulated through years of observation of customer behaviour in shops, in which certain regularities can be seen.

There is a conventional route a shopper takes to get to a place where they can buy an item. Managing the flow of shoppers and ensuring that they are in a good shopping environment is one of the main objectives of merchandising.

Most of the time, shoppers are moving counter-clockwise around the aisle and don't like to start in the middle of the aisle. They are reluctant to go back, as they then have to move against the oncoming traffic. They prefer counters on the right and like to "cut corners".

Thus, the behaviour of shoppers in the sales area is roughly known. But when they buy, they act according to different patterns.

Three types of shoppers can be categorised. "Determiners" know which brand they prefer even before they come into the shop, and they buy it all the time. The "migrant" often changes brands within a product group. The "undecideds" try all new products, make purchase decisions on impulse and are usually influenced by advertising.

The "migrant" shoppers are the most numerous, followed by the "undecided", and the smallest group is the "determined".
Merchandising tools

Based on the above, the merchandising tools we can refer to include:
  • ways of product layout;
  • assortments;
  • the assortment;
  • the equipment setup plan for the sales area;
  • the style of the sales area: geometry, design, lighting, temperature, background music;
  • provision of promotional material for the point of sale;
  • sales floor information support, such as video presentations, announcements;
  • the use of various additional equipment: refrigeration units, pallet display, shelving, showcases, etc.;
Migrating and uncertain customers are the target group of merchandisers. Ultimately, merchandising is a way of competing right at the point of sale. It is the last chance to nudge customers towards a particular brand.

Standard business process automation systems do not solve the challenges facing merchandising.

GreenShelf specialists have created the editor tool system to improve the efficiency of merchandisers.

GreenShelf automates merchandising processes

The system consists of several modules:

The Equipment Builder module is designed to solve the following tasks:

  • Selecting the type of equipment and specifying its dimensions. The planogram created in the system will then be attached to this equipment.
  • You can also create a detailed parts list for the purchase of new equipment or modify an existing one.
  • Keeping track of existing shelving and accessories.
The task of managing commercial equipment is not usually within the reach of software developers.

With GreenShelf system, this possibility is implemented, unlike standard automation systems existing in other markets.
“Planograms” module

Here the user can create planograms manually.

It is possible to display goods "gross" or "net" with a different set of sizes and images, positioned full-face or sideways on the shelves.

There is a function for adding goods in groups.

The system has implemented the possibility of internal matching of the planogram, taking into account its lifecycle.

It is also possible to quickly import planograms into GreenShelf using Excel.

The “Store Plan” module allows you to:

  • Create shop floor plans in the system.
  • Arrange equipment on the plan, combine equipment into complex groups, e.g. gondolas.
  • Use colour indication of equipment and planograms.
  • Use sales floor zoning.
  • Plan advertising space.
  • Create heat maps of efficiency in terms of sales areas and items of equipment.
  • Analyse sales in terms of sales areas and different figures per m2.

“Tasks" module

  • Designed to set tasks for the shop's staff.
  • In order to control the fulfilment of tasks, it is possible to create photo reports.
  • In this module you can also send a planogram for approval.
  • The system takes into account the phase of the planogram life cycle:
  • "Draft", "To be approved", "Agreed", "Active", "Archive", i.e. it can be assigned an appropriate status.
The "Analytics" module allows you to get feedback on previous decisions, to analyse how effective a particular planogram is, and to take this into account in your future work.

Reports are available from the system:

  • Efficiency evaluation of each sales area, sales analysis, profit figures per m2.
  • Analysis of efficiency of layout and use of retail space in the shop.
  • Comparative analysis of efficiency of planogram options.
  • Heatmap on revenue, profit, residuals.
  • Representation of brands in the goods section: analysis of blockiness and continuity of brand exposure.
  • Control of planograms for excluded SKUs from the product matrix
  • Reflection of low margin products which take up "valuable" space
  • Detailed analysis of planograms in terms of properties, matrices, categories and equipment.
Based on the analytical reports, decisions on assortment matrices are made: on the introduction or withdrawal of certain goods.

The system offers recommendations for improving the efficiency of the planograms on the basis of the sales data.

“Automatic layout” module

Designed to automatically create planograms.

GreenShelf system takes into account a huge number of factors: terms of marketing agreements with suppliers, stock balances, customer demand, basic rules of product display, including margins, revenues and others.

Planograms can be generated based on pre-set criteria:

  • Category of goods
  • Product group
  • Price segment
  • Shelf priority
The creation of the GreenShelf system is of great significance for the retail market.

Market trends give us the reason to believe that companies that seek to automate merchandising processes gain a clear competitive advantage in an increasingly fierce battle for customer loyalty.