Merchandising is the process of arranging products for sale within a store or other setting. Effective techniques can help increase both sales and profitability. Tips for successful merchandising include placing the most attractive or desirable items in high-visibility areas and understanding the target market for each type of item.
It is a well-known tenant of merchandising that attractive or desirable merchandise draws customers. Placing new, exclusive or unique merchandise in a high-visibility area, such as a display window or end cap, can help entice customers to enter a store, or to stay longer once they are inside. This concept also applies to attractive pricing, which is why sale-priced items are often placed on grocery store end caps or displayed in the front windows of clothing stores.
Perhaps the most important part of merchandising involves knowing the audience. This includes understanding their buying habits so that products can be properly located within the store. For example, a product targeted toward children should be placed at a child's eye level. A new product targeted for men should be placed in an area of the store in which men frequently shop.
Understanding buying habits also aids in the development of special merchandising efforts. For example, if a company has developed an all-new specialty duster designed specifically to clean ceiling fan blades, the company might consider creating special displays to go in the ceiling fan sections of home improvement stores. This alerts customers that the product is new and different, and can draw attention to an item shoppers might not notice in the cleaning supplies aisle unless they were specifically looking for it. Placing related items together can also encourage a larger sale.
Understanding the customer also helps determine the way a product is presented. A customer shopping in a clothing boutique will expect a much different presentation than one shopping at a discount outlet, for instance. Some merchandisers design plans to present the highest-margin items in the most attractive positions so that each sale earns the largest possible return.
Developing a merchandising plan is so important that many large companies have individuals, or even departments, devoted exclusively to this function. In such situations, it is also extremely important to understand how contracts with major suppliers affect the presentation of products. For example, a convenience store might have contracts with two competing soda vendors that stipulate that each vendor be given equal shelf space within the coolers. In order to develop an effective merchandising plan, the merchandiser must understand this requirement.