What is Merchandising in Retail?

retail merchandisingRetail Merchandising is the connection between retail marketing and sale on the front end and on the back end, it consists of the supply chain. Merchandising in retail answers the four most important questions (the four W’s): What to sell, Where to sell, When to sell, and Who to sell to.

Retail Merchandising on the front end refers to products that are for sale and the display of those products, as well as the kinds of activities that push sales in a retail environment. In essence, it is everything that a merchandiser does to sell and promote products to a customer in the store. It is the merchandisers’ job to maximise the potential of selling the products in the store.

These activities include creating attractive in-store retail display’s, planning and promoting sales using POS and other in-store retail marketing tactics.  

The way merchandise is displayed in retail plays a major role in sales since it is a key driver in attracting customers into your store. Once they are in your store you should stimulate their interest and persuade them to buy your merchandise through different techniques such as; cross-selling, and give them valuable information about the products that could encourage them their decision-making process.

In terms of visual display, it also refers to packaging, product selection, pricing, and displays that stimulate customers to buy more.

Merchandising Definition

Merchandising by definition is promoting sales of products by presenting it to the market at the right price, in the right quantity, in the right place, at the right time using advertising, marketing, and attractive displays.

Why is Retail Merchandising Important?

Effective merchandising has numerous benefits including       retail merchandising

  • Increased sales
  • Having the right merchandise at the right time
  • Customers will want to spend more time in your store
  • Brand identification and customer loyalty
  • Faster inventory turnover
  • Add on sales, customers will buy more than just one item

Types of Merchandising

As more consumers are turning to online shopping, brick and mortar retailers need to use new solutions to keep customers coming back for in-store experiences that they fundamentally miss if they are shopping online. Creating new and unique experiences through different types of merchandising in the store should be every merchandiser’s goal. This can be done by creating enticing and unique merchandise displays that drive brand awareness and share valuable information about products. These are a few types of merchandising trends that are taking over:

Interactive Retail Merchandising Displays

Numerous brands are investing in interactive retail merchandising right now because they are catering to important senses of a customer; smell, sight, sound, taste, and touch. Utilising these senses is important to the customer before making a purchase. This is where online retailers can not help the customer overcome any objections by being able to interact with the merchandise. Make sure you are taking advantage of this by allowing your customers to interact with the merchandise by always having at least one of the products out of the packaging to allow the customer to experience it or hand out samples.  iPads is another great way to display lifestyle videography which adds value to the merchandise since it inspires and helps the customer visualize how they can experience the brand.

Virtual Reality
This is a unique new approach that engages retail customers with the brand and immerses them in the feeling of owning the merchandise. This gives them the opportunity to try merchandise out before they purchase it and allows them to imagine what they can do with the product. For instance, North Face offers different virtual reality experiences to customers, one of them being “North Face Nepal” which puts them in a winter wonderland setting in Nepal allowing them to experience something that will encourage them to buy all the right merchandise for their cold but beautiful journey. Another brand to do this is Toms, whose mission is “one for one” in which Toms will donate a pair of shoes for every pair you purchase. Their virtual experience will take you to Peru where you can see the children receiving their shoes. This creates an emotional connection and brand loyalty that is far stronger than any other method would allow. These experiences will instantly win your customers over and lead to increased sales as well as admiration for your retail space for implementing such new and exciting technology that they would only find in your store. Virtual reality is being more affordable making this an option for almost all retailers.

Pop-up Shops

This type of fashion merchandising is a huge trend that is earning retailers over 10 billion in sales. This allows retailers to try out new locations, test out designs and other ideas at a fraction of the cost of having a long-term retail space. Pop-up shops are really all about the essence of merchandising since it is all about being in the right place, at the right time, with the right products. Around the holidays this can be extremely profitable since this is when consumers are spending the most money on shopping. It is beneficial to take advantage of all the unique locations that might be available to you and really speak to your brand and merchandise.

retail merchandising

Creating a Story Around Merchandise

This is a targeted marketing approach which is extremely successful since it’s targeted at a specific customer who wants to achieve something and you are offering the solution by providing them with everything they need to achieve this. Examples could be wanting to be more fashionable and up on the latest trends, creating an amazing living environment to be proud of, or be a better chef. These narratives can change from season to season targeting current events and times of the year. As your merchandising your retail space keep these stories in mind and the objective of who your target customer is, what do they want, and what advantage can you give them for coming into a retail store. Then plan your display and organize your products to help them accomplish their goals and live out these

idolized stories with your merchandise.

Retail Merchandising Process

As part of the retail merchandising process, the merchandiser should monitor the types of products carried in each location, deciding what the price points should be, and displaying the merchandise in the most effective manner.

The retail merchandising process includes:


Review the following to create goals and a plan that is cohesive with your target market; your existing and potential customers, what kind of a store image do you want, marketing approach, and sales goals.

Selecting Merchandise

Reviewing your sales to know what works and what doesn’t is crucial since this is a direct indication of what your customers shop. Trend forecasting is also important in this step so that you can select merchandise that customers will be looking for while keeping in mind what generally works for your store. The goal is to ensure merchandise is satisfying the needs of your target customer which is why reviewing your customer demographic and creating customer personas can be extremely helpful.


Selecting the right amount of stock to be sure to meet the customer demand but not have dead stock left over at the end of the season


This includes the selling and buying perspective. For in-store merchandising, it relates to testing prices in your store to see what the customer is willing to spend. Whereas from a buying perspective you want to make sure you are calculating all expenses of buying the products as well as overhead into the equation to then subtract that from what you think you can retail it for to make sure you have high enough profit margins.


Making sure to receive your products at the right time can be a major factor whether your merchandise sells or not, things to keep in mind are receiving trend pieces while they are still in demand and at its peak, and keeping in mind seasonality.

As part of the process, the merchandiser pays close attention to the types of products offered for sale, how to best present those products to consumers, and determining what is a reasonable retail price for each unit sold. The product assortment is the core of the retailing service. A retailer’s total product offering is called a merchandise mix or product range. At a strategic level, merchandise management includes the process of selecting the right items for a store and, at an operational level, ensuring that they are available when customers want to purchase them. Items in the assortment are organized into groups, the so-called categories. Merchandise planning encompasses selecting the right categories and the items within them. The selection of the appropriate items for a store refers to the breadth and depth of the assortment, quality levels, and the brand portfolio.

As part of the retail merchandising process, the merchandiser should monitor the types of products carried in each location, deciding what the price points should be, and displaying the merchandise in the most effective manner. What a retailer offers in product assortment is at the core of everything in a store.

Retail Merchandising Tips

retail merchandisingEffective merchandising in retail can be difficult if you do not know exactly all the techniques that can be used to maximise sales through displays, merchandise, and pricing. Here are some merchandising tips to help you make the most of your products and space.

Lifestyle Merchandising

When merchandising it is important to think about your customers that you are selling to and the lifestyle that you want to convey. Lifestyle marketing is best demonstrated through Tommy Bahamas. They don’t market towards demographics such as age but rather through the ideas and life experiences wanted by their customers.

Pricing Merchandise

Testing what customers are willing to pay for experimenting with pricing is the best way to benefit you and your customers.

3 Price Categories of Merchandising

These three categories include; expensive, middle, and discounted merchandise. A good rule of thumb is to have 10% of your stores’ products be expensive and another 10% be discounted, and the other 80% should be your stores’ average price (this will vary depending on what the price point is of your store). The average price point products are what makes up the most sales but it is important to include the other two categories since this is what will wow customers and add variety to your store.

Merchandise Visibility and Presentationretail merchandising

Merchandise has to be visible and presented in a way that makes it easy to access for the customer. Customers usually only buy what they can easily see as well as what they engage with. This can be achieved by having most things on hangers since this allows the customer to see more of the merchandise, as well as makes it easier for them to skim through. If things are folded it makes it harder for the customer to see what it looks like which is why mannequins or POS with pictures of the products is more likely to entice your customers in unfolding the products. This is why visual merchandising and window displays are so so important.

Range of Merchandise

The customer should have a range of merchandise to choose from to give them the sense of choice. There is a fine balance between having product options and overwhelming the customer. It is important to limit the amount of merchandise on the shop floor so that there is not an overcrowded feeling which causes stress and anxiety. You can easyíly limit the amount of merchandise you have on the floor while still showing a variety of styles by having at least 3 of each size out and the rest in back stock and refill when the item is purchased.