If retail operations were as simple as dumping product on the sales floor, there would arguably be a lot less work for managers and store employees. The truth is—even for warehouse stores such as Costco or discount grocers such as Aldi—how products are arranged and promoted within the store is an essential part of the business. And generally this work falls under the label of merchandising, a term that encompasses everything from signage and in-store displays to product demonstrations and promotions.
- Shopify defines merchandising as “everything you do to promote and sell your products once the potential customer is in your store.”
- Indeed offers a similar definition and adds “this can include all promotion and marketing activities from the initial planning stage to the execution stage.”
Here are some concrete ways retailers are overhauling their merchandising practices as they try to appeal to a customer base that is increasingly cautious and discerning:
Brand-forward merchandising
While promoting specific brands has always been part of the merchandising process, some retailers are finding new ways to give them extra real estate on the sales floor. Ace Hardware’s new store format, unveiled in August, aims to create immersive showrooms for select product makers. The company said its goal is to make it easier for customers to bundle purchases across a single brand, like, for example, buying accessories with a new grill.
The rise of shop-in-shops also fits into this trend. Kohl’s is increasingly relying on partner brands with designated in-store shopping areas to drive sales. The department store expects these shop-in-shops to make up a quarter of sales over the next several years.
Keeping it fresh
For others, just keeping their merchandising fresh is the priority.
Best Buy is currently remodeling its entire store fleet, and that has entailed “leveraging the space in the center of our stores in the most exciting, relevant, and efficient way possible,” CEO Corie Barry told shareholders this year. For example, the electronics chain is removing physical media, updating its digital imaging, and right-sizing certain categories, given that less product needs to be on the sales floor due to the shift to digital shopping. She also said the company will partner with vendors, similar to Ace Hardware, to create more branded in-store experiences.
Tech-powered merchandising
Then there is the increasing role of technology on the sales floor. Walmart is pioneering a number of tech and AI-powered merchandising practices, including transitioning to digital shelf labels across its footprint. The company said these tags will allow it to change prices in real-time, and make it easier and faster for employees to place orders for fulfillment.
Brands, meanwhile, are employing technology as well to help retailers merchandise. Hershey launched an augmented reality (AR) app last year designed to help sales leads visualize sales floors and determine where products should be located. It then uses another technology called image recognition (IR) to determine how a given placement is impacting sales.