“Merchandising” may be a term synonymous with big corporations, but it’s actually a crucial component of success for your small business. Your retail merchandising strategy determines the variety and display of products available for sale in a way that entices customers to make a purchase.

Improving sales through better merchandising is a practice as old as the town marketplace, where merchants would carefully arrange their goods to catch buyers’ eyes. It remains just as important today — even for businesses selling products online. To compete in the modern marketplace, it’s crucial to understand the key concepts of retail merchandising.

Offer an enticing retail experience

Often, the first thing that comes to mind when setting up the merchandise in your store is how it will look. But you need more than an eye-catching display to make the sale. What ultimately turns shoppers into buyers (and repeat customers) is an enticing retail experience designed to appeal to your target customer.

Approaching merchandising with the sole focus of making your store look as attractive as possible typically results in an energetic, multicolored, overflowing display of products that will leave shoppers feeling dazed and confused. To create a retail experience that truly stimulates buyers, try focusing on two main goals — projecting a consistent brand image and guiding shoppers through the purchase process.

A consistent brand image will separate you from the rest of the stores crying for shoppers’ attention. Your shop should consistently use specific brand colors, matching signage, a few overarching themes and a steady level of emotion throughout the store. This sense of consistency will also assure your customers that they’re in the right place and help strengthen the association between their experience and your products.

To guide shoppers to purchase, start by getting into the mindset of your target customer and consider what brings them into your store. What do they expect to find, and what might surprise or delight them? Make sure that it’s easy for shoppers to get what they’re looking for, but don’t be afraid to mix in unexpected items or eye-catching displays along the way. As long as the customer feels confident that they’re on the right path, these little diversions will enhance their shopping experience and inspire additional purchases.

Follow the rule of threes for product pricing

From bargain hunters to luxury buyers, every customer considers price when making a purchase. Which is why it’s vital to include pricing as part of your retail merchandising strategy. Settling on the right value for your products is a very complex mix of art and science. To merchandise your products, follow the rule of threes.

Your store should always offer three categories of purchase options:

  1. Expensive, prestigious products
  2. Middle merchandise
  3. Inexpensive buys

For most retailers, the majority of revenue comes from the middle category, rather than the high-end goods or the low-cost trinkets. However, it’s unwise to stop carrying products on the outer ends of the spectrum because they don’t often sell or generate much profit. Even if they mostly buy from the middle, customers will talk about the products on the edge — the bargains and the most expensive items — because they offer a special “wow” factor. This is key to word-of-mouth marketing and is as important as your logo in establishing your store’s identity. Stocking items on both edges of the price spectrum also plays a crucial role in promoting sales of your bread-and-butter products, as most buyers tend to seek out the middle ground.

Keep a close eye on inventory

The cost of keeping inventory on hand is very familiar to small business owners — after all, you have to write the check for the orders (or make the products) that go on the shelves. On the other hand, the cost of running out of stock can be much more damaging in the long run. Your merchandising strategy isn’t complete unless you have a plan to make sure your products are available when customers want to buy them.

If you’re not able to deliver your merchandise to the customer when they want it, your business suffers on multiple levels. The most immediate impact comes in in the form of lost income from failing to make a sale. But there’s also the harm that this experience inflicts on your brand and relationship with the customer — instead of delivering satisfaction, you leave your shopper feeling frustrated. Finally, running out of a product may drive your regular customers to buy from a competitor, which means you may have to work twice as hard to get them back.

There are various formulas for calculating how much inventory you need to have on hand to avoid stock-outs, but as a small business owner, it’s important to stay on the safe side. Unlike larger competitors, you probably don’t have that item available at a nearby store or ready for home shipment from a warehouse, and the stakes are high.

Big retail chains spend a lot of time and money planning out a precise merchandising strategy that’s been designed and tested to appeal to their shoppers. Even so, small business retailers have a natural leg up when it comes to planning a merchandising strategy because you ultimately know your customers better, and can customize your shopping experience on a personal level. While the academic literature on merchandising may seem overwhelming, don’t be afraid to dive in, experiment and find the strategy that makes you stand out from competitors.

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