Merchandising Types and Examples

Merchandising Types and Examples

Introduction to Merchandising

What is merchandising? Merchandising is the practice and process of displaying and selling products to customers. Whether digital or in-store, retailers use merchandising to influence customer intent and reach their sales goals.

Establishing the right merchandising strategy can depend on a variety of factors, such as sector, product qualities, available space, and whether the retailer is displaying in a physical or digital store. Additionally, there are various schools of thought on which types of merchandising are most effective in particular industries and departments.

The history of merchandising is as vast as the history of trade itself—even the ancient Ebla tablets (dated ca. 2500 BC to ca. 2250 BC) are predominately about the trade and commerce of the time. For this reason, it can be helpful first to understand the basic types of merchandising before seeing merchandising examples.

 

Types of Merchandising

Types of Merchandising

Before exploring the merchandising types listed below, please re-read the original definition of merchandising. This will provide a base for what’s to come.

Please note that these are only a few common types of merchandising. This is not meant to represent an exhaustive list.

For a deeper dive into apparel merchandising, I recommend Apparel Merchandising: The Line Starts Here by Jeremy A. Rosenau and David L. Wilson.

If you want to explore all aspects of in-store visual merchandising, check out Visual Merchandising: Windows and in-store displays for retail by Tony Morgan.

And if you need other book or resource recommendations on any of the merchandising topics listed below, feel free to message me (Cameron Conaway) on Twitter or LinkedIn.

Lastly, for ease of navigation, you can click on each of the questions below to be taken to the answer further down the page.

Let’s jump in. Here are a few types of merchandising:

 

What is product merchandising?

What is product merchandising?

Product merchandising involves all promotional activities used to sell a product. Product merchandising can refer both to in-store or online products.

Although often incorrectly used as a synonym for service merchandising (the promotional activities used to sell services), product merchandising can also refer to either physical or digital products.

For example, the definition of product merchandising applies whether you are merchandising shoes in-person or online, and even if you are merchandising a product that isn’t physical, such as an eBook.

Additionally, because product merchandising refers to both in-store and digital, it includes all promotional activities that take place in a store (such as shelf displays and end caps) and online (such as web design and on-site search).

 

What is retail merchandising?

What is retail merchandising?

Retail merchandising refers to all promotional and marketing activities that in some way contribute to selling products to customers in a physical retail store.

The definition here is limited to the physical, but it can be applied to a variety of merchandising venues—from traditional brick-and-mortar malls to annual pop-up events.

However, with the continued rise of digital merchandising, the term retail merchandising is increasingly being used to describe digital merchandising as well. This trend is likely to continue, especially because research suggests that 2017 will be the first year in history that digital retail sales will surpass in-store retail sales.

 

What is visual merchandising?

What is visual merchandising?

Visual merchandising in the retail industry refers to all of the display techniques used to highlight the appearance and benefits of the products and services being sold.

Visual merchandising can includes elements of spacing, lighting, and design, and is a term that can be applied both to in-store merchandising and online merchandising.

In regards to the in-store retail experience, visual merchandising includes aspects such as floor plan layout, color palette selection, three-dimensional displays, and product and banner alignment.

In regards to the digital retail experience, visual merchandising includes aspects such as web design, the use of GIFS and video, and any other visual design element used to highlight the features and benefits of a product or service.

 

What is digital merchandising?

What is digital merchandising?

Digital merchandising involves all promotional activities used to sell a product online. Often referred to as eCommerce or online merchandising, digital merchandising can include everything from site performance and digital product displays to digital marketing and email marketing initiatives.

Unlike terms such as retail merchandising, which were originally used to describe the in-store experience but are now expanding in their definition, digital merchandising is rooted 100% in the digital retail experience.

That said, as the in-store and digital experiences continue to merge, the digital experience may also occur in physical stores.

Take, for example, Bonobos. They started out as an eCommerce store, but now also offer physical stores referred to as Bonobos Guideshops. No physical merchandise is sold in these stores. Instead, associates help customers find clothes and discover their fit before asking the customer to place a digital order.

 

What is omnichannel merchandising?

What is omnichannel merchandising?

Omnichannel merchandising refers to creating a unified customer experience across all possible touchpoints of the customer journey.

For retailers with physical and digital stores, omnichannel merchandising involves creating a seamless customer experience—even if the customer moves from one to the other (as in the Bonobos example above).

Omnichannel merchandising (also referred to as omnichannel retailing) is a topic of increasing interest and research—especially because physical stores are increasingly embracing digital.

Additionally, omnichannel retailing is often used to describe all of the elements within a single customer journey—regardless of where each element takes place.

Let’s create an example here:

A customer visits a digital store through finding an organic piece of content via a Google search. From there, they search the online store and build out their cart, but then at the last minute they abandon their cart. In the next 30 minutes, the digital retailer sends a personalized behavioral email showing the customer what’s in their cart and offering a 5% discount to complete the purchase. The customer accepts the offer and completes their purchase.

This experience could be referred to as an omnichannel merchandising experience because the customer moved from a search engine, to on-site, to their email, and then back to on-site.

 

Merchandising Techniques

Merchandising Techniques

The types of merchandising (and certainly the merchandising examples covered below) can be understood on a deeper level when paired with knowledge of a few merchandising techniques.

Consider the technique of cross-merchandising, where items that are in some way related are displayed in close proximity to encourage additional sales (such as bread with peanut butter).

Again, this is not meant to be a complete list of merchandising techniques, but it can serve as a base from which to improve your overall merchandising knowledge.

 

First impressions in merchandising

First impressions in merchandising

Making a strong first impression in merchandising is a critical aspect—whether it is to entice window shoppers at a physical store or those who have recently landed on the home page of your website.

Let’s first look at the in-store experience.

Retail merchandisers try to control as many variables as possible, knowing that those first initial moments are what may influence the customer to stay and browse around.

While these physical first impressions may certainly impact that first step into the store, first impressions are increasing formed digitally—through an advertisement on television or Instagram, for example.

Similarly, making a strong first impression in digital merchandising is about controlling a variety of variables. Take site speed, for example. Research from Google found that “53% of mobile site visits are abandoned if pages take longer than 3 seconds to load.”

Speed is also a critical component when it comes to customers searching on your site. Site search is often one of the first ways a potential customer engages with a site, so making a strong first impression here can lead to a better customer experience and even revenue increases.

Unfortunately, many digital retailers are still asking customers to type in their product search, click submit, and then hope that they stumble on something relevant.

For the above reasons, more and more retailers are taking site search seriously. Our own research revealed that intelligent site search is one area where elite retailers are separating themselves from the pack.

 

Lighting in merchandising

Lighting in merchandising

Manipulating light is an important part of all types of merchandising. Just as a theatre production uses light to convey moods and highlight characters and scenes, modern merchandisers use light to display products, highlight particular promotions, and even influence the mood and energy of their potential customers.

The use of color plays an important role in purchasing decisions, and lighting can be used to highlight certain colors and even steer customers in certain directions.

Apple, for example, is known for using clean white backgrounds to display their steel gray computers—and they keep this consistent whether you are in their physical store or shopping on their site. This color and lighting contrast conveys modernity and mechanical or technological precision—elements that many people would associate with the Apple brand.

Additionally, just as casinos in Las Vegas create a well-lit, diversely colored experience that makes you feel as if you’re outside and do not need to leave, lighting can be used to make customers feel a variety of sensations that may influence customer intent or otherwise create a memorable brand association.

 

Traffic in merchandising

Traffic in merchandising

Every type of merchandising is influenced by traffic. This can include everything from the foot traffic of customers walking into your retail store to the digital traffic of potential customers visiting particular product pages.

Physical traffic can be influenced by end caps, floor plans, and product displays. Digital traffic can be influenced by search engine optimization, social media, and other digital marketing initiatives.

Traffic, however, can also be considered part of a merchandiser’s technique. Consider how many major supermarket chains place the milk in the back of the store.

Some grocery merchandisers refer to this as “building the basket.” Knowing that many customers are coming in and will purchase milk, they put it in the back of the store in the hopes that the customer will “build their basket” either on their way to the milk or on their way back to the register.

Likewise, digital marketing leaders such as Andy Crestodina often talk about the importance of understanding your site’s traffic. “Think of your website like a highway,” Crestodina often tells his audiences. In this metaphor, Crestodina says that understanding your digital traffic flow is critical to understanding how to optimize your site for the customer journey.

 

Merchandising metrics

Merchandising metrics

There are many merchandising metrics, and merchandising techniques can be determined by which merchandising metrics are considered the most important. The sales-per-square-foot metric, for example, is one popular efficiency metric. It determines the ratio of sales to total floor and shelf display space.

There are many other metrics, including CAC (the cost of acquiring a new customer) and RPV (revenue per visit).

For a deeper dive on merchandising metrics, Merchandising Mathematics for Retailing by Cynthia R. Easterling, Ellen L. Flottman, Marian H. Jernigan, and Beth E.S. Wuest may be a helpful resource.

 

Science in merchandising

Science in merchandising

As you’ve probably gathered at this point, merchandising types and techniques are not simply influenced by the aesthetic leanings of each individual merchandiser.

Science plays a large role as it relates to influencing which merchandising techniques will work the best in particular environments and sectors. The field of merchandising science is about solving retail challenges through the application of data science.

Responsive merchandising, the real-time understanding and attentiveness to a potential customer’s wants and needs, also demands that merchandisers are using the latest advances in data science to understand and influence the intent of each customer.

As alluded to in a few sections above, successful retail strategy demands a fundamental understanding of human psychology. Additionally, research from Forrester and others is showing that the rise of eCommerce merchandising means that retailers are increasingly turning to artificial intelligence not only to automate mundane tasks but to deliver more relevant, personalized experiences for their digital customers.

This had led to a phenomenon referred to as “AI-washing” whereby solutions providers are losing sight of showing how their product helps customers because they are blinded by the hype and excitement around artificial intelligence.

 

Merchandising Examples

Merchandising Examples

Now that we’ve covered several types of merchandising and various merchandising techniques, let’s round out our knowledge base.

Seeing examples of merchandising is a great way to pull all of your knowledge together. Many of the examples mentioned below are those that will be familiar to you. Rather than describe in-depth what they are, I’ll highlight a few key points that make them unique in the retail industry.

 

What is fashion merchandising?

What is fashion merchandising?

Fashion merchandising is the promotion and sale of clothing and accessories from brands and designers. As such, fashion merchandising involves all marketing-related activities—from building relationships with brands and designers to promoting and selling an array of clothing and accessories.

Some separate the term fashion merchandising from apparel merchandising. To them, fashion merchandising refers to more high-priced, trend-setting products.

Like other types of merchandising, fashion merchandising can encompass a variety of aspects that may not typically be viewed as promotional—such as fabric production and purchasing directly from suppliers.

Fashion Retailing: From Managing to Merchandising by Dimitri Koumbis may be a helpful resource.

 

What is toy merchandising?

What is toy merchandising?

Toy merchandising is the promotion and sale of products meant for children to play with. Toy merchandising at once has to enthrall and engage children while influencing the adult decision-makers to make a purchase.

For this reason, it’s an interesting field because the end-user is likely far apart in age from the purchaser.

As it relates to in-store retailing, toy merchandising is often about creating an immediate and powerful first impression for the child in the hopes that this leads the child to influence the adult to make a purchase.

One unique hook is seen in the educational toy sector, where children are influenced to want and play and parents are influenced by their wanting an educational experience for their child.

 

What is technology merchandising?

What is technology merchandising?

Technology merchandising is the promotion and sale of products and services associated with the technology space. Products can include smartphones and computers, and services can include data storage and cloud services.

Technology merchandising holds a unique position in that it’s essential to convey the end-user benefit while also positioning the brand or company as a technology leader.

Many brands focus too much on positioning themselves, which can lead to basic promotional failures—such as neglecting to show the customer the benefits of their service or product.

Likewise, technology companies can get lost in their own lingo or language. Unlike most toy companies which are hyper-focused on conveying their product’s value in as clear a way as possible, technology companies can fall into the trap of speaking in a way that doesn’t resonate with their targeted audience.

 

What is grocery merchandising?

What is grocery merchandising?

Grocery merchandising is the promotion and sale of all products housed within a traditional grocery store or supermarket. Grocery merchandising can also include the display and layout of farmer’s markets as well as other food and drink related spaces and events.

Additionally, grocery merchandising can also take place inside gas stations or other small non-grocery specific venues where food and drink items are displayed.

A fantastic (and dare I say must-read) resource on this topic is Grocery: The Buying and Selling of Food in America by Michael Ruhlman.

 

What is eCommerce merchandising?

What is eCommerce merchandising?

Ecommerce (electronic commerce) merchandising describes any and all types of business or commercial transactions that involve the purchase and sale of goods and services via the Internet.

Ecommerce merchandising, then, involves all activities surrounding the promotion and sale of products and services that are sold digitally.

In an eCommerce transaction, products can be delivered physically or digitally.

eCommerce has transformed all business operations, and as a result many predict the term itself will have a short shelf-life. As Steve Dennis wrote at Forbes, when most everything becomes eCommerce, we’ll simply refer to all types of commerce as commerce.

And as Amazon is of course a pioneer in this regard, The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone may be a helpful resource for learning about the rise of eCommerce.

 

Final thoughts

Like all sectors, merchandising is undergoing a rapid period of change. While many principals—including some dating back to the aforementioned Ebla tablets—remain the same, the industry is being transformed by technological advancements and what’s being referred to as “the age of the customer.”

For some additional reads on the future of merchandising, check out these articles on our blog: