What is 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.
In both brick-and-mortar and digital stores, a variety of merchandising techniques are used to arrange products, communicate their value, and create an optimal customer experience. Many disciplines fit under the umbrella of merchandising, and there are a variety of merchandising types. These include, but are not limited to:
- Product merchandising
- Retail merchandising
- Visual merchandising
- Digital merchandising
- Omnichannel merchandising
For an in-depth look at merchandising’s origins and future directions, Retailing by Patrick M. Dunne, Robert F. Lusch, and James R. Carver is a classic resource:
A great way to answer “what is merchandising?” is to tie it back to history.
For starters, merchandising is old as trade itself. Buyers and sellers have always entered into dynamic relationships whereby the former was focused on providing enough value to make the sale and the latter was focused on understanding if the value was worth the buy.
Step into the markets of Varanasi, India, one of the oldest continuously inhabited cities, and you’ll see that there are parallels between ancient forms of merchandising and even the most digitally-focused responsive merchandising efforts of today.
Like most of the world’s outdoor marketplaces and certainly like the merchandising spaces within shopping malls, elements of visual merchandising are on full display in Varanasi. And many of today’s merchandising techniques, including the use of color and the manipulation of traffic, are used as well.
What we see today as new merchandising techniques are simply fresh takes on what has existed for millennia.
Today’s use of holograms to get the attention of shopping mall visitors, for example, isn’t all that different to how snake charmers in Varanasi draw the attention of tourists to particular stands.
And merchandising displays have always been important, whether we’re talking about iPhones or meat.
Cycles and variety in merchandising
Today’s merchandisers, just as they’ve always done, are leaning into changes rather than holding on to what’s comfortable. They’re at once embracing new technologies and listening to customers. And they’re shaping (and being shaped by) digital merchandising’s continuous evolution.
However, to understand merchandising, it’s important to understand how cycles and variety play key roles.
For example, some merchandisers, such as chocolate shops, can see upwards of 80% of their total sales come during the holiday season. For them, constantly creating new chocolates, discounts, and enticing displays will not be as important as making sure they have a strong merchandising strategy for the months of October, November and December.
Additionally, what merchandising is (and what form it takes) depends quite a bit on the variety (of geography and of the products and services themselves).
In San Francisco, for example, hardware merchandisers aren’t going to be displaying bags of salt and snow shovels the way they will in Chicago.
So while the fundamentals of merchandising will remain the same, the strategies and techniques of the practice will change. This can include changes in the following, among others:
- How first impressions are made
- How lighting is used
- How traffic is manipulated
- Which metrics are tracked
- Which scientific merchandising principles should be applied
Supply chains in merchandising
Lastly, no discussion of the basics of merchandising can be complete without mentioning the merchandising supply chain.
Whereas many students see merchandising as the visual display and advertising of products, merchandising also involves the behind-the-scenes work of making the products available.
This can include ordering from wholesalers and managing merchandise inventory, which incorporates elements of accounting and business management.
For a better understanding of supply chain management, check out Essentials of Supply Chain Management by Michael H. Hugos: