It wasn’t too long ago that retailers and consumers were facing a plague of out-of-stock merchandise and empty shelves — on account of supply-chain disruptions in global retail.
Times have certainly changed since then, and so have the challenges. A recent study shows that 50% of retailers in the U.S. are struggling with unsold inventory even after New Year discounting. What’s more, 53% of them believe there could be “dangerous ramifications” if they fail to sell the excess stock.
The good news is, with proper planning, not only can you ensure that the right, in-demand products are available to customers when they need them, but also avoid ending up with excess inventory. This is where a merchandising plan can help.
This article will guide you through the process of crafting an effective merchandising plan for your retail store.
Let’s get started.
What is a merchandising plan and why should retailers care?
A merchandising plan is a detailed strategy or blueprint that outlines how you should select, manage, price, present, and promote the products at your store to elevate the customer experience, create the maximum ROI, boost your brand value, and optimize inventory levels.
Its objective is to present the right products to the customer at the right time, place, and price, in the correct quantity.
Benefits of an effective merchandising plan
According to Bob Phipps, CEO of The Retail Doctor, “Merchandising is one of the most impactful strategies you can implement to influence a brick-and-mortar consumer and cause them to pause and consider.”
He says when customers shop online, they can’t connect emotionally with the merchandise, so most often, they simply look for the cheapest option. However, when they take the trouble to visit a physical store, your display skills give you an opportunity to tell them, “it’s different here.”
“Then, they aren’t just looking for the cheapest but are open to having an emotional connection with your products that they can touch, hold, and try on,” he adds.
An effective merchandising plan can help you:
- Increase sales by creating a visually appealing shopping experience that encourages customers to buy more
- Manage inventory effectively by highlighting products that are popular and in demand
- Build brand awareness by showcasing products in a way that reflects your brand values and image
- Stay competitive by keeping up with the latest industry trends and customer preferences
Let’s now take a look at the different aspects of creating an effective merchandising plan.
Before creating a merchandising plan, it’s important to conduct market research to understand customer preferences and buying habits. Analyze your past sales data, market surveys, and industry trends to forecast consumer demand for the current season.
This will help you figure out how much inventory you may need to order for each product. Remember to take into account the current state of the economy and the sales potential of an item in your calculations.
Based on your target customer’s preferences and past sales data, you’ll need to figure out your product mix — product types, price range, and the number of SKUs for each. You should also think about how you’ll arrange your products on your store shelves.
For example, placing similar products — say beach hats, swimwear, sunglasses, etc. — close to each other is a good way to ring in more sales. Display your most profitable products at eye level or at your endcaps as products placed in these locations generally sell better.
Let’s face it. Shopping can be stressful for some — more so if customers can’t easily find what they are looking for. If your store is dirty, messy, or unorganized, you’re sure to send them packing, never to return.
Retail consultant and influencer, Ian Scott, says, “If stores are poorly presented, all the hard work from marketing, advertising, sourcing, and construction is wasted because shoppers won’t be inspired at the final point of purchase.”
That’s why you should pay special attention to visual merchandising. Let’s take a look at some of its most crucial elements.
Whether you choose a loop, a grid, or a free-flow layout for your store, your goal should be to maximize the floor space so that customers can easily navigate your store and locate what they need.
Also, make sure to incorporate design aesthetics and branding elements throughout your store to offer a fully immersive shopping experience to your customers.
Specialist in retail and consumer behavior, Dr. Esther Pugh, says, “Space is invisible and intangible, yet its sensitive management is absolutely essential for creating atmosphere and ambience.”
In-store signage plays a crucial role in helping customers navigate your store, find the items they need, and perhaps even discover new products in the process. Typically, in-store signage is of three types: informational, navigational, and promotional.
Most customers tend to have a short attention span, so make sure to incorporate smart visual cues that help them make a purchase decision quickly.
For example, sometimes retailers use informational signs to convey the features of a product. While these may be useful, they may not be what it takes to sell. Instead, focusing on a product’s benefits or how it solves a particular challenge may be more effective.
The secret to keeping your customers engaged and inspired is to change up your displays — at least every month. The simplest way to do this is to move around the location of your displays within the store.
Use your displays to narrate a story or offer creative new ideas for using your products. It’s also a good idea to place your freshest, fanciest, dream-worthy impulse items prominently on display at the front of your store.
Remember the old saying, “hope is not a management strategy”. So, don’t just hope that your signage and displays are properly put up, inspect them regularly and assign corrective actions when issues are found.
Pricing and promotion
Your job doesn’t end at getting people in through the door. You should determine your pricing strategy based on your target audience and the competition. It should be competitive, but also take into account your overhead costs and desired profit margins.
Also, plan your in-store advertising such as limited-time sales, special discounts, or seasonal events. Make sure to highlight any deals currently on offer or upcoming sales events to encourage customers to come back in the future.
Implementation and audit
Finally, you must ensure that the execution of your merchandising plan is on point. With a platform like Bindy, implementation of your merchandising plan won’t give you sleepless nights.
You can put all the resources your team needs — customized checklists, best practice photos, and supporting documents — in one place for easier execution and management. Not only will you be able to track compliance in real-time but also take corrective action and uncover opportunities for staff training.
An effective merchandising plan can go a long way in helping you outperform your competitors. In light of the current economic climate and the uncertainty associated with it, it’s even more crucial to get your merchandising plan right.
Follow the tips mentioned above to craft a killer merchandising strategy and leverage Bindy to deploy and verify your program easily. Contact us today to learn more.
OTHER MERCHANDISING RESOURCES
Refer to the Merchandising category for checklists, how-tos and best practices for merchandising.
About the author:
Francesca Nicasio is retail expert, B2B content strategist, and LinkedIn TopVoice. She writes about trends, tips, and best practices that enable retailers to increase sales and serve customers better. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores.