It’s no small secret that big box retailers such as Best Buy have had a hard time adjusting to our digital retail world. But recently, as reported by the StarTribune, Best Buy had a stronger than expected quarter. Best Buy’s CEO commented on the strong quarter saying “Merchandising, marketing and operational execution were the tactical drivers of our better-than-expected first quarter financial results.” We’ve all heard the term “merchandising,” but what does it mean? Website BusinessDictionary defines merchandising as “The activity of promoting the sale of goods at retail. Merchandising activities may include display techniques, free samples, on-the-spot demonstration, pricing, shelf talkers, special offers, and other point-of-sale methods.” According to the American Marketing Association, (via BusinessDictionary) merchandising encompasses “planning involved in marketing the right merchandise or service at the right place, at the right time, in the right quantities, and at the right price.” This may seem like a no-brainer to some of you, but you might be shocked to see how many stores are in need of improvement or simply get it wrong. Read on for guidance on how to get it right.
The Houston Chronicle published a wonderful piece on the “Advantages & Disadvantages of Merchandising.” It’s our opinion that the advantages effective merchandising presents far outweigh any perceived disadvantages, so we’ll focus on the benefits. The piece identifies three areas of interest you should pay attention to: attracting customers to the store, increasing sales, and changing the retail space.
In order to attract customers to the stores, the Houston chronicle advises the following. “Merchandising can increase the amount of customers who notice and enter your store. With increased traffic may come increased sales and success. Merchandising should start outside, where customers first see the store and make the decision whether to come in and shop or not. Bright signage and manicured grounds, a clean parking lot and well-kept retail structure are all factors that help shoppers to determine if a trip inside is warranted or if the store does not look like somewhere they would prefer to be. What happens once you get them inside is up to your interior merchandising, product line and pricing.”
Once you get them in it’s time to increase your sales. “Effective merchandising can have a clear and definite positive effect on retail sales and the bottom line, which is, after all, the goal of any business approach. Pricing, displays, product packaging and arrangement, sale signs and promotional marketing can all drive sales upward while improving the shopping experience for your customers. Good merchandising can help you to get more out of the same retail space without expansion or renovations. Your customers will begin to associate your attractive merchandising with your store and it may also impact where they go to shop on a regular basis.”
Feng shui is a way of harmonizing people with a surrounding space, and in order to fully harness the power of merchandising you must do so with your retail environment. “Proper merchandising may require the rearrangement of aisles, shelves, display fixtures and the general layout of the interior retail space. Interior spaces should flow more easily while directing the consumer to important sale items and significant displays. An effective retail space brings with it the advantage of flexibility and more usable space. It will also help to create an environment that can handle more people, more efficiently and makes the overall shopping experience less of a chore. Bottlenecks and awkward corners have no place in a properly designed retail space, where wide aisles and unobstructed sight lines are preferable.”
If it isn’t obvious, most successful retailers, including Best Buy, adhere to the core principals of merchandising. We hope this information is insightful, and stay tuned for much more on the subject.