Merchandising is the presentation and promotion of goods that are available for purchase for both wholesale and retail sales. This includes marketing strategies, display design, and competitive pricing, including discounting. Merchandising is important for retailers looking to cultivate their brand, improve the experience of customers, compete with others in the sector, and ultimately, drive sales.
KEY TAKEAWAY
Merchandising refers to the marketing and sales of products.
Merchandising is most often synonymous with retail sales, where businesses sell products to consumers.
Merchandising, more narrowly, may refer to the marketing, promotion, and advertising of products intended for retail sale.
Technology is changing the face of merchandising, with electronic point-of-sale terminals to targeted and personalized mobile ads.
Categories of merchandising include product, visual, retail, digital, and omnichannel.
Understanding Merchandising
Merchandising includes the determination of quantities, setting prices for goods, creating display designs, developing marketing strategies, and establishing discounts or coupons. More broadly, merchandising may refer to retail sales itself: the provision of goods to end-user consumers.
Cycles of merchandising are specific to cultures and climates. These cycles may accommodate school schedules and incorporate regional and seasonal holidays, as well as the predicted impact of weather.
Merchandising can take on different and more specific definitions in regard to different aspects of retail sales. For example, in marketing, merchandising can refer to the use of one product, image, or brand to sell another product, image, or brand.
The word merchandise comes from the Old French word marchandise, from marchand, which means "merchant."
Special Considerations
Since retailers may or may not be producers of the goods they sell, measuring the gross value of all sales provides insight into the company’s performance. This is especially true in the customer-to-customer market, where the retailer serves as a third-party mechanism for connecting buyers and sellers without actually participating as either.
Merchandising may also provide value to retailers in the consignment sector. In this sector, retailers never officially purchase their inventory. Even though the items are often housed within a company’s retail location, the business functions as the authorized reseller, often for a fee, of another person’s or entity’s merchandise or property. Generally, they are never the true owner of the item because the person or entity that placed the item on consignment may return and claim the item if they so choose.
Gross merchandise value is the total value of merchandise sold over a given period of time through a customer-to-customer exchange site. It is a measure of the growth of the business.
All around the world, but most notably in the United States, the reality of merchandising is getting an update. The roles and rules of merchandising are experiencing an evolution. Chief merchants, formerly concerned mainly with the selection and presentation of products, now have broader accountability and a heavier hand in customer experience, as well as the development of design and talent related to display and marketing design.
Because consumer savvy is broadening, and technology is playing such a massive role in merchandising, companies need to stay ahead of consumers’ expectations. Innovation and experimentation have a central role in retailers' merchandising strategies.
U.S. Retail Cycles
In the United States, the routine retail cycle starts at the beginning of January. During this time, merchandising includes the promotion of Valentine's Day and St. Patrick's Day products and related items. Shortly following this, Presidents' Day is represented through special sales and discounts.
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