What Is Merchandising? (Plus Types and Benefits)

By Indeed Editorial Team

Published 19 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Merchandising is a sales strategy that promotes products and presents them to customers in a way that encourages them to make a purchase. Retail businesses with in-store and e-commerce operations typically use this strategy through various techniques and methods to improve their sales. By exploring the merchandising strategy, you can determine effective methods of displaying and promoting a business's products to its customers. In this article, we define merchandising, discuss the types, detail the popular techniques and outline the common benefits.

What is merchandising?

Merchandising is a sales and marketing strategy that influences customers to make a purchase decision. There are several types of this strategy that serve the same purpose but incorporate varying techniques, such as retail and visual merchandising. Businesses that sell products typically incorporate these sales and marketing strategies into their operations. They can help businesses increase sales, improve brand awareness and generate leads.

Some techniques for promoting products can be complex and some can be relatively simple. For example, displaying products in a window so potential customers may view them is a simple technique. A complex technique may be installing lighting that influences customers to feel specific emotions towards a product. A business usually uses a combination of merchandising techniques to alter consumer behaviour. Merchandising typically differs between physical stores and e-commerce platforms, but the purpose remains the same.

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Types of merchandising

Below, you can explore the typical types of merchandising that physical and e-commerce businesses may utilise in their sales and marketing strategy:

Product

This promotional strategy is relatively broad and may include techniques from other strategies. It usually refers to all business activities that promote a product, from in-store visual displays to online advertisements. Other merchandising methods are technically subsets within this strategy, as product merchandising incorporates all activities regarding the promotion of a product.

Visual

This display strategy is specific to gaining customers' attention through visual display techniques. It involves many techniques that alter the appearance of an environment to entice customers to make a purchase. Physical stores and online stores may use this strategy to promote their products. For example, a business may arrange the store layout so customers typically view products in a specific order. For an online store, a business may develop an interactive graphic user interface that encourages customers to continue navigating the website. Visual merchandising focuses on fostering an environment where customers feel inclined to make a purchase.

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Retail

Retail merchandising is specific to physical stores. It may incorporate techniques from visual and product merchandising that aim to entice walk-in customers to make a purchase. For example, a business selling apparel may display its products on life-size mannequins. This technique allows customers to visualise what it may be like to own the products. Another technique in this strategy might be to display products outside the store so customers can view products without physically entering the store. This can improve foot traffic and ultimately lead to more sales.

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Digital

Digital merchandising is specific to businesses that operate on e-commerce platforms. It involves many visual merchandising techniques and development processes that improve the customers' experience while browsing the online store. Customers who enjoy navigating an online store may feel inclined to make a purchase. Techniques that improve customers' online experience can include website colour schemes, product descriptions, page layouts and interactive graphical user interfaces.

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Omnichannel

This method of merchandising helps businesses promote and display products across multiple online platforms. It can also help businesses connect offline customers to their online promotional techniques. For example, if someone purchases a product in a physical store, they may provide their email address to the business so they can receive online promotions through email marketing. Another example of omnichannel merchandising may be a post on a social media website encouraging viewers to visit the business's online store.

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Common merchandising techniques

Below, you can explore some typical merchandising techniques for physical and e-commerce stores:

Physical retail store techniques

Below, you can explore some common merchandising techniques for physical retail stores:

  • Window displays: This is usually a simple technique that displays products in a store window. Potential customers can view products without entering the store.

  • In-store displays: This refers to displaying products in the store, such as a mannequin or a hanging wall frame. This technique can allow customers to visualise the products.

  • Interactive displays: An interactive display can provide customers with an engaging experience while viewing or testing a product. For example, when browsing headphones, an interactive display may allow customers to test the headphone quality by listening to music.

  • Product placement: Where you place a product can influence a customer's purchasing behaviour. For example, if you place a product in a clear view, more customers may view it, which can improve the likelihood of a purchase.

  • Themes for products: This visual technique can be excellent for creating an engaging environment. A themed display for a product can influence customers to associate specific emotions with the product.

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E-commerce techniques

Here, you can examine typical e-commerce merchandising techniques:

  • Prominent search bar: A search bar is typically where online customers can search for a specific item. If you place the search bar in a prominent location, customers can locate it easily and discover the variety of products.

  • Effective product organisation: Customers typically have a positive experience when viewing products in logical order. For example, if a retail store organises all its products into categories, customers may have a positive experience while browsing the store.

  • Free shipping offers: Shipping fees might discourage customers from making online purchases. A promotion such as free shipping usually encourages customers to make a purchase, as they can save money on their order.

  • Clear product descriptions: When customers browse products, they typically prefer reading a description of the product's features. A product description can help customers discover new products they might not have originally searched for.

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The benefits of merchandising

Below, you can examine some typical benefits of implementing a merchandising strategy:

Increased profits

The primary purpose and also benefit of merchandising is usually to increase business profits through more sales. By implementing promotional and product display strategies, a business can encourage more customers to purchase products. A higher rate of customer purchases can directly increase the business's profits.

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Enhanced customer satisfaction

Customers may experience more satisfaction when purchasing products from physical and online stores with excellent visual merchandising techniques. For example, a customer may have a higher sense of satisfaction when shopping in a store with excellent lighting and neat displays. Customers navigating online stores may also experience more satisfaction by purchasing products from a website with clear formatting, engaging interactive features and responsive user interfaces. Satisfied customers might feel inclined to make repeat purchases.

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Improved inventory turnover rate

Inventory turnover typically refers to the number of products sold within a ‌period. If this rate is high, a business can experience increased profits and reduced expenses. Retail stores typically require new inventory as seasons change and customer demands increase or decrease. If a retail store has a surplus of inventory, the demand for the products may lower as the season changes. Products with low demand typically sell at a lower price. If a retail store has an excellent inventory turnover rate, it might have a minimal surplus and sell its products while the demand is high.

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Strengthened brand loyalty

As a benefit of improved customer satisfaction, a business might experience an increase in its brand loyalty. Excellent promotional and product display techniques can improve customers' experiences while making a purchase, which can directly improve the rate of repeat purchases. Customers who continuously make repeat purchases typically gain loyalty to the brand. A business with excellent brand loyalty can experience consistent sales, which can allow for effective business modelling, accurate performance forecasting and efficient procurement strategies.

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Improved brand awareness

One of the major benefits of merchandising is that a business can effectively promote its products. This promotional strategy typically improves brand awareness, as more customers notice a business's products. Improved brand awareness can foster many benefits for a business, such as lower price sensitivity, increased sales, higher profits, improved customer satisfaction and increased brand loyalty.

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