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Glossary – Merchandising

Merchandising

Nikiforov Alexander
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What is merchandising?

Merchandising, derived from the English word merchandising, refers to activities aimed at the effective presentation of products for customers. This process includes a wide range of strategies and methods that help to highlight a product among competitors and attract the attention of the target audience. In the 1980s, Jan Carlzon, the manager of the Scandinavian airline SAS Airlines, introduced the term "Moment Of Truth" (MOT), which denotes the key moments when a consumer forms their opinion about a brand.

In 2005, A. G. Lafley, CEO of Procter & Gamble, expanded Carlzon's concept by highlighting the first moment (First Moment of Truth — FMOT). In his view, it is when the consumer first sees the product that they make a purchasing decision within just 3-7 seconds. This is a critically important moment, as in-store shoppers focus on the product that visually attracts them the most.

The importance of merchandising

According to research, most consumer decisions are made directly in the sales area. About 80% of brand choices are made at the point of sale, and this often does not depend on the product's characteristics but rather on its presentation. This underscores the significance of merchandising, which determines:

  • The product assortment;
  • The methods of product display;
  • The organization of retail space;
  • The distribution of equipment in the area;
  • The provision of information;
  • The pricing policy.

Thus, merchandising encompasses all aspects that influence the consumer's perception of a product and shape their positive impression. A specialist engaged in this activity is called a merchandiser. They represent the brand in retail chains, and in large stores, multiple merchandisers from different companies may work simultaneously, creating a competitive environment.

Key rules of merchandising

There are many rules in merchandising based on the study of consumer behavior and observations of customers. Here are some of the most popular rules:

  • Products with an approaching expiration date should be placed closer to the customer to reduce the amount of expired goods.
  • Products on display should be presented face-forward to the consumer, so they immediately see the product in the most appealing way.
  • Products should be easily accessible, with a clear path to them and simple access on the shelves.
  • Premium products are better placed in separate areas to attract more attention.
  • Products with strong odors should preferably be placed in separate displays to avoid interfering with the perception of other goods.
  • Price tags should be informative so that the consumer can find the necessary information without assistance from the seller.
  • Products should be arranged in a way that encourages customers to spend more time in the retail space.

All these rules come down to a single concept: to ensure an adequate supply of products at the right time and in the place where the consumer is most likely to notice them.

Merchandising tools

To successfully perform their tasks, merchandisers use various tools, including:

  • Ensuring product availability: The merchandiser monitors the sufficient quantity of goods in the sales area, regularly checks displays, and controls stock levels.
  • Placement of POS materials: These materials, such as promotional stands, price tags, and posters, aid in promoting the product and informing consumers about its benefits.
  • Shelf control and maintenance: This includes regular checks of product availability and proper placement, as well as competing with rivals for consumer attention.
  • Placement of additional equipment: Branded shelves, demonstration tables, and other elements help improve access to products and enhance customer comfort.
  • Product display: Creating a planogram is a key step that takes into account customer behavior and supplier requirements.

Communication in merchandising

Merchandising also includes communication with visitors. These can be divided into informational and image-based. The informational component is aimed at rational thinking and immediate results, while the image component focuses on creating a positive image of the product and brand.

The main tasks of the communication policy in merchandising include:

  • Developing a marketing communication program;
  • Selecting advertising placement methods;
  • Providing customers with necessary information;
  • Reducing the time for conscious decision-making and increasing the share of impulse purchases;
  • Creating a favorable atmosphere in the sales area.

The success of communications is influenced not only by visual elements but also by the store's atmosphere, the manner of staff communication, and the overall design of the retail space.