The Gray Cat Blog

A comprehensive collection of blogs designed to assist small business owners and multiunit operators.

The Keys To Merchandising

Feb 06, 2023

“Merchandising, merchandising, where the real money from the movie is made. Spaceballs the T-shirt. Spaceballs the lunchbox. Spaceballs the coloring book. Spaceballs… the flamethrower! Kids love it. And my favorite, Spaceballs the Doll – me!” – Yogurt from the movie Spaceballs

Merchandising is a critical aspect of how “shoppable” a store will be. Conceal or confuse the customer with your merchandising and it won’t matter if you carry the top brands, the customer will become frustrated and leave the store. Many retailers simply “stack it high and let it fly” without considering the nuances of proper merchandising.

By guiding the customer through your store with their favorite products that are easily accessible, the retailer has an excellent opportunity to turn merchandise inventory more quickly and thus increase profits. Failing to provide the top products due to out-of-stocks or through cluttered merchandising – along side their corresponding complementary products – will frustrate potential customers.

The goal with an overall merchandising strategy is to make the shopping experience quick, efficient and easy for the customer. While some customers may wish to “shop” the store and take more time, let that be their choice, not forced into that mode by poor merchandising. Let’s take a look at some specifics:

Display Area: A clearly delineated display area helps guide customers to distinguishable merchandising sets that allow easy shopping and ultimately, purchasing. Merchandising can be highlighted with specific store designs and gondolas. All too often, retailers cram products onto shelves without rhyme or reason and expect the customer to navigate through their purchasing. Make the set and display easy for the customer to say “yes”.

Fixtures: Fixtures should be used to accentuate the merchandise, not conceal it. Select fixtures that allow for the product to be showcased and easily stocked. Fixtures that are too high prevent inviting site lines as well as create a security risk. Dark, dingy and filthy fixtures detract from the products.

Merchandise: Of course, selecting the most consumer-preferred merchandise is critical to the overall success of your store. Category management strategies call for the appropriate number of SKU’s for the highest moving items and the premium position on the fixtures. Out-of-stocks not only will hurt the immediate sale, but will cast doubt in the minds of the consumer on whether the store can be trusted to have their favorite brands on their next visit. In some cases, one out-of-stock experience for the customer will result in the customer never returning.

Plan-O-Grams: Every product should have a preordained placement on the merchandising fixture. A plan-o-gram is a tool that visually communicates the placement and the pricing associated with those products within the category and/or fixture. Haphazardly placing products leaves profits on the shelves instead of in the store register.

Pricing: Pricing should be considered within a holistic, store strategy. In particular, if multiple people are making pricing decisions for products throughout the store, be careful to ensure that “not everything in the store is on sale”. A collective pricing strategy enables a retailer to drive volume with certain products while protecting margin with others. The success lies in the combination of both of these approaches so that the store optimizes overall revenue and profits.

Signage: Signage is a crucial element providing both directional messaging and price points. It is critical that signage not be overwhelmingly busy or too plentiful that the store becomes a cacophony of messaging. Customers need to be informed throughout the store rather than inundated with overcommunication.

Product Adjacencies: Placing products that are complementary next to one another enables the average ticket sale of the store increase. If you are selling shirts, having ties merchandised next to them is an excellent example of a merchandising product adjacency strategy. Much like plan-o-grams and positioning the top selling items in the best places, many stores that fail to link products with adjacency placement, miss out on sales and profit dollars.

Want more ideas?  For more information on Merchandising, visit the Gray Cat Learning Series:

John Matthews, President & CEO, Gray Cat Enterprises, Inc.

John Matthews is the Founder and President of Gray Cat Enterprises, Inc. a Raleigh, NC-based management consulting company. Gray Cat specializes in strategic project management and consulting for multi-unit operations; interim executive management; and strategic planning. Mr. Matthews has over 30 years of senior-level executive experience in the retail industry, involving three dynamic multi-unit companies. Mr. Matthews experience includes President of Jimmy John's Gourmet Sandwiches; Vice President of Marketing, Merchandising, Corporate Communications, Facilities and Real Estate for Clark Retail Enterprises/White Hen Pantry; and National Marketing Director at Little Caesar's Pizza! Pizza!