Careers Business Ownership 5 Must-Follow Retail Visual Merchandising Rules Retailers Must Understand These Merchandising Basics to Be Successful Share PINTEREST Email Print Getty Images Business Ownership Industries Retail Small Business Restauranting Real Estate Nonprofit Organizations Landlords Import/Export Business Freelancing & Consulting Franchises Food & Beverage Event Planning eBay E-commerce Construction Operations & Success Becoming an Owner Table of Contents Expand What Is Merchandising? 1. Present Products Strategically 2. Experiment With Pricing 3. Offer 3 Merchandise Categories 4. Merchandise Should Last 3 Months 5. Focus on Customer Lifestyles By Matthew Hudson Matthew Hudson Matthew Hudson is the author of three books on retail sales and has nearly three decades of experience in the industry. Learn about our Editorial Process Updated on 12/12/18 Understanding how to merchandise properly is a challenge for many retailers. What seems simple to shoppers is not so easy when you're the one responsible for moving product. Merchandising basics can be challenging, especially when some retailers don't know exactly what the term means in practice. If you don't have a clear working definition, it's tough to succeed at merchandising your store and turning a profit. What Is Merchandising? Merchandising is simply the promotion and sale of goods in a store. This term encompasses a lot of different strategies, but there are five basic aspects you need to master as a retailer: how to present it, how to price it, how to offer multiple categories of it, how to get rid of it in a few months, and how to make sure it fits with your customers' lifestyles. You should also recognize that you are catering to a growing percentage of millennial and Generation Z shoppers, who are focused on the following things: They prefer merchandising methods that allow them to touch and feel.They often prefer shopping in stores versus online, but only if merchandised in a way that they find appealing.They value merchandising much more than their predecessor generations. With this being the case, it makes sense to emphasize and improve merchandising in your store. While merchandising has always been important, the new priority being placed on it by these shoppers makes these five rules your new textbook. 1. Present Products Strategically Great merchandising entails having what the customer wants to buy, at the time they want to buy it, at the price they want to pay for it, and presented in a way that encourages a purchase. The way in which customers want to purchase products has changed dramatically, from the peddler in the town square to the one-click purchase on Amazon. But customers aren't really buying specialty items on Amazon; they’re buying everyday basics, like garbage bags and Keurig K-cups for their morning coffee. How do customers want to buy your specialty products? Figure that out, and factor it into your merchandising strategy. No matter what products you sell, you can make them more appealing and accessible with targeted merchandising. Customers used to be satisfied with simply touching and feeling merchandise. Today's customer has been trained to interact. Make sure your displays include a way for the customer to "experience" the product. 2. Experiment With Pricing Pricing plays a big part in merchandising, but there aren’t set formulas. The basic rule is that the higher the price, the slower the rate of sale. However, this rule may not be true for your store, and you need to experiment to find out what pricing rules apply. If you buy something wholesale for $5.00, you may need to sell it at $10.99 to turn a profit. But you can start with an initial markup to $11.99, then later drop to $10.99 and see if that really affects the rate of sale. You won’t know unless you experiment. Pricing doesn't have to be difficult, you just need to test the waters by re-pricing and tracking sales to figure out what customers are willing to pay. 3. Offer 3 Merchandise Categories Think of your merchandise as it would exist on a bell curve. On the right side of the curve lives expensive, prestigious merchandise that makes up 10% of your store’s products. Every store needs these products, even if customers don’t always buy them, because they "wow" customers. On the left side of the curve lives the promotional merchandise, which also makes up 10 percent of your store’s products. Every retail store needs these products too, even if they don’t generate a lot of profit, because they also "wow" customers. In the middle of the curve lives your bread-and-butter merchandise that generate the most profit. Although most of your profit comes from the middle merchandise, customers talk mostly about the left- and right-side products. This is why retailers who remove the high- and low-end products are making a mistake, not realizing they’re potentially removing the products that generate word-of-mouth advertising for their business. Don’t get rid of products just because they don’t turn a ton of profit. Evaluate how those products make your store the right experience for your customer. Even though these products do not sell at the same rate as others, their presence is part of your branding as a leader in your retail space. 4. Merchandise Should Last 3 Months After 90 days, a retailer needs to get rid of their merchandise. Why? Because seasons are three months long and consumption habits for specialty items follow seasonal trends. This may change if you’re a big, high-volume store that needs only about two weeks worth of merchandise at any given time. But if you’re a specialty retailer, you should carry three months' worth. 5. Focus on Customer Lifestyles While merchandising has everything to do with the products you sell, it has even more to do with the customer who is buying your products. And it’s not just the demographics that are important, it’s the psychographics, or what some call lifestyle marketing. Consider the store Tommy Bahama, which doesn’t necessarily market towards a specific demographic or age, it markets towards a lifestyle: the kinds of ideas, philosophies, and life experiences wanted by its "tribe." Urban Outfitters and Anthropologie also make clear examples of this type of merchandising. Anthropologie especially understands the idea that if you know your tribe, you can sell them lots of different items from the same store—even items that don't necessarily fit together, such as clothing and kitchen drawer pulls.