Now is the time to rethink retail merchandising
Retail merchandising is an essential tool for positive shopper experiences. Effective merchandising ensures products, pricing, promotions and messages are displayed to the shopper as intended by the brand — hopefully engaging them enough to make a purchase. From product placement on shelves or promotional displays to shopper messaging communicated through marketing materials or special offers, how brands and retailers merchandise their products can vary greatly.
Proper merchandising strategies should not be pushed to the backburner, especially now. To regain loyalty that may have eroded due to the pandemic, brands must ensure shoppers can easily find the products they are looking for and feel incentivized to purchase again.
Thinking beyond traditional merchandising
There are a few approaches to traditional retail merchandising typically followed by brands. Brands that go to market through direct store delivery (DSD) are responsible for product distribution all the way to the shelf or display — meaning the brand’s team is in charge of in-store merchandising. For brands that utilize the retailer’s distribution centers or warehouses as a route to market merchandising, responsibility is shifted to a mix of the retailer and third-party support from sales and marketing agencies. Working with third-party agencies can be costly, so it is common for retail merchandising to be done without this type of support, placing more responsibility on retail associates to execute the merchandising strategy.
Brands that invest in dedicated retail labor or syndicated coverage from traditional agencies are often challenged by issues such as lack of coverage, lack of visibility into execution and a clear way to measure return on investment. In addition, when brands have needs for urgent in-store actions, traditional agencies often struggle to execute quickly, sometimes requiring weeks to set up and plan schedules and routes in order to execute.
A rapid increase in online shopping highlights the urgent need for more effective merchandising, as consumers need powerful incentives to return to brick-and-mortar stores. While many brands and retailers appropriately shifted their focus to e-commerce throughout the past year, it is essential they now reprioritize the store, creating the experience consumers are craving after months of lockdowns and social distancing orders. Without proper merchandising, brands and retailers neglect the in-store experience, which inadvertently neglects the consumer.
Unfortunately, many brands do not have the same budget they had before the pandemic, making it difficult to afford traditional merchandising methods. Brands have historically struggled to understand and justify their spend on traditional merchandising and retail coverage because lack of granular, store-specific data has made it difficult to quantify its impact. As shopping patterns continue to evolve, it has become even more important to adopt scalable, outcome-driven merchandising solutions that lead to clear and quantifiable results.
What brands must consider when rethinking merchandising strategies
As discussed, traditional retail merchandising solutions tend to be costly and can be difficult to justify without clear results. Modern, data-driven solutions that utilize marketplace-style, experienced workforces are becoming available to brands today. Brands should turn to these non-traditional strategies and refer to performance-based metrics, such as an increase in on-shelf availability (OSA), improved compliance and uplift in sales to identify the effectiveness of the merchandising strategy. In the future, we will see more performance-driven solutions emerge that provide the necessary proof of performance.
Brands can also take a page from e-commerce to improve their retail merchandising strategies. Online sellers have become experts at testing multiple kinds of messaging and ultimately landing on the approach that yields the best results. This same model, while more challenging, can also be applied to physical retail. Imagine a scenario where a brand is launching a new product — they could quickly activate in a set of stores with flexible or configurable displays and marketing materials. After closely watching sales at those outlets, they could activate merchandising teams to “switch” the lower performing execution with the better performing execution, especially during month-long promotions, to help boost sales.
When determining retail merchandising strategy, brands should consider the best way to rightsize their investment in physical retail, especially because of the drastic shift to e-commerce. Additionally, instead of costly traditional merchandising strategies, brands must consider innovative solutions that allow them to do the right work, at the right store, at the right time, in a more sustainable and scalable manner. Merchandising strategies must always be performance-driven for brands to feel confident in their investment decisions.
This article first appeared on Forbes.
