Everything You Need to Know About Retail Merchandising for Small Businesses

If you own a retail business, you always have a lot on your mind, from team management to product sales to market shifts. With almost half of shoppers (48%) still opting to shop in person, how you manage your products can play a huge role in the success of your retail business. And how you manage your products comes down to your retail merchandising strategy. In this guide, we’re breaking down the ins and outs of retail merchandising, why it matters for your small business, and how you can put together a winning merchandise management strategy.

What is retail merchandising?

Retail merchandising is everything that you do to encourage customers to purchase the products in your stores. From strategy and analysis to execution, retail merchandising is key to helping you make sales and grow your business. Merchandise management is such an important part of starting or running a retail business that you’ll find it includes many of the day-to-day decisions you make about your store. For example, how many items you stock, where you place them on the shelves, and the lighting you use in your store can all fall into the category of retail merchandising. In the digital age, retail merchandising can also refer to similar strategies for an e-commerce store, with a bit of a twist. Much of the inventory management remains the same, but instead of deciding where to place products in your store, a digital merchandising strategy might consider how to categorize products on your website.

Why retail merchandising is essential for your small business.

It's easy to think retail merchandising matters most to large retail stores with fancy displays and thousands of products. But the reality is that retail merchandising is important for retail businesses of all shapes and sizes—it just looks a little bit different depending on the business. Retail merchandising can help your small business:

• Increase sales: The goal of retail merchandising is to help you catch your customers’ attention and encourage purchases. From clever product placement to customer behavior analysis, you can make merchandising decisions that boost your sales and profits.
• Improve the customer experience: If you’ve ever struggled to find something in a store, you know how frustrating it can be. Retail merchandising takes the stress out of shopping so customers leave your store with a great experience.
• Optimize space: As a small business, you might be working with limited space in your store. Retail merchandising helps you make the most of the space you have.
• Stay on top of stock: The last thing you want is to be sold out of your most profitable or popular items. A retail merchandising strategy can help you maintain the perfect inventory levels.

How can bad retail merchandising hurt your store?

Retail merchandising isn’t just a nice-to-have. When you’re not strategically managing the products that you sell, it can actually hurt your business. Without a merchandising plan in place, you likely aren’t optimizing the shopping experience for customers. This means you’re losing out on sales and revenue. But retail merchandising also goes beyond simply selling more products. It can impact the customer experience and even your reputation. Let’s say a customer is looking for a product in store, but they aren’t able to find it because the store layout is confusing. Or maybe a customer is looking for a specific item that you carry, but every time they come in, it’s either out of stock or moved to a different part of the store. Both of these scenarios result in customers leaving the store disappointed and empty-handed. And news of that experience can quickly spread to other potential customers. However, with a super strong merchandising plan, you can reduce the likelihood of similar situations happening in your retail store. Instead, your goal is for customers to come back for more.

What to include in an in-store merchandising plan.

Now that you know why retail merchandising is so important, it’s time to create a strategy for your store. Let’s look at what should be included in any effective in-store merchandising plan.

• Products: What products do you want to promote and bring attention to? Generally, these should be new releases, bestsellers, or high-profit margin items.
• Store layout: How will your products be displayed? How will customers physically navigate your store? Think about the type of shopping experience you’re trying to provide, your target demographic, and how that can be reflected in your layout and design. For example, a high-end boutique will likely have a much more minimalist layout compared to a variety store.
• Visual design: Your interior design, fixtures, and product displays should complement your store layout. Even small adjustments, like updating light fixtures to shine a spotlight on top products can help you get one step closer to your sales goals.
• Signage and displays: How will you bring attention to specific promotions or displays within your store? Maybe custom window displays aren't in the budget, but assuming it fits your brand, even simple chalkboard signage can help draw attention to the items or sections of the store you want customers to check out.
• Schedule: A merchandising plan is a living and breathing strategy. It should evolve as you get new products or even as the seasons change. So decide on a schedule to update your plan that makes sense for your product and business. Remember to factor in things like holidays and the movement of trends, so you can always adapt your plan.

Retail store merchandising tips to drive more sales.

The right retail merchandising can be key to driving more sales for your small business, and more sales are crucial for the growth of your business. Here are some of our top tips to help you make the most of your retail merchandising strategy.

Understand your in-store experience.

In a world where customers can get anything delivered right to their doorstep, the in-store shopping experience matters more than ever. With so many other options available, why would a customer come to your store if they don’t enjoy their time there? The best way to make sure your merchandising plan helps elevate the experience is by taking the time to understand your customers’ shopping journey from the moment they step through the door to the moment they leave. In a perfect world, where in the store would they pause to look at items? How long would they stay? What would make the experience stand out from the crowd? Once you understand what the ideal shopping experience should look like, you can start to create a merchandising strategy that actually delivers that experience.

Keep your store clean and well-stocked.

Your store is a representation of your business, which means it should be presentable any time a customer walks in the door. A meticulously maintained store tells your customers that you’re professional and committed to quality, making it much more likely that a customer is going to spend time in your store and make a purchase. Think about the tiny details as well, like hooks and mirrors in changing rooms and a space for wet umbrellas on rainy days. For some stores, a great vibe might even mean a little music or a nice smelling candle. But it’s not just about keeping things looking (and smelling) great; it’s about keeping products orderly and stocked on the shelves. Imagine how you’d feel walking into a store that’s mostly empty. Not only is it an uncomfortable shopping experience, but you’d likely assume that the items you need wouldn’t be available and go somewhere else in the future.

Group merchandise together to create eye-catching displays.

Our eyes will almost always be drawn to larger items. But many quality products may fall on the smaller size. Create the illusion of larger items through merchandise grouping. For example, you might create a featured display of yellow items to celebrate the start of summer. This helps draw the attention of customers to specific products or displays that you want them to notice. But you don’t have to limit yourself to color. You can group products by anything from product type, color, price, or even a timely theme. Then within that grouping, you can use visual merchandising to design a display that fits your store’s identity. Not only does this strategy improve visibility but it makes it easier for customers to find what they’re looking for.

Research your customers’ needs.

Your store should be a reflection of you as a business owner. But it should also be a reflection of your customers. A customer may enjoy shopping, but if the shopping experience doesn’t meet their needs, they’re unlikely to make a purchase or return in the future. To prevent your customers from heading elsewhere, here are a few questions to ask that can help better understand your customers’ needs:

• • Why do customers come to your store? The key to a positive shopping experience is having the items customers need when they need it. Knowing why they come into your store can help you curate the right products.
  • What products would customers buy together? Consider what items go well together, so they can easily find everything they need in your store. For example, if you sell candles, you might also consider carrying lighters or fancy matches.
  • How do customers shop for your core products? This helps you determine things like your store layout or even what amenities to include, like mirrors, chairs, or fitting rooms.
  • When do customers buy specific items? Understanding customer buying patterns can help with demand planning so you never find yourself under or overstocked.

Tip: You’ve likely already answered many of these questions in your retail store business plan.

Strategically place popular products.

If you’ve been shopping and found yourself at the checkout counter next to a basket of lip balms, those items haven’t been put there accidentally. It’s the perfect example of strategic product placement. The goal is to help customers discover items that may not have initially been top-of-mind but make sense to add to their cart. For example, you’ll often see items like BBQ skewers in the meat section of the grocery store. Theoretically, BBQ skewers probably belong in the kitchen tools section. But that kitchen section is sooo far away, and customers may not want to make the trip. But if they see skewers next to the meat they’re buying? Well, adding some to the shopping cart becomes a no-brainer.

Make sure products are easy to see.

In-store shopping is a visual experience. The more a customer can see, the more likely they are to buy something. In fact, one in three people who discover an item in store will actually buy it right then and there. But if an item is buried behind a bunch of other stuff, customers are almost never going to see it. So when you decide how to organize and present products within your space, consider how you’ll make sure customers get their eyes on the most important products. This might include creating featured displays to highlight specific products. Or, you might even redesign your shelves so that a sample of every product is presented at eye level. Retail store merchandising is about taking every aspect of the customer experience into account.

Highlight promotions and sales.

It’s no secret that shoppers love a good sale. And while sales and promos often fall into the realm of marketing, they should go hand-in-hand with your retail merchandising strategy. For example, if you’re planning on running a sale on sunscreen, you should have a plan to update your displays to feature that sale. Even with the best email campaigns or promos, if the sale isn’t obvious in store, there’s a good chance customers might miss out.

Are you ready to hire a retail merchandiser?

We all know small business owners wear many hats. So whether you realize it or not, there’s a good chance you’ve played the role of retail merchandiser at one point or another. But as your business grows, hiring a dedicated retail merchandiser can help you optimize your products and maximize your business growth. This is someone with the skills and expertise to help you refine your merchandising strategy and even help with the execution. And if you’re crunching the numbers in your head to see if you can actually afford to on another full-time employee, we have some good news. You don’t necessarily have to hire an in-house merchandiser to reap the benefit. There are plenty of retail merchandising services ranging from both individual professionals to companies that can help you strategize and improve your retail merchandising—at a fraction of the cost. And the reality is that a talented merchandiser might even help you reduce costs and boost sales so that you—and your business—come out ahead.Run your retail business better with Homebase. Are you ready to spend less time managing your people and more time growing your business? Get the all-in-one employee management app made for small businesses. Try Homebase today