Analysis of the main merchandising stakes.
Merchandising is about how to present items so that consumers will buy them. Every business must create an effective merchandising plan to generate more orders and sales throughout the year. To do this, depending on the season, stores must optimize their assortment and manage their inventory.
So, what are the challenges of merchandising in a sales area? What challenges do retailers have to face in order to sell efficiently in each of their shelves? Hot and cold zones, market analysis and psychological factors, we invite you to discover all the stakes involved in the implementation of the assortment in stores.
Implementation of the assortment: challenges related to the sales space
The sales floor is not a trivial area. On the contrary, it contains precious information concerning the future performance of the store. Indeed, from the surface to the layout of the shelves, not forgetting the different traffic areas, the store is above all a space in which a consumer moves and with which he interacts.
Take into account the constraints related to the store itself
The implementation of the assortment, or merchandising, starts by taking into account the constraints related to the point of sale. Indeed, depending on the store, the products will not be presented in the same way. To do this, companies must consider:
- the size and layout of the store;
- the geographical location of the business.
Regarding the geographical location of the store, it highlights the proximity of the competition. Moreover, a store located in the mountains and a store located by the sea will have a different merchandising, because each will put forward the offer corresponding to its customers.
Analyze the different zones of a sales area to make a successful merchandising plan
Each point of sale is composed of a hot zone and a cold zone. In addition, there is a direction of circulation in a store that must be kept in mind when developing the merchandising plan.
The hot zone of a store is located at the entrance and near the cash registers. On the contrary, the cold zone is located at the back of the store. The real challenge for companies is to create a merchandising plan that takes both zones into account.
For example, must-have products can be located in the cold zones, while hot items or promotional offers will be positioned in the warm zones. By having to go to the cold zones to buy necessities, the customer necessarily passes by other references, potential complementary purchases.
The customer's circulation direction is also taken into account when developing the merchandising plan. In a store, customers generally move from right to left. Companies take this into account when choosing the products they display on the right and left-hand shelves. In addition, some brands optimize customer traffic by forcing them to walk past their entire offering. This is notably the case of a famous furniture and decoration brand.
Choose the layout of a shelf according to its sales potential
To conclude this overview of the issues related to the sales space, it is important to know that the position of items on the shelves is not insignificant. Studies have shown that merchandising directly influences the consumer.
For example, items placed at the top of the shelf can double or triple their sales. Similarly, the center of the shelf at eye level is an ideal position to stimulate purchases. Items positioned at this level of the shelf will be more visible than items located at floor level or at the end of the shelf.
Merchandising must therefore take into account the economic environment of the store, its dimensions and layout. But to be effective, it must also adapt to consumer behavior. All of this information must be pooled and analyzed so that the marketing department can develop an effective, customized sales strategy.
The economic stakes of the implementation of the assortment in store
Presenting a commercial offer must also make it possible to respond to financial and economic issues. Indeed, depending on the time of year and the brand's objectives, the marketing strategy will differ from one department to another and from one area of the store to another. Merchandising must therefore be customized for each range and each reference.
Product presentation: the objectives of the distributor and producers
In a local store or in a large-scale distribution, the shelves present references from different producers. So how do you determine the merchandising of each product? What criteria are taken into account to choose the place of the products in each shelf?This is the first part of the economic stakes of merchandising. Let's take the case of mass retailing. Distributors have developed their own brands for fresh produce, organic products, clothing, hygiene, etc. Each distributor also has its own brand references. Each retailer also presents references from other brands.
So they have to make trade-offs to know which products will be installed in the areas most visible to consumers. The private label is sometimes in direct competition with other brands within the same shelf space, whether it is a food or cosmetic department. To carry out a merchandising plan, the retailer must take into account:
- its own products that it wants to promote;
- products that are popular with consumers;
- products from competing brands.
The organization of promotional events in the stores
Throughout the year, businesses schedule promotional events. Their organization responds to specific requests and highlights a selection of products. The retailer then creates a separate universe to promote a particular offer on the occasion of:
- the beginning of the school year ;
- Christmas ;
- Easter;
- summer vacations;
- winter sales;
- Halloween ;
- etc.
Sales forecasting is one of the techniques that retailers use to meet merchandising challenges. Indeed, artificial intelligence facilitates the work of the marketing team, which can thus anticipate the number of purchases of each item or each service according to the geographical area of the store, the time of year and the economic context.
Consider the consumer and the buying context for your merchandising plan
The consumer is an individual who evolves in a business with his own sensitivity at a particular time of his life. Being able to anticipate and predict their behavior means being able to implement commercial strategies that meet their expectations.
Consumer behavior drives merchandising
As we have seen with the analysis of hot and cold zones, consumer behavior directly influences merchandising. But customer behavior goes beyond this work at the point of sale. Indeed, to adapt the assortments and their positioning in the shelves, other parameters must be taken into account.For example, packaging and promotional offers play a role in the consumer's buying decision. Also, a particular item may trigger other purchases, while some consumers make emotional purchases and others rational ones. Finally, analysis of customer behavior can reveal recurring purchases made by a certain type of consumer.
Analysis of the purchase context thanks to a predictive intelligence platform
The context details the external environment. In addition to the psychology of the customer, it will focus on the weather, the traffic, the seasonality or the events organized near the shops. All this information has a direct impact on consumer behavior.For example, during the coronavirus crisis, several essential items were out of stock, due to a very strong increase in demand. On the contrary, cosmetic products were left out.
Being able to predict the level of sales of each product in a week, a month or for any other period of time, allows to set up a merchandising tailored exactly to the needs of the consumers. If retailers are able to offer their customers the right products or services at the right time, at the right price, and in the right quantities, then they will be able to increase their sales and improve their performance.
This is where the predictive intelligence platform has become a source of success and security for stores. Indeed, this tool is the only one capable of gathering and analyzing all the information we have just mentioned: sales area, shelf analysis, customer behavior, external context, competition, etc.