IMPACT OF MERCHANDISING IN RETAIL STORES

Submitted By Nishanthi.A 10mba1043

Merchandising is the methods, practices, and operations used to promote and sustain certain categories of commercial activity.[1] In the broadest sense, merchandising is any practice which contributes to the sale of products to a retail consumer. At a retail in-store level, merchandising refers to the variety of products available for sale and the display of those products in such a way that it stimulates interest and entices customers to make a purchase. The following aspects to successful merchandising tactics: Promoting timely products and services to new and existing customers Basing your promotions specifically upon customers personal needs Doing so at a time when they are thoughtful of related issues and insulated from competitors Messages, i.e. when they are inside your stores Unifying the process across all your stores at the same time Experience has proven that merchandising works. So much so that companies spend tens of thousands of dollars to set up and furnish complex systems for their customers to interact with, learn from, inquire about, and even purchase from. For every business, an important factor of profitability is the optimized use of assets. In retail, the biggest assets are almost always the retail storefronts, including merchandising fixtures. These valuable resources are often grossly under-utilized, and represent an attractive opportunity for increasing profit margins. For a relatively small investment, these assets can be effectively leveraged to enhance customer experience and sales revenue. The proposed new method of successfully managing your retail merchandising and in-store advertising campaigns can solve many of your challenges by: Accelerating the campaign launch cycle and reducing the amount of repetitive steps involved to getting your promotions out in front of customers Counting on the local store to execute campaigns exactly as specified through in-depth and easy-to-use instructions Monitoring and reporting of campaign launch results

 Decreasing amounts of wasted materials and precious employee time Providing detailed floor plan and graphical representations of the entire store network Promoting a standardized and unified brand Customizing the presentation to fit local needs and buying habits Ending the need for executive travel out to remote branches to check on merchandising setups

Objectives of the Store Environment Get customers into the store Serves a critical role in the store selection process Important criteria include cleanliness, labeled prices, accurate and pleasant checkout clerks, and well-stocked shelves The store itself makes the most significant and last impression Once they are inside the store, convert them into customers buying merchandise The more merchandise customers are exposed to that is presented in an orderly manner, the more they tend to buy Retailers focusing more attention on in-store marketing marketing dollars spent in the store, in the form of store design, merchandise presentation, visual displays, and in-store promotions, should lead to greater sales and profits (bottom line: it is easier to get a consumer in your store to buy more merchandise than planned than to get a new consumer to come into your store)

Objectives of Good Store Design Design should: be consistent with image and strategy positively influence consumer behavior consider costs versus value be flexible recognize the needs of the disabled The Americans with Disabilities Act Types of Floor Space in Store Back Room receiving area, stockroom Department stores (50%) Small specialty and convenience stores (10%) General merchandise stores (15-20%) Offices and Other Functional Space employee break room, store offices, cash office, restrooms Aisles, Service Areas and Other Non-Selling Areas Moving shoppers through the store, dressing rooms, layaway areas, service desks, customer service facilities Merchandise Space Floor Wall

Location of Departments Relative location advantages Impulse products Demand/destination areas Seasonal needs Physical characteristics of merchandise Adjacent departments Feature Areas The areas within a store designed to get the customers attention which include: End caps displays located at the end of the aisles Promotional aisle/area Freestanding fixtures Windows Walls Point-of-sale (POS) displays/areas Fixture Types Straight Rack long pipe suspended with supports to the floor or attached to a wall Gondola large base with a vertical spine or wall fitted with sockets or notches into which a variety of shelves, peg hooks, bins, baskets and other hardware can be inserted. Four-way Fixture two crossbars that sit perpendicular to each other on a pedestal Round Rack round fixture that sits on pedestal

 Other common fixtures: tables, large bins, flat-based decks Wall Fixtures To make stores wall merchandisable, wall usually covered with a skin that is fitted with vertical columns of notches similar to those on a gondola, into which a variety of hardware can be inserted Can be merchandised much higher than floor fixtures (max of 42 on floor for round racks on wall can be as high as 72 Merchandise Display Planning Shelving flexible, easy to maintain Hanging Pegging small rods inserted into gondolas or wall systems can be labor intensive to display/maintain but gives neat/orderly appearance Folding for soft lines can be folded and stacked on shelves or tables - creates high fashion image Stacking for large hardliners can be stacked on shelves, base decks of gondolas or flats easy to maintain and gives image of high volume and low price Dumping large quantities of small merchandise can be dumped into baskets or bins highly effective for soft lines (socks, wash cloths) or hardliners (batteries, candy, grocery products) creates high volume, low cost image Three Psychological Factors to Consider in Merchandising Stores Value/fashion image Trendy, exclusive, pricy vs. value-oriented Angles and Sightlines

 Customers view store at 45 degree angles from the path they travel as they move through the store Most stores set up at right angles because its easier and consumes less space Vertical color blocking Merchandise should be displayed in vertical bands of color wherever possible will be viewed as rainbow of colors if each item displayed vertically by color Creates strong visual effect that shoppers are exposed to more merchandise (which increases sales) POS Displays Assortment display open and closed assortment Theme-setting display Ensemble display Rack display Case display Cut case Dump bin Visual Merchandising The artistic display of merchandise and theatrical props used as scene-setting decoration in the store Several key characteristics Not associated with shop-able fixture but located as a focal point or other area remote from the on-shelf merchandising (and perhaps out of the reach of customers)

 Use of props and elements in addition to merchandise visuals dont always include merchandise; may just be interesting display of items related to merchandise or to mood retailer wishes to create Visuals should incorporate relevant merchandise to be most effective Retailers should make sure displays dont create walls that make it difficult for shoppers to reach other areas of the store Store Front Design Storefronts must: Clearly identify the name and general nature of the store Give some hint as to the merchandise inside Includes all exterior signage In many cases includes store windows an advertising medium for the store window displays should be changed often, be fun/exciting, and reflect merchandise offered inside Atmospherics The design of an environment via: visual communications lighting color sound scent To stimulate customers perceptual and emotional responses and ultimately influence their purchase behavior

Visual Communications Name, logo and retail identity Institutional signage Directional, departmental and category signage Point-of-Sale (POS) Signage Lifestyle Graphics Coordinate signs and graphics with stores image Inform the customer Use signs and graphics as props Keep signs and graphics fresh Limit sign copy Use appropriate typefaces on signs Create theatrical effects Lighting Important but often overlooked element in successful store design Highlight merchandise Capture a mood Level of light can make a difference Blockbuster Fashion Departments

Color Can influence behavior Warm colors increase blood pressure, respiratory rate and other physiological responses attract customers and gain attention but can also be distracting Cool colors are relaxing, peaceful, calm and pleasant effective for retailers selling anxiety-causing products Sound & Scent Sound Music viewed as valuable marketing tool Often customized to customer demographics - AIE (http://www.aeimusic.com) Can use volume and tempo for crowd control Scent Smell has a large impact on our emotions Victoria Secret, The Magic Kingdom, The Knot Shop Can be administered through time release atomizers or via fragrance-soaked pellets placed on light fixtures EIGHT STEPS TO SUCCESSFUL RETAIL MERCHANDISING AND IN-STORE ADVERTISING 1. Define Marketing Goals & Objectives

Before you get started, think about your current and future customers, and what you currently sell or plan to sell them. This thought probably conjures up panoply of opportunities. List your objectives in order of priority. As we progress through the procedures, refer back to your list to periodically to make sure you are keeping in line with your goals.

2.

Target Audience Your market segments are usually three to six identifiable groups of customers. If you

feel like you only have one group of customers you are marketing, you have more work to do. If you feel you have more than ten, you might want to simplify. How do you know which customers belong to each segment? With 25 or more retail outlets, you have numerous customers, and access to even more potential customers, so it might seem too difficult to classify them. However, it is safe to assume that customers shop in the neighborhood where they live. By examining your store locations, you can deduce the profiles of the customers and potential customers you have access to at each location. Chances are, the profiles of each location are not distinct, but varying mixtures of the different segments you already defined. Make a pie chart for each location describing the customer segment mix. If you cant make a judgment on a neighborhood or location, talk with the store manager, as they will be familiar with who is shopping and living or working in the surrounding area. When in doubt, just look at the cars parked at the store; you can learn a lot about your customers by the cars they drive. For example, in the banking industry, luxury car driving customers would likely be interested in retirement and insurance products. Pickup truck and van driving customers would likely be interested in small business solutions, and economy car driving customers may be interested in available credit.

3.

Separate Business Lines

This has probably already been done for you. For banks, business lines are usually divided into personal, business, and wealth management; for fast food: value, convenience, and price; for wearing apparel: mens, womens, kids. You get the idea. If this isnt already accomplished, try to find logical divisions among your product and services lines. Talk to your product managers and ask if they are aware of different business lines. 4. Rollout Merchandising Fixtures This step is optional, as you may already have an existing merchandising system. However, if you have recently merged, are adding new locations, or your merchandising system is a number of years old, it may make sense to start fresh. A merchandising system can unify your brand and improve the customer experience. This document includes the extensive rationale for merchandising systems.

5.

Layout

(Re-) Position merchandising fixtures Check the floor plans of your stores and verify in the field the location and orientation of your merchandising fixtures. Make sure they are positioned correctly, as sometimes they are moved into storage by the cleaning crew or obstructed by a plant that grew towards a window. Classify merchandising fixtures To do this, you need to have a database of all your merchandising fixtures, including type, collateral containers, and container sizes. To organize your merchandising systems, each fixture in your stores, branches or restaurants must be given data attributes for its visibility, business line, and orientation, based upon the store it is located in, as well as where it is situated within that store. This process can be accomplished with new or existing merchandising systems. 6. Design Advertising Collateral

This step is often outsourced to an advertising agency, but it can also be done in-house if you have the resources. 7. Create Campaign

Select Stores Choose the stores you would like to include in your current campaign. This can be all of them, certain regions, or only a few specific stores. Select Collateral From your library of collateral pieces, choose the products, services, and/or brand emotions that match your customers needs during this campaign. Schedule Promotions Campaign schedules are completely up to you. Some retailers have obvious schedules to abide by, like Christmas for department stores and toy stores, and the tax season for financial institutions. Your schedules will vary by industry and corporate objectives. Once the campaigns

are scheduled, the system will inform your printer of the quantities you need and how many to ship to each location. Instruct Employees While the campaign materials are being produced and shipped, the local store employees will receive Instructions (these can be mailed, emailed, faxed, or accessed online) for the upcoming campaign. The instructions will include the campaign schedule, as well as detailed diagrams of the location they work in, specifying where everything will be installed. Lastly, they will be told to report back to management when they have completed their tasks. Launch Campaign At this point, your work on your n-store marketing campaigns is finished, freeing up your time to attend to other pressing business matters. When the launch date arrives, you can observe in real time, how the stores comply with your instructions. If all the stores are not in compliance after the launch, you can send out reminder emails, or follow up with phone calls to identify and resolve and issues. Track Response Once a campaign has successfully launched, you can measure its effectiveness in many ways. For example: how many brochures have been picked up, products bought, and services rendered? Then compare this data with your strategy and gain insight into the effectiveness of your campaigns. 8. Refine Strategy

Marketing is a continual process, and your strategy must be continuously refined. Fortunately, with this framework and process, you dont have to re-invent the wheel each time you improve your strategy and launch another campaign. You will repeat procedure 3.7 and the five steps it contains to fit your ongoing campaign objectives. Additionally, you can adjust the settings in procedure 3.5 from time to time as your marketplace changes and evolves.

Recent Developments in Retail Marketing For years, retail marketing executives have used the in-store customer experience as a channel for raising public awareness of their companies products and services. These practices included the use of take-one displays, posters, product displays, window dressings, and even interactive kiosks. They discovered the these practices produced real results such significant results that branch, chain and franchise operations began to invest tens of thousands of dollars into their merchandising systems for each one of their stores. Along came the internet with ecommerce and its worldwide network access, promising to save these companies from the cost of the brick and mortar buildings, let alone the expensive, yet effective, merchandising systems they contained. Shortly thereafter, online merchandising solutions began to appear on the marketplace, further promising to raise public awareness of products and services, as well as up sell and cross-sell customers, just as their traditional wood, metal, and plastic counterparts were already successfully accomplishing. During the bubble expansion and after the burst, businesses realized that while e-commerce was a truly viable business model, in-store retail was truly and increasingly too valuable and rich a channel to leave behind. Today, more and more companies are using lessons learned from the internet bubble era to enhance their online and in-store strategies, like uniting their brand throughout their store network, as well as customizing their messages, based upon local needs and buying habits. However, the following list of challenges further complicates these already daunting tasks: Labor intensive campaigns High degrees of merchandising discretion at the stores No merchandising accountability at the stores No awareness of merchandising presentation at the stores No governance over store merchandising The use of outdated and home made merchandising The need to promote different products and services from multiple business units.

Ways to improve merchandising

Visual merchandising is the most important variable in in-store environment among the tested variables. It can significantly influence on consumers store choice decisions. Therefore, application of more attractive visual merchandising materials in their promotions will help to obtain better results. The lighting, Design layout and cleanliness are the key elements of visual merchandizing programs other than product display. Most of customers are willing to purchase products from supper markets from 6.00p.m. to 9.00p.m. in weekdays and 10.00a.m. to 8.00p.m. in weekends. Therefore, managers can pay special attention to make attractive environment in the supermarket premises and make action to control the rush condition. Spaces between shells (Passage), cashier counters layouts, height of shells, no. of Gondola, number of impulse counters, sanitary facilities, height of roof are key variables of design layout that helps to make customer relaxation, convenience to selection of products, reduce average waiting time and encourage the impulse purchasing etc. When designing the product display, Supermarket managers should pay special attention on category layout, canola (Light ceiling), color separation, lighting box, category name of product shells. Damaged items on the shells and dust will make bad image towards the supermarket outlets and design of floor tiles can make significance influence to feeling of pleasure at shopping time. Majority of customers respond to the lighting more positively. They specially mentioned that lighting helps to select correct products, reduce the time wasted and feel relaxation during the shopping tours. Therefore managers can select appropriate lighting system

that creates satisfaction of psychological needs of customers. Even though there is no significant correlation between in-store fragrance and store choice decisions, 58% of respondents mentioned that it is strongly influence on their store choice decisions. Therefore, the consumers preference can be changed according to the in-store fragrance used in the supermarkets. If marketers change the fragrance strategically and use more favorable fragrance, it will be more significant to patronage

customers towards supermarkets and maintain the freshness within the supermarket premises. The background music will also encourage customers to spend extra time in supermarkets. However, it has low significance relative to the other elements of in-store environment. It will help to encourage customers to make impulse purchasing decisions in supermarkets. And also customers will consider the shopping in such a supermarket is one of entertaining exercise. The soft and classic music are highly recommended than other type of music.