First of all I have to establish that a manager in charge of the merchandising actions has a lot of responsibilities over his shoulders, since will be controlling the sales space of the company.
To be able of implementing the store (or any other sales space) the Manager must have a very good understanding of:
* The Industry in which store or company is participating
* The business strategy
* The Strengths, weaknesses, opportunities, threads of the company (SWOT)
* The Branding standards and objectives
* The development and changes taking place on the market
* The competitors
* Sales budget and/or sales objectives
* Marketing budget
* The clients habits:
1. When do they buy?
2. Where do they prefer to buy?
3. What motivates them to buy more?
Now that been established lets get into the Merchandising Implementation. These are the things to be implemented:
I. The Products Mix.
This the first action that should be taken because you can have a great selling space, well organized and categorized but, if you don't have the right Merchandise, won't be able to sell.
To be able to have the right Products Mix you need to know all the information that I mentioned before and specially you need to know your customers and/or clients. You have to study your clients and follow up their behavior. You need to know how long and how deep the products categories should go in your store and how much you should keep in stock of each stock keeping units (Sku').
Keeping track of all this information is very important because if you have a lot of what you sell less and less of what you sell more (to put it in black and white), you will end up having a problems with your clients or loosing them and also you could end up compromising the overall profitability of your business.
How is that so? Think of this:
Say you have a shirt A that sales 6 units every day
You have a shirt B that sales 10 units every day
Shirt A gives you 30 % profit margin
Shirt B gives you 15 % profit margin
They are both substitutes, the same product with different brands.
Which product should you sell more?...Product A!
So you need to manage yourself very carefully not to loose those customers buying "shirt B" by having it in your stock but maybe you could give "shirt A" more exposure in order to sell more of it and less of the other. That means that you are going to need more of "shirt A" to keep your profitability to the optimum level.
Another very important factor in the merchandise mix is the pricing strategy. The pricing strategy is a part of the overall image of the business and will be sometimes a reflect of the costs plus the return of investments the owners will be expecting at the end of the year.
II. The Store Distribution or Setting.
This refers to the position that the different shelves, fixtures, displays, gondolas and other components will have in the store space. This setting is very important because it is going to drive your customers through the store and should do it in a very logical flowing and profitable manner. Customers should feel comfortable, should feel that they are not loosing time going back and forth looking for what they need. Also this is a very powerful tool when used to make impulsive sales by placing displays, product islands and other out of shelf exhibitions. The store setting is all about getting the must profits out of every feet of the store. This Merchandising Tool functions like the store ghost seller presenting the products, making recommendations and communicating to your client. Also makes its contribution to the business image that can be perceived at the moment you enter the store. Many customers can be heard saying "I won't come to this store any more, I feel I can't find what I am looking for!" that is because of a bad store distribution/setting.
When planning the store distribution/setting you should respond to these questions:
* Where should the entrance and exit be? To facilitate both actions.
* What and how many sections will the store have? Depending on the type of store and business objectives.
* How and in which order should this sections go? To facilitate the traveling through the store.
* What size should this sections have? Depending on customers and market targeting.
* How many check out lanes should the store have? Depending on the size of the selling space and the amount of customers the store can handle.
* How should the furniture be placed?
* How should the lighting be?
* Which are the hot and the cold spots or zones? To bring balance to them.
* How are you improving visibility?
* What should be the sound system be and what music and sound should it play?
* What temperature should the store have inside?
* How and where should the signage be?
* How wide should the corridors be?
* What about the parking lot, is it big enough?
* And so on.
This store distribution/setting should always be a case study in order to respond to the customers needs and to continuously improve the return of investment.
III. Shelving.
When shelving, you will use the must of the concepts of the store setting but applied to a smaller section of the store, the gondolas. When done correctly, gondolas will:
* Attract the attention of the clients
* Sell products
* Facilitate the selection of products
* Make impulse sells
The gondolas are where the final marketing battle takes place between competitors of the same product family or category. This is where the customers will take the final buying decision selection. You don't need to be a scientist to see that the more space a specific brand gets of the shelf the more opportunities to make sales it has, I will go over this in another article.
Usually there are three factors taken in consideration to assign the amount of space or the amount of facings each product (sku) should get on the shelves. Some times these factors are taken separately and other times in combination. These are:
1. Profits margin
2. Amount of sales/product rotation
3. Market share
Now, often times there are other factors taken in consideration by the store owners:
* Private labeling
* Trade/commercial agreements
There are two general ways to establish product shelving: horizontally or vertically.
The more popular and the one that I personally consider more effective is the vertical display of products. I believe so because you give your product participation on all the levels of the gondola and so, helping improve it's sales.
IV. Store Animation.
This refers to the different actions that the store makes to have a more appealing purchasing experience for the customers. Must of the times these efforts will be done with the participation of the manufacturers of the products involved in these actions. Usually the initiative will be taken by the store who will then look for the sponsorship of the manufacturers. This actions will be regarding the store's anniversary, special promotions, special times of the year, holidays and other occasions. Some other times the initiative will be taken by the manufacturer who will be pursuing some type of differentiation from their competition.
There are several ways to do this animation, among them:
1. Outside and inside decorations
2. Demonstrations
3. Showcase
4. Fairs
5. Sampling
6. Awards
7. Coupons
8. Exhibitions out of gondola
9. Special displays
10. Promotional offers, like 2x1, 3x1, 1+free...
11. Sound special announcements
12. Point of purchase materials, POP
13. Expositions
14. And others
There is no limit for this store animations. Every day there are new things. At the end, this will only depend on the imagination of the people involved.
Well that is it for now. Have great sales. Bye.
By Jose Leonardo Guzman Manukyan
Actually working for the marketing department of a mass consumer product manufacturer at the Dominican Republic.
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