What is Retail Merchandising?

Retail merchandising is the process used in order to conduct retail sales. As part of the process, the merchandiser pays close attention to the types of products offered for sale, how to best present those products to consumers, and determining what is a reasonable retail price for each unit sold. While retailers have traditionally engaged in the task of retail merchandising in a physical location, the Internet has now made it possible to apply these same basic principles in a virtual setting.

The first important step in retail merchandising is establishing working relationships with manufacturers who will provide the goods or services that are ultimately sold by the retailer. This type of retail buying involves determining what products will be carried in the retail establishment, negotiating the unit price that will be charged by the manufacturer, and arranging for the delivery of those goods. Depending on the number of units the retailer can afford to purchase at a given time, it may be relatively easy to obtain a discounted unit price, making it easier for the retailer to be competitive in the local marketplace.

Once the goods are secured, the retailer must determine the unit price that he or she will assign to the products. In all cases, this retail price will be higher than the cost of purchasing the goods from the supplier. It is this difference between the wholesale price and the retail price that allows the retailer to make a profit and remain in business. Some retailers follow a formula of setting the retail price at a fixed percentage above the acquisition price, while others base the retail pricing on factors such as the desirability of the items and the amount of competition from other retailers in the immediate area.

After setting the retail pricing, the process of retail merchandising moves on to the task known as setup and display. This process is concerned with displaying the goods within the retail setting to best advantage. By using such devices as display windows, elevated platforms, and colorful backdrops to attract the attention of shoppers, the retailer increases the chances of selling units quickly. Setup and display are often considered especially important with fashion merchandising and similar retail settings, in that the visual display is often the key means of attracting customers who are highly likely to make a purchase. Quick sales lead to higher profits and the chance to secure more products that will result in more sales.

Marketing is an important aspect of any retail merchandising strategy. Engaging in a publicity campaign to reach prospective customers may involve something as simple as advertising in local publications as well as electronic advertising on local radio and television stations. Direct mail is also a common strategy in retailing, as the mailings make it possible to reach people in their homes and places of business rather than relying on them to approach the retailer first.

In order to be successful with retail merchandising, it is necessary to provide consumers with a couple of key benefits. First, the products must be of high quality; this helps to ensure the customer will return for more purchases in the future. Along with the quality, the retailer must also sell the products at prices the consumer finds reasonable. By providing quality products at affordable prices, the retailer has a much better chance of standing out from the competition and remaining in business for many years to come.