Merchandise planning is defined as an organized approach to selecting, purchasing, presenting, and selling merchandise. This is done so that retailers can maximize their return on investment and reduce potential losses. Retailers also strive to satisfy customer demand by presenting the perfect merchandise to them at the right time, place, price, and quantity. The best way to do so is to develop a merchandise plan to make sure that everything is just right to meet customer demands. With so many factors in place, it might be confusing to start your merchandise planning. No need to fret as we have prepared a guide so you can learn more about merchandise planning and how to do it successfully.
The most basic and vital aspect of merchandising is the product. Without a product, what is there to sell? You have to ensure that you have the correct product and enough of it to fulfill consumer demand. With the numerous options out there, be sure to do your research to determine which products your customers will like and are more likely to purchase. You can also turn to your past sales data to see which products do well and which need to be replaced.
It is important to have a range of products to provide your customers with a variety of options. This does not mean that you should include every product you can find as part of your product line. You will also have to make sure that your product has depth so that your customers will find an interest in them. This is a fine line to balance depending on the store you have. Smaller retailers tend to have niche products with more depth while bigger retailers prefer to have a huge range of generic products.
The balance between the price and quality of a product is a delicate one. However, there is no one-size-fits-all strategy in pricing your merchandise. The common approach is the price quality theory as developed by Philip Kotler. There are three levels of pricing and quality— high, medium, and low. This creates a three-by-three matrix of pricing strategies with six viable solutions. If your product quality is low, price it low as well, if your product quality is high, you can price it at any level depending on the value you want your customers to perceive. Such a strategy will allow you to appeal to the largest group of customers possible. Sales and promotions are also helpful in changing up the prices of less desirable products to clear them.
Presentation of your products will determine how your customers react to them. There are many ways to combine and present your products. For example, you can place similarly low-priced items together for customers who are seeking cheap products. In most retailers, products tend to be grouped according to their product types such as shoes or pants. You can also try out cross-merchandising by pairing items from different categories and displaying them together as a bundle.
A good store layout can make for a pleasant shopping experience and entice customers to spend more. Use a mix of displays such as mannequins, shelves, and fixtures to keep the store dynamic and interesting to walk through. A rule of thumb is to ensure products are at eye level.