Merchandising strategies are a valuable component of any retailer’s success, but a “one size fits all” approach will not work in today's competitive environment. Strategies should vary by category and sometimes by segment depending on the overall objective for the brand, category and retailer. Each strategy should be carefully crafted to target a specific objective such as increasing foot traffic, inviting new customers to try your brand, developing loyal committed customers or increasing sales.
Developing and managing merchandising strategies should be a collaborative effort shared between the retailer and the manufacturer. Manufacturers are the true experts in their brand’s categories. A smart retailer should take full advantage of the manufacturer’s knowledge and expertise to help grow the category and sales.
The category captain role is a key factor in a savvy retailer’s success. This person is a trusted business partner and ally to the retailer. Together, the retailer and manufacturer can help satisfy a greater number of consumers, grow the category, increase consumer takeaway and beat the competition.
Strategies include a variety of components: pricing, promotion, product placement, ad support, consumer education, etc. Together, the different components help achieve the retailer’s goal. Here are seven to try.
7 effective category merchandising strategies
Traffic Building: High volume share, frequently purchased items, high percentage of sales. This strategy focuses on drawing consumer traffic into the store and/or into the target category.
Transaction Building: Higher ring/transaction size, impulse purchases. This strategy focuses on increasing the size of the average category transaction.
Profit Generating: Higher gross margin and higher turns. This strategy focuses on the ability of the category to generate profits. Margins can be higher in this area due to the value added, higher-quality products in these categories.
Cash Generating: Higher turns, frequently purchased items. This strategy focuses on the ability of the category to generate incremental cash flow.
Excitement Creating: Impulse, lifestyle-oriented and seasonal items. This strategy communicates a sense of urgency or a limited-time sensitive opportunity to the consumer.
Turf Defending: Used by retailers to draw traditional consumers. This strategy focuses on aggressively positioning the category to appeal to the consumer by highlighting comparable items with key competitors. This strategy also focuses on keeping your existing customers happy and returning. Loyalty cards, aggressive pricing and promotion strategies, consumer education, high value coupons, etc. are all designed to help maintain a loyal customer base. For example: Pacific Foods Organic Chicken Noodle Soup priced aggressively compared to target retailers.
- Image Creating: Frequently purchased, highly promoted, impulse, unique and seasonal. This strategy communicates an image to the consumer in one of the following areas: price, service, quality, specialty items or assortment.
Which merchandising strategies work for you?