Reviewed by Aug 27, 2020| Updated on
Merchandising refers to the act of promoting the sale of goods and services in a store by way of retail sale. It includes setting the marketing strategy, method of display of goods, discounts or incentives, price setting, and fixing the retail quantities for sale.
In a general sense, merchandising refers to the retail sale of goods and services. The type of merchandising may depend on the type of goods and services and target customers.
The word 'merchandise' originates from the French language, from the word 'marchandise', 'marchand' or 'merchant'. Merchandising takes different forms depending on the features of a retail sale.
Most retail sellers do not produce the goods they sell. The company may employ a different method of marketing, such as using the brand equity of an existing product to sell another product.
A company's profitability or performance depends on the volume of retail sales. Here, the sales effected by a retailer and the method of merchandising are important and the key to better performance of a company.
The company itself does not directly sell the goods. Hence, the retailer is the key to connecting with the customer. The gross value of the merchandise sold indicates the growth of a company.
In consignment sales, merchandising is quite profitable for retailers since they do not need to block their money by purchasing the merchandise.
They provide shelf space or display the goods for sale at their retail stores in return for a fee. The company owning the goods may seek to return or replace the goods. The retailers do not invest to earn a return on the sales.
Merchandising bears a connection to the retail cycle in different parts of the world. In India, merchandising begins with the onset of the festival season in August with discounts on offer on consumer durables, clothing among others.
Similarly, merchandising for winter season begins with offers on warm clothing, tourism activities and so on. The merchandising activities continue with seasons, with festivals and summer vacations.
The rules and methods of merchandising are undergoing a change. With the latest technological developments and affordable internet services and mobile devices, most merchandising shifts on the e-commerce market.
Also, an increase in competition and a reduction in production costs makes companies seek new and effective ways of delivering value to their customers. The end consumer is quite informed, and companies need to foresee their future expectations.