Darren Gilbert Dec 8, 2017 4:13:00 PM 10 min read

4 Ways Merchandising Software Can Lead to Sales

Merchandising Software.png

To make a sale, you must ensure your customers know you have the product they want. Because having a product in stock won’t necessarily lead to a sale. You must also know how to present it. For that, there is merchandising. More importantly, it’s where merchandising software can play a significant role.

Before we take a closer look at merchandising software, though, it’s important to first understand merchandising for what it is. While ‘merchandising’ itself is a broad term, in the retail context it’s essentially defined as “any practice which contributes to the promotion and sale of products to potential customer in retail stores”.

As for merchandising software and it’s importance, that should be fairly obvious. You need to present your products in a way that will lead you to make sales. And the software can help.

But how exactly can it lead to more sales and increased profitability? Here are a few ways:

By choosing the right merchandise to begin with

Before you can even think about selling a product, or presenting it, you need to first consider how you’re going to choose your merchandise to begin with.

That’s where your assortment plans come in.

Assortment planning - the process of selecting the products which will be on offer in particular areas and during specified periods of time - allows you to choose the right merchandise to begin with. More than that, when done correctly, you’ll have the right product at the right time, in the right place and at the right price.

For example, a good assortment plan will always consider the needs and wants of your customers first. A store clustering exercise is also worth doing so you can find out exactly what what is selling at which store. Doing such an exercise can also help you to identify opportunity gaps.

Also, any buying or assortment decisions you make need to be based on a combination of both internal and external market data. In fact, for anything you do around your retail business, data is a must. Fortunately, the assortment planning process gets easier with time.

A poor assortment plan, on the other hand, doesn’t consider local demand and is not data-driven. It doesn’t connect to your space planning efforts, and it’s not customisable.

By presenting your products optimally

If you want to increase your sales, you don’t need to look any further than the humble planogram. That’s simple because of its end goal. Planograms are built for the sole purpose of increasing your sales and improving the profitability of the categories in your store.

Of course, these are not any old planograms. They need to be data-driven. Without data, you are essentially thumb-sucking and guessing how to merchandise your products in your store. And if you’re guessing, you’re not efficient.

Without it you can easily find yourself running out of stock and spending money on stock that doesn’t sell. That’s because the sales and product data isn’t informing you of how much space your products need. Or where they should be on the shelf. And that’s only two small consequences. You can also find your capital tied up in inventory costs while you could easily find yourself losing control of your inventory all together.

That said, presenting your product optimally is about more than just giving your products the correct space. With merchandising software, you can also ensure that you put the right merchandising strategy into your planogram. And there are all sorts of strategies, from traffic building to profit generating to image creating. It all depends on you overall retail strategy. But either one will result in a better performing planogram.

Then there are your different merchandising techniques that you can consider such as cross-merchandising.

By positioning your categories in a way that you meet customer expectations

Once you’ve chosen your products and have placed them on your planograms, it’s now time to consider how you’re going to present them in your stores. For that, you need merchandising software that includes a floor planning capability.

Why? For one, floor planning allows you to position your categories in a way that meets your customer’s expectations. For example, if you sell both Hair Care products and Car care products, you won’t place these two categories next to each other since that’ll confuse your customers. There is no logic to it. You’d be better off placing your Hair Care category next to your Deodorant category. Your Car care category would be more appropriate next to your Gardening and Outdoor category.

Besides positioning your categories in a way that pleases your customers, in using merchandising software, you can also go about placing the right gondola in the right location. And this is so as to increase sales.

You may find, for example, that there are four or five gondolas that house all of your best selling products. And they are all together in the corner of your store. That’s a problem because it’s going to cause a hotspot during your peak hours, which will result in an over congested store. That makes for an unhappy customer.

By looking at your store at a category level, you can anticipate this and then place these high-performing categories throughout your store. In reducing foot traffic and congestion, you’re also ensuring that your customers walk past gondolas and categories that they wouldn’t normally have walked past. That’s partly why you’ll usually find your high traffic categories such as Bread and Milk close to the back of a store.

You’re giving your customers the opportunity to increase their basket sizes, which means more sales for you.

By understanding what’s working and what isn’t

It’s all good and well selecting your products, presenting them and making the sale. But how will you know if what you’re doing in store is actually working? While you might be able to predict any short-term results by looking at what is happening, you also need to think long-term.

For that, there is retail analytics.

At it’s core, retail analytics provides you with analytical data on a variety of factors around your retail business. These include, but are not limited to, inventory levels, supply chain movement, the needs of your customers, and sales figures.

With this data at hand, you will have an opportunity to analyse where you have done well and where you need to improve. In so doing, retail analytics gives you the opportunity to make smarter business decisions.

For example, you can prove if a particular range of products you recently introduced into your store is actually selling or not and then act on that information. On the customer front, retail analytics can provide you with information about who your best customers are, where they live, and even predict what products they’re likely to purchase in the future.

This can be done through various types of reports that you can run to analyse your sales, your category and even the performance of your store. For example, let’s say you want to look at the category performance of all of your stores. With merchandising software, you can pull up reports to see how well the category is performing in all of your stores.

You can also do a cross-category analysis and take it one store at a time. For example, let’s look at all of the categories in one store. How well are each of your categories doing? What percentage of sales, out of 100% are each of these categories giving you. Does the percentage of sales they contribute align with the amount of space that your category is receiving? If not, you can make the necessary changes.

That said, retail analytics isn’t a final step to take to ensure you can increase your sales. Rather, it’s a consistent tool that you should use during each of the above steps.

avatar

Darren Gilbert

With over 10 years of writing and marketing experience, Darren joined DotActiv in 2017 as a content writer where he was responsible for producing blogs, Ebooks and more. He has since worked himself up to the role of content manager, where he oversees all and any content produced by the company. He has a Bachelor of Arts in International Studies from the University of Stellenbosch.