This article is brought to you by Retail Technology Review: In-Store Merchandising: A Key Ingredient for Retail Growth.
By Arun Rasika Karunakaran, Retail Product Manager & Consultant, Tata Consultancy Services. 
Over the last decade, the number of online sales has skyrocketed. The most recent statistics show that 19.4% of normal retail sales around the world were made online. That has led to some retailers thinking that it might be time to shift most of their focus to e-retail and their online storefronts.
While it might seem like the right time to pivot toward dedicating resources to online sales, traditional in-store merchandising is not something that can be ignored.
Here are some of the primary reasons in-store merchandising is still just as crucial as ever.
Customers Still Use In-Store Shopping for New Items
While online purchases are on the rise, and they make up a significant percentage of retail purchases, customers still prefer in-person experiences often.
In fact, despite 70% of United States citizens having access to an online retail platform, 57% prefer in-store purchases.
The reason for this is straightforward, too. In-person sales allow customers to see the product with their own eyes, evaluate it, and compare it to similar options to determine the best value. They can also avoid issues that occur with shipping and storage such as damaged products.
Because of that, while 19.4% of worldwide retail sales are made online, those are mostly items that customers are familiar with or that could not be found in nearby stores. They know exactly what they are getting in that case. New items from brands they don’t know are likely to be sought out in-person if possible.
So, even if a business has an online storefront with plenty of sales coming in, there is still a reason to do in-store merchandising to propel new products forward.
Retaining Shoppers Looking for In-Store Experiences
Majority of buyers who openly prefer in-person experiences while they shop is still the majority. They are looking for in-store opportunities to purchase the products they love, try new things, and otherwise engage in a more personal shopping experience.
By limiting in-store merchandising or otherwise neglecting it, retailers are leaving more than half of their shoppers on the back burner in favor of an upward trend.
As that is done, that majority share of the shopper base will go elsewhere to shop, and even the dramatic rise in online sales won’t make up for it.
Leveraging In-Person Merchandising Effectively
While much of what is been talked about already would make it seem like simply continuing to use existing in-store merchandising strategies is optimal, there actually is a need to start innovating the way we all look at the concept.
Consumer trends and needs have changed, and merchandising needs to adapt to reflect those trends and behavioral changes.
Based on my experience leading fortune retailers with AI based product transformations in merchandising and store operations, here are a few ways that retailers are currently changing their merchandising approach to ensure they’re meeting in-store customer demands.
1: Demographics Drive Localized Store Space
First and foremost, every retailer should reflect on the location metrics while planning their retail store space for merchandising. Key demographics factors such as age, gender, ethnicity, income, education, and lifestyle factors influence the shopping decisions of customers. Hence its imperative retailers leverage these factors in deciding the categories to be included in the store, macrospace allocation, placement of category within store layout, adjacency factors etc.
Retailers should invest in data and methodologies to identify underlying patterns that reside in space recommendations across stores and creating drastically reduced number of floor plans and planograms in accordance with the identified set of patterns from demographics and other location specific parameters.
2: Seasonality is Key for Localized Assortment
Assortment planning involves identifying the right products for the right store in right quantity. These decisions are primarily determined by numerous factors but seasonality and shopper demand at specific locations are the key deciding factors to decide the assortment.
Typically, seasonality refers to the climate changes but in the assortment planning context this is more than weather changes. In addition, even local events such as football match, pet show, beach festival in the vicinity of retail store should also be considered to plan for smaller, frequent assortment changes to drive personalized shopping experience.
3: Competitive Pricing and Promotions Still Work
A big part of in-store merchandising is ensuring the products are offered at optimal prices and promotional offers in comparison to the competitors. This is often done by constantly tracking the competitor’s pricing strategy to pre-empt their prices and plan the in-store pricing and promotions.
A quite common misunderstanding is that retailers are focusing on 2 or 3 key competitors from the catchment in general to decide their pricing strategy. But many a times this is not the case as competitors can vary by department. For example, shopper would be willing to travel longer distance to explore offers, product features from various competitor and specialty retailers than for a daily grocery run.
4: Balancing Variety and Availability fulfils Range
One of the primary reasons shoppers value the in-person experience so much is that engaging with the product they intend to shop while also comparing wider range of options. Keeping inventory while maintaining a balance of variety can be enabled through variety optimization in hyper localized assortment by identifying optimal attributes which are influenced by store location
A display or in-store advertised promotion can highlight new items. Remember, most consumers will go to in-store shopping opportunities and be more likely to try new products. So, highlighting those products in these effective marketing avenues can greatly boost a retail establishment’s success rate.
5: In-Store Merchandise Initiatives Propel Footfall
While the internet provides an unmatched level of connection around the world, it simply does not match the experience that a local pillar creates.
In-store merchandising supports the building of communities. That is not just a feel-good sentiment, either. It has financial ramifications. Based on the type of retail business, launching in-store initiatives to engage customers will not only help in customer retention but also drive loyal customers. Retailers such as Home Depot conducts in-store kids workshop program among many other workshops to engage with the community and drive store traffic.
6: Complementing Digital Shopping In-Store
One of the best ways to help the in-store merchandising efforts in a rapidly growing online world is to embrace an omnichannel approach and nourish both in-store and online sales channels.
Multiple major online retailers already do this when they list items as only available in-store. This pushes an online audience to participate in the in-store experience, and it makes them susceptible to retailer’s merchandising efforts.
One popular method is to leverage the research habits of shoppers. The average shopper in today’s world looks up most of their new purchases before converting to a customer. To aid in-store efforts, it is a popular option to add live support chat to online storefronts. This is not a direct merchandising effort, but it does offer the opportunity to direct shoppers to the in-store experience while enhancing online efforts.
This helps meld the two experiences into a single, coherent, shopping endeavor that lets them get some of the perks of both options.
In-Store Merchandising is More Important Than Ever Before
Finally, the most important aspect of improving the retail merchandising efforts in an in-store environment is to make sure retailers are meeting the needs of their customers.
Not only is in-store merchandising crucial to keep the in-person experience alive, but it is more important than ever before. With competition, it is paramount to ensure that existing customers are catered to, strategies are adapted, and the brick-and-mortar experience is alive and well.
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Author: Arun Rasika Karunakaran, Retail Product Manager & Consultant, Tata Consultancy Services
My role as a Retail Product Leader thrives on steering retail transformation, leveraging deep expertise in merchandising, e-commerce, and store operations. Partnered with Fortune 500 retailers across US, Australia and Europe, we’ve pioneered initiatives in space and range optimization, pricing, and inventory planning that have empowered the retailers to make intelligent decisions and significantly enhanced digital operations.
My knack for domain consulting, combined with a strategic approach to product management, has equipped me to infuse thought leadership in sales and marketing within the agile delivery framework. With a track record of leveraging AI based solutions for retailers, my goal is to continue innovating retail solutions that resonate with global market trends and benefits the retailers and consumers.
