Merchandising strategy: best practices and tactics to drive more sales

What does it take to stand out in a saturated market landscape? A good merchandising strategy, of course.

With online shoppers, you have only 8 seconds to make an impression, according to?Microsoft. Whether shoppers are browsing your ecommerce site or strolling through your store, they need to be drawn in by compelling visuals, easy navigation, and an exceptional shopping experience.

A well-crafted marketing strategy is essential to not only engage and delight your shoppers, but also to drive sales and positively impact your bottom line. By thoughtfully planning every aspect of your merchandising, you can create a shopping environment—whether digital or physical—that resonates with your audience and supports your business goals.

What is a merchandising strategy?

A merchandising strategy refers to the planning and execution of activities to increase your online store revenue and improve your customer satisfaction. Its facets could include upselling, cross-selling, promotions, sales, limited-time offers, and product recommendations.

A successful?merchandising strategy?focuses on achieving the following goals:

• Maximizing sales:?The primary objective is to increase sales by presenting products in a way that appeals to shoppers and motivates them to buy.
• Enhancing customer experience:?A well-thought-out merchandising strategy improves the overall shopping experience, making it easier for shoppers to find what they need and discover new products.
• Building brand loyalty:?Consistent and effective merchandising helps establish and reinforce your brand identity, which fosters customer loyalty over time.
• Driving ROI:?A successful merchandising strategy aligns with your business goals to?maximize profitability?and ensure a strong return on your investments in products and services.

Brick-and-mortar vs. ecommerce merchandising strategies

Merchandising strategies can vary significantly between brick-and-mortar stores and ecommerce platforms. However, both are essential for driving sales and enhancing the customer experience.

Brick-and-mortar merchandising strategies:

• Store layouts:?The layout of your store is crucial for guiding shoppers and ensuring that products receive maximum visibility. Techniques like the “racetrack” layout encourage shoppers to explore more of the store.
• Lighting:?Proper lighting enhances the appeal of products, creates ambiance, and influences customer perception. For example, warm lighting can create a welcoming atmosphere, while spotlighting can draw attention to specific items.
• Product displays:?Effective product displays catch shoppers’ eyes and showcase products in a way that highlights their features and benefits. End caps, window displays, and point-of-sale displays are key elements in a physical store.
• Signage:?Clear and attractive signage helps shoppers navigate the store, find promotions, and make informed purchase decisions. Signs should be consistent with your brand’s visual identity.

Ecommerce merchandising strategies:

• Homepages:?Your homepage is often the first point of contact for potential shoppers. It should be visually appealing, load quickly, and guide visitors toward key products or promotions.
• User-generated content (UGC):?This includes customer reviews and photos. Ultimately, USC adds authenticity and social proof to your product pages, encouraging other shoppers to make purchases when they see good reviews and photos of products that have arrived in good shape.
• Category pages:?Well-organized category pages help shoppers find what they’re looking for quickly. These pages should feature filters, sorting options, and high-quality images.
• Personalized recommendations:?Using data to offer?personalized product recommendations?can increase average order value (AOV) and customer satisfaction. These can be based on browsing history, past purchases, or similar customer behavior.

Key merchandising tactics

There are several key tactics that can significantly enhance your merchandising efforts:

Optimize site search

For ecommerce platforms, optimizing site search is crucial. Shoppers use the search bar to find specific products quickly. A poorly functioning search tool can lead to frustration, causing some to leave your site without making a purchase. To optimize site search, consider the following:

• Autocomplete suggestions: Implement?autocomplete?suggestions to help shoppers find products faster. For example, if a shopper starts typing “running shoes,” your search bar should suggest popular products or categories like “Nike running shoes” or “men’s running shoes.”
• Synonym recognition:?Ensure that your search function recognizes?synonyms?and common misspellings. For instance, if a user searches for “hoodie” instead of “sweatshirt,” your search results should still display relevant products.
• Filtering and sorting options:?Once a shopper performs a search, offer?filtering and sorting?options to help them narrow down their choices by size, color, price, or other relevant criteria.

Simplify navigation

This is essential for guiding shoppers through your online store with ease. A cluttered, confusing layout can deter shoppers and lead to lost sales. Make sure your ecommerce store has the following:

• Clear category structures:?Ensure that your categories and subcategories are logically organized and labeled in a way that makes sense to your shoppers. For example, a fashion retailer might categorize products by type (e.g., tops, pants, dresses) and then by gender or occasion (e.g., men’s, women’s, formal wear).
• Breadcrumb navigation:?Implement breadcrumb?navigation?on product and category pages so shoppers can easily backtrack to previous pages without getting lost.

Improve user experience (UX)

Positive experiences keep shoppers engaged and encourage them to complete a purchase. The goal is always to make the shopping process as enjoyable and seamless as possible. This is how you do it:

• Website speed and performance:?Review your website performance, ensuring that it loads quickly and performs well across all devices. Slow load times and technical glitches can lead to cart abandonment and lost sales.
• Intuitive design:?Implement a clean, easy-to-navigate interface where shoppers can easily find products, read reviews, and check out quickly. Shoppers don’t want a cluttered website where they can’t get from A to B with ease.
• Customer service:?Provide responsive customer support through?chatbots, email, or phone so shoppers can get their enquiries and issues solved without hassle.

Create urgency

Urgency drives shoppers to make quicker purchasing decisions. It’s as simple as that (kind of). Use the following in order to get shoppers to make their purchase:

• Limited-time offers:?Display countdown timers for sales or promotions can create urgency. For example, highlighting a “24-hour flash sale” encourages shoppers to act fast before the deal ends.
• Low stock indicators:?Show low stock levels on product pages, such as “Only 3 left in stock,”. Similar to limited-time offers, it can push shoppers to purchase before the item sells out.

Use mobile optimization

Optimizing your ecommerce site for mobile is essential. In fact,?58%?of all multi-device purchases are made on mobile. So you want to make sure that you attract a chunk of that audience. Here’s how:.

• Responsive design:?Ensure that your ecommerce site is fully responsive, meaning it adjusts seamlessly to different screen sizes. This includes easy-to-click buttons, readable text, and a simple checkout process designed for mobile users.
• Mobile-friendly payment options:?Incorporate mobile payment options like Apple Pay, Google Wallet, or PayPal to make the checkout process faster and more convenient for mobile shoppers.

6 best practices in merchandising

It’s crucial to adopt best practices that not only meet but exceed customer expectations. Here are six essential practices that can significantly enhance your merchandising strategy:

Personalize recommendations

Personalization is one of the most powerful tools in modern merchandising. By tailoring product recommendations to individual shoppers, you can increase engagement, boost sales, and enhance customer satisfaction. Not only that but?78%?of shoppers are more likely to recommend your platform to friends, as well as repurchase, if you use personalization.

For example, Amazon excels at personalized recommendations. By analyzing a shopper’s browsing history, past purchases, and items in their cart, Amazon suggests products that the shopper is likely to be interested in. This not only increases the likelihood of a sale but also enhances the shopping experience by making it more relevant to the shopper’s needs.

Analyze customer behavior

Understanding your customers’ behavior is essential for effective merchandising. By analyzing how shoppers interact with your products and your store, you can make informed decisions that improve your merchandising strategy.

Use?analytics tools?to track how shoppers navigate your website, which products they view, and where they drop off in the purchase process. For example, if you notice a high abandonment rate at a particular point in the checkout process, you can investigate the issue and make necessary adjustments to improve conversion rates.

Manage your inventory

Effective?inventory management?is critical to ensuring that the right products are available at the right time, without overstocking or understocking. Good inventory management can improve cash flow, reduce waste, and increase customer satisfaction.

Implement an inventory management system that syncs with your online store to provide real-time stock updates. For instance, if a product is running low, the system can automatically adjust the product’s availability online or notify the purchasing team to reorder. This prevents situations where shoppers order items that are out of stock, which can lead to dissatisfaction and lost sales.

Pay attention to market trends

Staying attuned to market trends is vital for maintaining relevance and competitiveness in the retail industry. Understanding what’s popular, what’s fading, and what’s on the horizon allows you to adapt your merchandising strategy proactively.

Online retailers can use tools like Google Trends, social media listening platforms, or even internal sales data to identify emerging trends. For instance, if a particular style of clothing is gaining popularity, an online fashion retailer can quickly adjust their inventory and highlight those items on their homepage or through targeted marketing campaigns.

Simplify online checkout

A streamlined, user-friendly checkout process is crucial for converting online browsers into buyers. Complicated or lengthy checkout processes can lead to cart abandonment, so it’s essential to make this final step as simple and quick as possible. With research indicating that the average cart abandonment rate is?70.19%, you need to implement the right process so your shoppers don’t become part of that statistic.

For example, simplify your checkout process by reducing the number of steps required to complete a purchase. Offer guest checkout options so shoppers aren’t forced to create an account, and minimize the number of fields they need to fill out. Additionally, provide multiple payment options, such as credit cards, PayPal, and mobile payment methods like Apple Pay.

Incorporate user generated content

USG is a powerful tool for building trust and influencing purchasing decisions. When shoppers see that others have had positive experiences with your products, they’re more likely to feel confident in making a purchase themselves. Research backs this up, suggesting that customer reviews — a form of “social proof” — impact more than?80%?of purchases.

Encourage shoppers to leave reviews, upload photos of their purchases, or share their experiences on social media. For example, brands like eBay showcase customer photos and testimonials on their website, helping to build credibility and encourage new customers to buy.

How to measure the success of your strategy

To ensure your merchandising strategy is effective, you need to measure its success using relevant metrics and key performance indicators (KPIs). Here are some ways to do this:

• Sales metrics:?Track overall sales, and online sales metrics like conversion rates and AOV.
• Customer feedback:?Collect and analyze customer feedback through surveys, reviews, and direct communication. This feedback provides insights into customer satisfaction and areas for improvement.
• A/B testing:?Regularly perform?A/B tests?on different aspects of your merchandising strategy, such as product displays, promotions, or website elements. This helps identify what works best for your audience so you can tailor future strategies to it.
• Inventory turnover:?Monitor how quickly products sell compared to how often they need to be restocked. High turnover rates indicate effective merchandising and strategies that you need to continue pursuing.
• Traffic and engagement:?Analyze the traffic to your website. Look at how shoppers engage with different areas of your website to identify successful strategies and potential bottlenecks that need to be ironed out.

Tools and solutions for effective merchandising

Choosing the right tools and solutions is crucial for executing your merchandising strategy effectively. Here are some tool categories to consider:

• Inventory management systems:?These tools help track stock levels, forecast demand, and manage replenishment, ensuring that your most popular items are always available.
• CRM software:?A CRM system helps you track customer interactions, preferences, and purchase history, allowing for more personalized merchandising efforts.
• Data analytics tools:? Use analytics tools to gather and interpret data on customer behavior, sales trends, and the effectiveness of your merchandising strategies.
• Ecommerce platforms:?A robust ecommerce platform is essential. Look for features like customizable product pages, built-in analytics, and support for UGC.

Create a merchandising strategy that pays off

Outpacing the competition means implementing bold merchandising solutions that engage shoppers all the way through a successful checkout. Algolia offers proven Search and Discovery technology to help you streamline your online merchandising battle plan.

Check out our new resource, the?Merchandising Playbook, highlighting digital merchandising best practices for reaching your target shoppers. You’ll learn how to:

• Optimize your business metrics
• Measure the impact of your merchandising strategies
• Run promotional campaigns

Looking to drive your sales and ROI metrics off the charts? We know how you can level up your merchandising.?Contact us?today.