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Merchandising is any practice which contributes to the sale ofproducts ("merch" colloquially) to a retailconsumer. At a retail in-store level, merchandising refers to displaying products that are for sale in a creative way that entices customers to purchase more items or products.
Inretailcommerce, visual display merchandising means merchandisesales usingproduct design, selection,packaging,pricing, and display that stimulates consumers to spend more. This includes disciplines anddiscounting, physical presentation of products and displays, and the decisions about which products should be presented to which customers at what time. Often in a retail setting, creatively tying in related products or accessories is a great way to entice consumers to purchase more.
Merchandising helps to understand the ordinary dating notation for the terms of payment of an invoice.[clarification needed] Codified discounting solves pricing problems including markups and markdowns. It helps to find the net price of an item after single or multiple trade discounts and can calculate a single discount rate that is equivalent to a series of multiple discounts. Further, it helps to calculate the amount of cash discount for which a payment qualifies.
The termmerchandising encompasses a range of practices used to present and promote products as they move toward consumers. In physical retail environments, it generally refers to decisions regarding the arrangement, pricing, packaging, and visual display of goods in a store.[1] The word is also used to describe promotional items bearing a company's name or logo such as shirts, mugs, or small giveaways.[2]
A more formal usage appears inlicensed merchandising, in which characters, trademarks, or other forms of intellectual property are placed on commercial products under contractual agreements.[3] With the expansion of e-commerce, the term also includes the ways products are displayed online, from image presentation to search and recommendation systems that assist customers in locating items without a physical shelf.
The principles of merchandising began to take shape in the19th century, with the appearance of the modernsupermarkets and the transition from small shops to wide sales areas. In department stores in Europe and in theUnited States they began to use designed display windows, arranged shelves, and conscious planning of the customers' movement in the store, in order to attract buyers and to emphasize certain products. These processes are considered the turning point in which the presentation of the product, the layout in the space, and the visual appearance became from merchants' intuition into a systematic tool for increasing sales.[4]
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During the 20th century, and mainly with the spread of retail chains and self-service stores, merchandising developed into a recognized and studied field. Retailers began to plan systematically the product mix, the depth and width of the collection, inventory levels, prices, and the allocation of shelf spaces, in order “to convert” customer movement into sales. In the research of the field, merchandising is described as an overall strategy integrating the selection and arrangement of the products, the design of the store and the shelves, promotions and signage in physical stores and in electronic commerce.[5]
A parallel branch of merchandising developed around cultural figures and symbols. At the beginning of the 20th century the authorBeatrix Potter registered a patent for thePeter Rabbit doll, which is considered one of the first cases of a literary character being distributed as a consumer product and accompanied by a line of toys, household items, and additional products. Later in the century, "character merchandising" became an especially organized system at theWalt Disney studios, where in the 1930s a structured business model was developed for licensing characters and distributing them on toys, clothing, and accompanying products, which influenced the cinema, television, and sports industries throughout the world.
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The annual cycle of merchandising differs between countries and even within them, particularly relating to cultural customs like holidays, and seasonal issues like climate and local sporting and recreation. Events such asChinese festivals andJapanese festivals are incorporated in an annual cycle of shop decorations and merchandise promotion.
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As just one example, in the United States the basic retail cycle begins in early January with merchandise forValentine's Day, which is not until mid-February.Presidents' Day sales are held shortly thereafter. Following this,Easter is the major holiday, while springtime clothing and garden-related merchandise is already arriving at stores, often as early as mid-winter (toward the beginning of this section,St. Patrick's Day merchandise, including green items and products pertaining to Irish culture, is also promoted).Mother's Day andFather's Day are next, withgraduation gifts (typically smallconsumer electronics likedigital cameras) often being marketed as "dads and grads" in June (though most college semesters end in May; the grads portion usually refers to high school graduation, which occurs one to two weeks after Father's Day in many U.S. states). Summer merchandise is next, including patriotic-themed products with the American flag, placed on the market byMemorial Day in preparation forIndependence Day (withFlag Day in between). By July,back-to-school is on the shelves and autumn merchandise is already arriving, and at somearts and crafts stores,Christmas decorations. (Often, aChristmas in July celebration is held around this time.) The back-to-school market is promoted heavily in August, when there are no holidays to promote. By September, particularly afterLabor Day, summer merchandise is on finalcloseout andoverstock of school supplies is marked-down some as well, andHalloween (and often even more of the Christmas) merchandise is appearing. As the Halloween decorations and costumes dwindle in October, Christmas is already being pushed on consumers, and by the day after Halloween retailers are going full-force with advertising, even though the "official" season does not start untilthe day afterThanksgiving. Christmasclearance sales begin even before Christmas at many retailers, though others begin onthe day after Christmas and continue on at least untilNew Year's Day but sometimes as far out as February.
The trend of stocking stores with merchandise many weeks prior to the actual event targeted and the period of consumption can be described by the term advance selling. Although it may seem disadvantageous for sellers, advance selling can have the opposite effect. For example, this practice works to counteract a lack of abundant capacity in stores during prime seasons and a lack of value in premature products.[6]
Merchandising also varies withinretail chains, where stores in places likeBuffalo might carrysnow blowers, while stores inFlorida andsouthern California might instead carry beach clothing and barbecue grills all year. Coastal-area stores might carrywater skiing equipment, while ones nearmountain ranges would likely havesnow skiing andsnowboarding gear if there are ski areas nearby.
As promotional merchandise acquires a larger portion of companies' annual budgets, its appearance in the hands of unintended recipients increases. However, this has been found to generate a positive outcome for companies without any additional effort after producing the merchandise because of the concept of silentpersuasion. The concept theorizes that even without the acknowledgement of the brand being promoted on the merchandise, the individual utilizing it is affected in their future actions as a consumer. Furthermore, a 2019 study found that the tactile usage of the products produced a greater response in consumers than a solely visual interaction with a product such as posters.[7] This study concluded that considering allotting a greater sum of money to smaller pieces of merchandising that promote a brand would benefit newer companies that have yet to become quickly recognizable.
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In thesupply chain, merchandising is the practice of making products in retail outlets available to consumers, primarily by stocking shelves and displays. While this used to be done exclusively by the stores' employees, many retailers have found substantial savings in requiring it to be done by the manufacturer, vendor, or wholesaler that provides the products to the retail store. In the United Kingdom, there are a number of organizations that supply merchandising services to support retail outlets with general stock replenishment and merchandising support in new stores. By doing this, retail stores have been able to substantially reduce the number of employees needed to run the store.
While stocking shelves and building displays is often done when the product is delivered, it is increasingly a separate activity from delivering the product. In grocery stores, for example, almost all products delivered directly to the store from a manufacturer or wholesaler will be stocked by the manufacturer's/wholesaler's employee who is a full-time merchandiser. Product categories where this is common are Beverage (all types, alcoholic and non-alcoholic), packaged baked goods (bread and pastries), magazines and books, and health and beauty products. For major food manufacturers in the beverage and baked goods industries, their merchandisers are often the single largest employee group within the company. For nationwide branded goods manufacturers such asThe Coca-Cola Company andPepsiCo, their respective merchandiser work forces number in the thousands.
A challenge that online retailers face in comparison to the traditional in-store shopping experience is the sensory exploration that isn't available to consumers through a screen. An area this is especially prevalent in is clothing or fashionretail in which potential sizing issues can be a large factor in a customer refraining from purchasing an item online. Moreover, accurately portraying the texture and quality of a product in all areas of retail, not limited to fashion, remains a challenge in the field of online merchandising as the lack thereof has been proven to result in more indecision for consumers.[8] Because of this, many companies look for ways to improve their online shopping options to make browsing merchandise as similar to an in-store experience as possible while keeping up with the growing online market.
This concept can be linked tomarketing channels which bring products from the possession of the producer into the possession of the consumer. In recent decades, these methods utilized by companies to provide merchandise have expanded from in-person only, to online-only for some stores during theCOVID-19 pandemic, to a mixture of both, sometimes referred to asomnichannel retailing. The combination of both options for consumers provides a favorable encounter with retailers that makes them more likely to purchase products and return to the seller again at a future date. However, these strategies can be difficult for sellers to maintain as it can require many more physical and technical resources that may not be currently available to them.[9][10]
Inmarketing, one of the definitions of merchandising is the practice in which the brand or image from one product or service is used to sell another.Trademarked brand names, logos, or character images are licensed to manufacturers of products such as toys or clothing, which then make items in or emblazoned with the image of the license, hoping they'll sell better than the same item with no such image.[11] For the owners of the IP (intellectual property) in question, merchandising is a very popular source of revenue, due to the low cost of letting a third party manufacture the merchandise, while the IP owners collect the merchandising (royalty) fees.
In 1903, a year after publishingThe Tale of Peter Rabbit, English authorBeatrix Potter created the firstPeter Rabbitsoft toy and registered him at thePatent Office in London, making Peter the oldest licensed fictional character.[12][13] Erica Wagner ofThe Times states, "Beatrix Potter was the first to recognise that content—as we now call the stuff that makes up a book or a film—was only the beginning. In 1903, Peter hopped outside his pages to become a patented soft toy, which gave him the distinction of being not only Mr. McGregor‘s mortal enemy, but also becoming the first licensed character".[12]
Merchandising for children is most prominently seen in connection withfilms andvideogames, usually those in current release and withtelevision shows oriented towards children.
Merchandising, especially in connection with child-oriented films, TV shows and literature, often consists of toys made in the likeness of the show or book's characters (action figures) or items which they use. This was first seen with the Peter Rabbit soft toy in 1903, with theSmithsonian magazine stating Beatrix Potter "created a system that continues to benefit all licensed characters, fromMickey Mouse toHarry Potter."[13] However, sometimes it can be the other way around, with the show written to include the toys, as advertising for the merchandise.
Sometimes merchandising from a television show can grow far beyond the original show, even lasting decades after the show has largely disappeared from popularity. In other cases, large amounts of merchandise can be generated from a pitifully small amount of source material (Mashimaro).
The most common adult-oriented merchandising is that related toprofessional sports teams (and their players).[citation needed]
A smaller niche in merchandising is the marketing of more adult-oriented products in connection with similarly adult-oriented films and TV shows. This is common especially with thescience fiction andhorrorgenres. Occasionally, shows which were intended more for children find a following among adults (for example,Gundammodel kits). An early example of this phenomenon was the cartoon character Little Lulu, who became licensed to products for adults, such as Kleenex facial tissue.[14]
Sometimes abrand of non-media products can achieve enough recognition and respect that simply putting its name or images on a completely unrelated item can sell that item. An example isHarley-Davidson branded clothing.
Idol goods oridol merchandise are various types of merchandise related tocelebrities ("idols"). Consumption of idol goods is a significant part of the idol fandom.[15] Such goods create and reinforce a more physical connection between fans and celebrities.[16]
Examples of common idol goods includestationery items,compact discs,photo albums, calendars, telephone cards, T-shirts (see alsoconcert T-shirt), key chains, lapel pins, and various other goods.[17][18]Virtual idols can be considered an idol good themselves as they can be bought and sold.[15] An idol can have a tremendous effect on sales of merchandise, an example beingDavid Beckham upon his arrival at Real Madrid in 2003, with an Adidas spokesman stating, "Put Beckham's name on any product and Real Madrid didn't stop selling".[19]
In the 1960sthe Beatles were pioneers in conventional retailing in music, setting up their own retail store in London, Apple Boutique, that sold Beatles merchandise.[20]
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