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Retail merchandising – art or science?

  • Retail merchandising
  • August 31, 2014
  • Gerry Sapucci
Retail merchandising – art or science?

Republished from NZRetail's August 2014 issue.

To decide on which side of the fence Retail Merchandising belongs, it is necessary to define what is meant by the term, and what its purpose is.

Taking a step back and accepting that the objective of retailing is ultimately to profitably satisfy customers’ requirements in the marketplace, it is clear that in order for a retailer to be successful, it must have the ability to realise an acceptable return on investment by meeting the ongoing and constantly changing needs of the consumers of its offering.

Therein lies the challenge. Because consumers have constantly changing demands, retail inventories are by default volatile with new items being added and other items being dropped in an attempt to always offer what the customer wants.

As inventory is often a retailer’s single largest asset by a long way, this volatility has to be carefully managed. The cost of inventory is constant, but its saleability, and hence profitability, is entirely dependent of the three fundamental cornerstones of retailing - “What”, “Where” and “When”.

“What” being the actual items on offer. Obviously, if the merchant is not offering what most customers want, he will not sell many (or any) and eventually may not even recover his investment.

“Where” relates to the physical locations and channels through which the merchandise is being offered.  While some items may be in demand in certain areas where the merchant is trading, they may well be unwanted elsewhere. An extreme example would be snow ploughs which would be relevant to areas where snow falls, but hardly likely to sell where the year-round temperatures are high.

“When” refers to the time of year that items are offered. While for some retailers this is less crucial than others, for example white goods vs fashion apparel, it is nonetheless a critical consideration when determining the range of merchandise to be offered given that consumers have constantly changing requirements.

Of course, the above is basic Retailing 101 and there are many more factors that play a part, but achieving the nirvana of having the right merchandise, at the right price, in the right place, at the right time, in the right quantities, is far from easy or simple. And that is what Retail Merchandising is all about.

It also goes without saying that the larger the retailer, the greater the range of items on offer and the number of sales channels, the more complex merchandising becomes. However, even smaller merchants are faced with the same challenges, often with less resources to utilise in the quest to meet them.

Many computerised systems have been developed to assist with the calculations and volumes of data that are part and parcel of merchandising, however no two retailers are exactly alike or have exactly the same business model or ethos which is inherent in their approach to retail merchandising.

It is highly unlikely that a “turn-key” solution exists for all, or many, retailers, even in the same sector. This therefore necessitates that each retailer’s unique merchandising objectives and processes should be clearly defined and that any system deployed must be able to fit those objectives and processes, rather than the other way around.

It is in the definition of these processes and objectives, and the means of achieving them, that the question arises – is Retail Merchandising art or science?

While there are generally accepted merchandising principles, formulas and theories which could be considered “scientific”, and certainly the use of technology to implement these would fit the definition, the knowledge, experience and intuition of the retailer – the “art” component – cannot be dispensed with. Without these key ingredients there is little hope of a successful outcome.

So, Retail Merchandise can be considered a partnership – a blending of art and science which, when balanced correctly, provides the essential foundation for building a profitable retail enterprise.

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