Retail Dogma

Merchandising 101: Definition, Tasks & Needed Skills

Merchandising is a function in retail that deals with ensuring the retailer’s merchandise is available in the right quantities at the stores and displayed in the right way to drive its sales. This involves initial allocations in the right quantities, ensuring continuous replenishments, effective visual displays and actioning inter-branch transfers if needed.

What Are The 5 R’s of Merchandising?

The 5 R’s of merchandising are the right products, at the right place, on the right time, in the right quantity at the right price.

5 R's of Merchandising
  1. Right Product: The right products being allocated to stores based on store profile and grade
  2. Right Place: The product being in the right place (store or warehouse) based on the seasonal plan and strategy
  3. Right Time: Ensuring products arrive to stores at the right time for seasonal launchings and continuous replenishments before sell outs.
  4. Right Quantity: Allocating and replenishing the right quantities to maximize sales without disrupting display
  5. Right Price: Actioning the right pricing and markdown strategy and ensuring it is right on the system

What Does a Merchandiser Do?

The job description of a merchandiser will typically include the following tasks:

What Are Merchandising Skills?

In order to be a successful merchandiser you will need to have a special skill set that includes the following:

  • Data Analysis: Merchandisers generate and analyze a huge amount of data on a daily basis. This includes sales, product sell throughs, margins and inventory reports.
  • Sales Forecasting: Merchandisers need to be able to forecast sales in special occasions and peak trading periods and adjust inventory levels at the stores accordingly.
  • Spotting Trends: In order to forecast sales accurately, the merchandiser should be good at spotting trends in the market and making decisions based on that.
  • Planning & Budgeting: Merchandisers generate the required data needed for the planning and budgeting of future sales and purchasing budgets.
  • Advanced Excel Knowledge: Excel is an essential tool that retail merchandisers use on a daily basis. Not only are they expected to know basic excel functions, but also advanced functionalities to organize and deal with the vast amount of data generated from the retail merchandising system.
  • Financial Acumen: Merchandisers should be able to understand basic financial metrics, such as gross margins for their daily job. Analyzing and managing margins through effective markdown planning is part of their KPIs.

Online Merchandising

With the introduction of ecommerce, the term “online merchandising” was born.

Online merchandising shares a lot of tasks with regular merchandising, but also differs in other parts .

An online merchandiser is still expected to generate and analyze different sales, margin and inventory reports, and probably also participates through these reports in the Open to Buy planning process.

In addition to that, the online merchandiser will build the digital product catalogue that displays each SKU on the website and connects different categories and products together to deliver an easy shopping experience for the customer.

He will also make sure the search functionality is designed and set up in a way that makes it easy for customers to find what they need and add it to the cart.

On the products page, the online merchandiser will ensure the product description is sufficient and elaborate enough for the customers to be convinced of buying from this store.

IKEA online merchandising

He will also connect product suggestions from other categories and link them to that page for up-selling and cross selling opportunities to increase ATV & UPT.

Tip

Access our members area and read our full case study on how IKEA has mastered online merchandising and ecommerce.

Merchandising Vs. Visual Merchandising

Visual merchandising is the part of merchandising that deals with the product display on the shop floor.

After the merchandiser has made sure the right products have been delivered to the stores in the right quantities, the visual merchandiser will then ensure those products are arranged and displayed in the best way to drive their sales.

Usually the merchandiser and the visual merchandiser will communicate and collaborate together ahead of the product delivery to facilitate this process.

Buying & Merchandising

Buying and merchandising are often mentioned together, and this is because both functions are linked together.

After the buyer has selected the items that the retailer will carry in their assortment, the merchandiser then allocates those items to the stores and ensures their availability all the time until they are sold out successfully.

Buyers and merchandisers also collaborate on the Open to Buy process, with some retail businesses assigning the budgeting part to the buyers and others assigning it to the merchandise planner. In both cases, the buyer uses the OTB to buy the products and the merchandiser generates all the reports needed for the budgeting phase.

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