Strategic Merchandising for a Recession

Written by John Stanley

When the customer is in a spending mood they will buy almost anything a retailer entices them with. When a recession occurs their wallet or purse stays closed for a lot longer. This means that retailers have to be a lot sharper and go back to some of the basic principles of retailing.

Tom O’Toole, the baker and conference speaker from Beechworth, Victoria, Australia has a wonderful quote” Retailing is simple, not easy, but simple.” In the good times we forget about the simple rules because it has become easy. Now that it is less easy we need to go back to the simple rules. One reason we have seen” 70% off” sales around the world is that some retailers have forgotten the simple rules of merchandising management. Merchandising management is the backbone of retailing, yet in the good times it often becomes weaker.

Last year, I was visiting a so called retail specialist in his field who was offering twelve ways to polish a car on the shelf and could not explain the differences to me. Another retailer was offering fifteen ways to kill a snail, all containing the same chemical and doing the same job. No wonder the customer is confused.

Get the range right

One of the keys to merchandise management in any retail business is getting the range of products right. I am often told by retailers that their sector of retailing is different to other retail sectors, but in my view the principles stay the same. If you look at any range of products in a store there are three sub divisions you must get right to encourage customers to “buy” into your range.

  • Statement Products

The fashion industry calls these the ‘Catwalk pieces”. They are the cool, fashionable end of the product range . Often they are slow movers, but are needed to show customer that you are in tune with the latest fashions. If you think about the fashion industry, consumers very rarely purchase the “cat walk” item. But, those garments set the scene for the designer and if the retailer is also offering the consumer something a little less outrageous, encourage consumers to dare to be different.

In general retailing these items are often called “Statement” products. They are key to helping establish the experience of shopping in the store and should be positioned in a “Hot” spot in your store within the category to show the customer you have a wide and deep range of products within the category . Often this is a case of perception, but perception is truth in the eyes of the beholder.

  • Volume Products

In the fashion industry “Volume Products” are the timeless garments. They are products that just keep selling and selling within the range whatever the state of the economy. Within the store you need to identify the volume products within the range, they are the “white paint” of the category. An inspection of the sales history of the range will quickly highlight what your volume products are and these should be positioned in the lesser traffic flow areas in the category.

  • The Best Sellers

The final key group is the best sellers within the range. Best sellers may vary based on the fashion and the time of year. You will need to keep in touch with trends and forward plan to the next season to ensure you get this part of your merchandise strategy correct. Also do not be afraid to tell consumers which products are the best sellers, as consumers may need that assurance.

I often come across products in stores that are not selling. When I challenge the retailer and ask why the products in question are on the shelf, I get an embarrassed look and am told they were purchased because the buyer liked them. This is a big mistake, never buy based on personal preferences, buy what your target consumer need and wants.

Merchandising management needs to be more exact in tough economic times. Keep to the three basic sub categories . You may need to reduce the range, but being perceived as being more of a specialist and increasing sales per square or linear meter should be the overall aim.