The past decade has witnessed sea change in the world of retail, of which increasing competition is just one aspect. New and emerging technologies and customers fragmentation has made it even more difficult for retailers to retain consumers who are loyal to their stores. Walters and Hanharan have identified four key elements of the strategic direction that are retailer may take, they are: * Merchandise strategy;
* Communications strategy;
* Customer service strategy; and
* Format and environment strategy.
Among all the elements of retail strategy, that of merchandising is becoming increasingly important, eventually determining the loyalty that a customer may have for a retail store. Over the years, the concept of merchandising has also evolved. From an era when manufacturers decided what the consumers needed to buy, to a time when consumers are the decision-makers – the change in the world of merchandising has been phenomenal. The Concept of Merchandising
The word “merchandise”, means goods and sold for a profit. It originate from the French word “merchant” which led to merchandise – meaning “goods” derived from the old French marchat.
According to Business Dictionary, merchandise refers goods and commodities sold at the retail level. “Merchandising” is the buying, presenting, and selling of the merchandise. This includes all related activities such as advertising, display and promotion of merchandise involving the retail customers.
The merchandising challenge of consistently having the right product in the right quantity, available at the place, at the right time and at the right price becomes increasingly difficult as more selling an fulfilling locations are added to a distributed retail model. Achieving these ‘five rights’ is the key to successful merchandising and, many a times, remains an elusive goal for most retailers. On the one hand, when an inventory enhanced with a view to improve service levels and decrease stock outs, profitability suffers owing to excessive markdowns. On the other hand, when inventory is reduced profitability suffers due to lost sales. Many a times both these situations typically occur simultaneously.
Grace Kunz has defined merchandising as the ‘planning, developing, and presenting of product lines for identified target markets with regard to pricing, assorting, styling and timing.
Retail merchandising has been defined by Lewison as the process of developing, obtaining, pricing, supporting and communicating the retailer’s merchandise offering. These aspects can be individually explained as follows: * Analysis- because retailers must be able to correctly identify their customers before they can ascertain consumer desires and needs/requirements so as to make good buying decisions. * Planning- because the merchandise that is to be sold in the future must be bought ‘now!’ * Acquisition- because the merchandise needs to be produced, be it from distributers or manufacturers. * Handling- because the merchandise has to reach where it is needed in proper condition to be sold. * Control- because it is necessary to check the amount(s) spent on buying/acquiring products, in the process of merchandising. The concept of merchandising can be summarized in the words of Aufreiter, et al as ‘merchandising is not a synonym for the buying function, it is an integrated, end-to-end business process that runs from planning the assortment, to sourcing, to distribution, to allocation of the goods to the stores, to promoting and selling the assortment to the customers to replenishing inventory as necessary.’ Different Roles in Merchandising
Retail buyers represent both the retail firms and those consumers who are in the market for merchandise. Therefore, they are often referred to as the customers’ advocates. Ettenson and Wagner define retail buying as the decision making process through which retail buyer identifies, evaluates and selects...