Why Merchandising Should Follow a Long-Term Strategy

Effective merchandising, in my opinion, is becoming a lost art. Before, online retailers could look at purchasing behaviour throughout the course of the year and have a pretty strong understanding of which products would need to be included in merchandising efforts, and when this needed doing by.

Now, with the introduction of AI-powered search, more complex product catalogues, and higher customer expectations, it seems to me that merchandising is fast becoming just a tick box exercise. There’s a heavier focus on “I want to push this product”, rather than acknowledging whether a shopper a) wants to buy the product, b) will even interact with the product listing, or c) if the product is even relevant to them at all.

In my experience, there’s no consideration for how to make merchandising unique for each individual user. There is a huge disconnect between what a business wants to achieve and what the user actually wants. Time and time again I see this done either as a half-hearted attempt, or just not done at all. (and yes, I am still thinking about Reebok trying to convince me that I need a pair of white trainers…. I still dont).

However, I have a suggestion: combining merchandising with personalisation efforts.

The current state of merchandising

Merchandising in its current state feels like an afterthought, when in reality it should be treated  as a more sophisticated process. I find that, generally, people don’t like feeling they’re being sold to. The companies that are doing the best merchandising/product placement (like Amazon and Tesco) are much more covert in their approach, connecting different elements of the customer journey to offer a complete merchandising package which feels relevant and connected to what I want.

Relevance

Relevancy and attention spans are becoming a big deal – and shouldn’t be an afterthought when devising promotional strategies.

The world we now live in focuses more on instant gratification. Think of YouTube shorts, TikTok, Instagram reels… It’s undeniable that this shift in how we consume social media content is affecting other parts of our lives. We expect near-immediate answers, whether that’s a simple question, how to do something, or looking for potential purchases when browsing online retailers.

This makes it harder for retailers who don’t have a strategy in place for grabbing, or holding,  shoppers’ attention with (usually) new and seasonal products. Especially if they’re not meant for the shopper, or what the user set out to purchase in the first place.

Time

All too often, retailers approach merchandising with a short-sighted view. The methods used for tracking performance and progress only focus on short periods or achievements (typically using a framework like objectives and key results, OKRs). This means retail organisations aren’t trying to build a proper, long-term sales engine, but rather firefighting to meet the next upcoming target. This limits the amount of time that can be spent creating an effective merchandising strategy.

By only thinking a few weeks or months ahead at any time, merchandising efforts won’t be sustainable – nor will they drive long-term purchasing behaviour amongst the pool of potential and current customers. 

A static approach

Customer wants and needs are always changing, yet retailers are still following the same traditional methods they always have for merchandising – like sticking a carousel on the home page to show this season’s “hottest new arrivals.” Not all products will be relevant to each user but rather a small selection of those visiting your site, meaning your merchandising efforts aren’t reaching the right people. As customer expectations change, so should merchandising strategies.

How to connect personalisation and merchandising

A little earlier, I suggested that personalisation and merchandising efforts should be combined, or work together somehow. If you’ve ever played FIFA and built an Ultimate Team, you’ll likely remember Chemistry. For those who are unfamiliar, creating the right team chemistry in FIFA gave players a stat boost if a player was on the same team as someone with whom they played at club or national level., 

For me, personalisation and merchandising should be treated similarly. Create the right chemistry around them, and you get your stats boosts. Personalising your merchandising will make it more relevant to more people, while also demonstrating that you understand what the user actually wants.

However, simply combining the two won’t solve the merchandising conundrum. There are a few things you need to do first that will build a robust sales engine.

Effective strategy

Look at both your short- and long-term goals – are these connected in some way? Do they complement each other, or actively contradict what you’re trying to achieve? As I previously mentioned, all too often I’ve seen retailers take advice that focuses their strategy more on short-term achievements, rather than trying to instill long-term buying behaviours.

By regularly reviewing your strategy, you will understand where your merchandising is currently falling short, and identify opportunities to make changes that improve merchandising results. Add small touches of personalisation to merchandising when starting out, and refine these as you progress in line with your broader goals.

Improved segmentation

Segmentation, again, is something that I don’t often see done well – but that’s a conversation for another day. Traditional segmentation leans more on basic demographics (age, gender, location), whereas, in reality, these segments aren’t as necessary anymore, and we should do this on each individual level. If Tesco and Amazon could achieve unique personalised rewards for their millions of customers over 20 years ago, I’d like to think the technology has caught up to allow all retailers, no matter what size, to do this.

Personalisation offers a way to target customer segments that might have been previously overlooked. This then enables you to better understand that group of people, their characteristics, buying behaviours, and so on, which will give you the data needed to improve the relevancy and impact of your merchandising. 

A progressive approach

Not everything has to change immediately or overnight. But, tactics and strategies do need to be optimised to match current buying behaviours. If you consider that what we want or need as a person is constantly changing, then using an algorithm, technology, or a static approach to offer someone what you think they might want isn’t going to keep up. 

Traditional merchandising is not in line with modern buying behaviours. The last big industry shift in retail was probably around March 2020 when retailers had to rely on ecommerce. Shoppers are now showing a strong preference for making online purchases, opening up a whole new world of options for retailers to meet these demands. Personalising merchandising efforts moves closer to how someone would experience a high-street store, choosing what they want to browse. 

A change in perspective

Changing how you view merchandising – and the entire customer journey in fact – is definitely more a long-term strategy. Understandably, revenue and profit have a heavy influence in merchandising techniques. However, think about the changes that we’ve already seen in buying behaviour such as Roblox virtual stores, TikTok Shop, AI search, ChatGPT… And there’s certainly more changes to come.

Focusing on the long term and creating a customer-centric strategy for merchandising might not reap immediate major returns, but will nurture the existing relationship with your current customers and build a strong foundation for new ones. This change of approach will give your customers better options that drive long-term buying behaviour and, ultimately, encourage positive sentiment about your brand. 

So what next?

Merchandising should reflect how people actually shop today. Not just to improve the overall customer experience, but for the benefit to retailers too. This change can’t (and won’t) happen overnight, and should follow a progressive approach that considers metrics beyond profit and revenue. 

By aligning personalisation, merchandising, and other parts of the customer journey, you will close the gap between what you want to sell and what customers want to buy – creating a more relevant and meaningful shopping experience that drives long-term behaviour, builds loyalty, and adapts to constantly changing needs.

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