Retail Merchandising

One of the most popular ways that retail merchandising has been increasing their sales and revenue has been through memberships.

• Memberships create incentives for customers to spend more (e.g. buy $1000 of merchandise and get a $20 gift card). 

• Builds loyalty with a company (Lifetime Customer Value)

• Creates reoccurring charges 

  • • Disney, Netflix, Paramount - Charges every a fee every month unless you cancel 

    • Fabletics - Charges you $59.95 every month and your account is credited $59.95. You can bank the amount and spend in the following months or use it to purchase items that month.

    • NordVPN - 1/month fir $12.99, 1/year $59.88, 2/year $95.76

• Many subscriptions changed their plans for annual to monthly to add flexibility to catch new customers and bring back previous customers. 

Credit Cards

• Annual Fees - Paying a fee to use a credit card for added benefits; increases revenue for the company

• Wanting to take advantage of the benefits, customers use the credit card more which gives the company more money (transaction fees - they gain a small percent on what customers purchase) and when they cannot pay their bills on time (late fees or interest)

• Some benefits offer services that are exclusive to members. However, excusive benefits like getting into restaurants that are hard to get into or special events comes at a cost to the card holder which the credit card companies profit.

• Additionally, credit card companies may use your personal information from transactions to sell to advertising companies.

Retail Memberships

• While most do not charge a fee, it does encourage buyers to continue coming back for benefits

• Though a company may give back free rewards to customers, inherently the customer has paid for them through all of their shopping. What is a little good will to encourage continued shopping with their business.

• Costco/Sam's Club - Charges members a fee to gain access to wholesale pricing. If you can believe this, both companies make most of their money based upon their memberships. If you are in my investing class, paying attention to memberships, similar to online streaming services, determines the success of the business. 

• Typically, companies will ask for email or phone numbers to track customers spending as well as give companies a way to send promotions in the future. 

Stamp Cards

• Buy 10 get 1 boba drink free

• Great way to keep people coming to your establishment despite other options because people want the benefits or are so close to getting the benefit

People pay for service and convenience. 

• Some people do not have the time, poor taste (haha), or just like the advice of others when purchasing items whether they are for you or a gift.

• Many retail (clothing) shops, especially high end, offer the services for free. In some cases, the employees receive a commission for the sales they make. 

  • • Employees will establish a connection with a frequent customer. Based on their interests, taste in clothes, and previous purchases the employee will find the sizes of the newest items that come into the store and contact the customer to set up a fitting. This avoids customers having to search for their sizes and to lets them know when new items are in stock. This can be even more impactful when a customer is waiting for a product that they know will be released in the future.

    • Let's be honest, do you really know what to buy everyone for Christmas, birthdays, graduation, or other celebrations? Give them a budget, occasion, age, or other information and let them do their job in finding what you need.

    • Do you know what you are going to wear to the next formal event? Some places will find what you need and call you in. If you need to wear it right away they will even steam the clothes so you can wear them right away.

• Automotive Market - This has become a growing market with automobile acquisition. Looking for a rare car, something in particular, unique, or just meets certain needs? Give them a price and your request and they will find the vehicle somewhere in the world and get it to you.

Trends are bound to change based on the season or year to year. Similar to restaurants we can shift demand between when customers come to our business whether online or in person.

• Executive Club Members - earlier hours for shopping and additional discounts 

• Independence Day, Labor Day, Black Friday, Cyber Monday - special deals to attract customers and move back inventory

• Online only specials (online exclusives)

• App exclusives (similar to online specials)

• Offering substitutes that are similar to popular brands or have similar functions (Name brands vs generics vs other popular brands). You walk into a store to buy a LG refrigerator and but you leave with a Frigidaire refrigerator because of a better deal or because the other was sold out.

When I worked at Marriott Ko'olina Beach Club there was one individual who was a more experienced waiter and his gross sales were always higher every night. One day it dawned on me that training employees in what to say and how to respond made the biggest difference in check size and overall revenue for the company. The same can be said about retail and how we help customers find what they need and showcasing additional options.

You don’t always need more customers, you need higher check averages

• 100 people x $15 = $1500 in sales

• 75 people x $ 20 = $1500 in sales 

Training employees to better serve customers

• Expert retail salespeople know their products

  • • In retail merchandising, they understand color schemes, utilization (what goes with what), layering techniques, and faux paus of fashion.

    • In jewelry, understanding the needs of customers, how they will be wearing the items, occasion, matching pieces, or where to find the items that people are looking for to acquire them on behalf of your client is important.

• Salespeople always ask for the sale 

  • • Always be closing. While everyone and every retail establishment is different, time is money. Always ask if they would like to purchase the item. 

    • You do not need to add in a 'Call to action' (limited amount, highly coveted item, rare) unless it is true and there are other suitors currently. Lie to people about it and when people come back and still see it you lose credibility.

    • Remember, if you are a good salesperson you would have spent your time with the customer asking as many questions as possible to learn about what they are looking for to find exactly what they want. By hearing customers out, it allows us to narrow down the options and in turn makes the customer sell themselves into buying an item.

    • Using tactics to force, urge, or push people into buying something is the worst sales technique. This often creates buyers remorse and could end up with customers coming back to return what they purchased at a later time.

• The difference is how we offer or provide options to guests to make their decisions. 

Floor Layout

The layout of the store serves several purposes

• Which direction people walk. This can help to avoid customers running into one another or causing areas to be congested. Creates control points for protecting merchandise; consider Sam's Club or Costco where there is one entry and one exit and the exit has employees that check each customer receipt and items.

• Ability for customers to see all merchandise. We can only purchase what we see, and like food, we are visual people and need to see how things drape or look before we try things on.

Product Placement

• Adding sales racks to the furthest point in the store or having essential items in opposing locations 

  • • This forces customers to have to walk through the entire store before finding the sales rack. 

    • This can help to boost sales as customers may find something on their journey to the back. 

    • Think of grocery stores that put vegetables and meats on opposite sides of the store or milk products in the back of the store. 

• Displaying items 

  • • Displays in windows or at the entrance to showcase new products

    • Costco/Sam's Club will often feature food products for customers to try the product in hopes that it boosts sales for the product.

    • Best Buy will often have a display to sample video games, new technology (phones, laptops, VR, gaming).

    • Apple will feature all of their products for you to try

      • • Created classes for people to learn about the features and apps on the their products

        • One on one sessions to learn features

        • General customer service to help customers learn about new features

    • Grocery Stores

      • • End of aisles in grocery stores or at the register (point of sale)

        • In grocery stores, where your product appears on a shelf (beginning of the aisle, top shelf, middle shelf, bottom shelf) is often determined by how popular an item is purchased. 

        • In some cases, companies will pay more money to make sure that their product is featured in the best spots to assure that customers see their products

        • Typically the middle shelf is the most coveted since it is at arms length and easy to grab and put into the cart

        • Due to competition in specific categories of products, some groceries will ask for a slotting fee (fee for taking on your product into their store). This fee gives them a profit up front to take on the risk of products.

    • For larger chains, companies may feature new products in several stores regionally, before they decide to take on the product nationally across all their stores. In many cases, some products are only promoted in specific areas due to the preferences of shoppers; Spam is unique to Hawai'i though it can be found in many other locations.

Asset Protection (Loss Prevention) 

• Cluttered stores that have rack after rack are the easiest to steal from as they make it difficult for security to see from above what people are doing below

• Helps with inventory. If we have racks cluttered throughout it is hard to determine what we have at any one time since customers do not always put items back where they found them. Even if we know we have items in inventory, finding them would be difficult. At the end of the day, we need to protect our merchandise.

• Layouts allow us to control entries and exits (Sam's Club/Costco)