Retail Merchandising and Visual Merchandising
Merchandising decides what a store stocks and where it sits; visual merchandising decides how it looks and how it draws the eye. The exam tests assortment terms, planograms, space productivity measures, and display principles with a commercial purpose behind each.
Merchandising decisions
- Breadth = number of categories; depth = variants within a category. A specialty store is deep and narrow; a convenience store is shallow and narrow.
- Range tools: ABC analysis (A items typically give about 70% of sales from roughly 20% of SKUs), core and never-out lists, seasonal buys, exit plans for slow movers.
- Planogram: a diagram fixing each SKU's shelf position, facings and space. Facings should follow sales velocity, and the fastest movers sit at eye/touch level, about 120–150 cm.
- Space productivity: sales per square foot, gross margin per square foot, and GMROI = gross margin ÷ average inventory at cost. GMROI shows whether both space and money are working.
Visual merchandising
- Elements: window display, signage and price tags, lighting, colour blocking, props, fixtures, music and scent.
- Principles: balance, emphasis (one focal point), proportion, rhythm and harmony; keep sightlines clear and aisles uncluttered.
- Impulse items belong at the till; cross-merchandise complements, such as batteries beside toys.
Worked example
A 40 sq ft wall is split between A and B, 20 sq ft each. A sells ₹40,000 a month at 20% margin; B sells ₹24,000 at 40% margin. Sales per sq ft: A ₹2,000, B ₹1,200. Gross margin per sq ft: A ₹400, B ₹480. B earns more profit from identical space, so B should take the eye-level zone and A the lower shelf.
Traps that cost marks
- Choosing the highest-selling SKU without checking its margin.
- Placing heavy or bulky stock at eye level - a safety and sales error.
- Hiding price tags; unclear pricing is a legal issue, not only a display one.
- Confusing a planogram (SKU-level shelf plan) with the store layout plan.