What is MD (merchandising)? Introducing the types and “5 techniques”!

It is not easy to measure differentiation from rival companies that handle similar products to your own. MD (merchandising) is a method and points for gaining competitiveness to overcome rivals. In this article, we explain what merchandising is, and the types and benefits of specific methods.

Table of contents

What is MD (merchandising)?

MD (merchandising) is an abbreviation of “merchandising”, and in Japanese, it is translated as “commercialization plan” or “product policy”. In the retail and distribution industries, it refers to the overall process of properly delivering products to customers, and is often heard especially in retail industries such as chain stores and apparel.

The main role of merchandising is to investigate customer needs, purchase products that meet customer needs, formulate sales methods, and set prices. Merchandising requires strategies and practices to get these processes right.

Importance of MD (merchandising)

The purpose of merchandising is to increase the value of products and to increase competitiveness in various aspects such as pricing.

In the retail and distribution industries, it is not uncommon for rival companies to handle the same or similar products. Under such circumstances, to win against rival companies and improve sales, it is necessary to deliver products to customers more “appropriately”. For example, it is necessary to sell at an appropriate price, determine the appropriate sales period, period, and timing, maintain an appropriate amount of inventory and prevent stockouts.

In the retail and distribution industries, increasing the accuracy of merchandising directly leads to increasing competitiveness against rival companies. For these reasons, merchandising is considered important in the retail and distribution industries.

Types of MD (merchandising)

Even if it is called merchandising, there are multiple ways to appeal to customers. It is important to be aware of these types of characteristics when practicing merchandising. Prioritize the methods that are most effective for your company.

Visual merchandising

Visual merchandising refers to marketing that appeals to customers through visuals. This method can be said to be a success if the product display and sales floor decoration can be devised to create a sales floor that makes it easy for customers to make purchases.

For example, the following acts constitute visual merchandising:

• Appeal to customers by displaying products that symbolize the brand image in the show window
• Create a flow that makes customers want to go around the store, such as by making the display of popular and recommended products stand out.
• Make it easy for customers to compare and pick up competing products by displaying them side by side.

The keyword visual merchandising is said to have originated with an American display company. Visual marketing has been attracting attention since the 1970s when the market became more competitive.

Cross-merchandising

Cross-merchandising is a method of appealing to customers by combining and displaying products belonging to different categories.

Stores usually sell products in the same category in bulk. For the customer to purchase products in a different category, the customer must move between sales floors. In such a situation, even if there is a product that is attractive to the customer, it may not be noticed.

In cross-merchandising, products are displayed side by side so that they can be appealing by combining items from different categories. For example, there are methods such as “displaying snacks next to alcohol” and “displaying special health drinks next to meat”.

Although these products belong to separate categories, they are a combination that customers are likely to purchase together. Through cross-merchandising, even customers who always purchase the same product will notice the appeal of other products. By appropriately conducting cross-merchandising, stores can propose new value to customers.

Lifestyle merchandising

Lifestyle merchandising is a method that focuses on the lifestyle of the customer. The purpose of merchandising is to propose attractive products to customers promptly. Lifestyle merchandising is a method born from the perspective that hints for products that arouse the interest of customers are hidden in the lifestyle of the customer.

A good example is lifestyle merchandising aimed at beauty-conscious women. In this example, products related to beauty such as cosmetics, beauty goods, and health foods are sold. By arranging products that match the customer’s lifestyle, you can expect an increase in the average spend per customer.

Important “five aptitudes” in MD

The following “five aptitudes” are indispensable for practicing merchandising. The American Marketing Association has summarized the key points of merchandising as “five right things”. This idea originated in the United States, but it can be used as a reference when conducting merchandising in the Japanese retail and distribution industries. It is important to keep these points in mind to operate a store that meets the expectations of customers.

[“Five aptitudes” in merchandising]

• The Right Product:
  Securing the optimal product that appeals to the customer’s interest
• The Right Time
  Selling products at the right time when customers need them
• The Right Place: Optimizing
  product suppliers and sales locations, and displaying products on sales floors that maximize appeal to target customers.
• The Right Goods:
  Optimizing the number of purchased products to prevent the products that customers want from running out of stock, and to purchase products with a proper understanding of the required quantity to prevent them from becoming dead stock.
• The Right Price
  Setting the optimal price that customers can afford to purchase (do not lose profit by setting too low a price)

Advantages of introducing MD (merchandising)

Merchandising optimizes the way you sell your products to meet the needs of your customers. Customers will be satisfied if stores are devised to smoothly meet their needs. Merchandising is a technique to improve customer satisfaction.

In addition, by producing results in merchandising based on evidence analysis, we can accumulate success stories within the company. By sharing the know-how accumulated in successful cases, you will be able to achieve further results. By accumulating successful cases, you can acquire more know-how and brush up on the accuracy of merchandising.

Merchandising is important to maintain and strengthen competitiveness these days when it is difficult to differentiate products handled by rival companies. If you are losing sales to rival companies that deal in similar products, you are likely practicing merchandising with a higher degree of accuracy than your own company. It’s difficult to do high-precision merchandising all at once, but I recommend starting with what you can do.

Summary

Merchandising refers to the entire process of optimizing the provision of products to customers, from purchasing products to pricing and display. With similar products flooding the market, it is not possible to win against rival companies just by offering a wide variety of products. Let’s practice merchandising and carry out our daily work with the goal of improving customer satisfaction and increasing sales.