The retail industry faces unique and unprecedented challenges as we move through 2025 due to rapidly changing consumer preferences. Merchandise planning plays an inevitable role in contributing to the success of global retailers. You can reduce costs and expenses, streamline operations, and increase the profitability and productivity of your retail business with a strong merchandising plan. This approach also plays a key role in enhancing customer loyalty and satisfaction.
You will find multiple successful strategies and approaches in merchandise planning. What works for one retail company will not produce the same results for another. That is why you must understand the nuances of merchandise planning better to customize strategies that align with your business model and customer preferences.
MORE NEWS: Phoenix bucket list: 25 things you must do
An Overview of Merchandise Planning
The merchandise planning process refers to selecting, managing, and displaying various products to bring maximum turnover to a brand name. This is usually done by meeting consumer needs and desires.
Merchandise plans seek to meet consumer demand by making the right products available to customers at the right time, price, place, and quantity.
One of the biggest expenses faced by retailers is purchasing merchandise. All the costs of shipping, delivering, transporting, and storing add to a significant amount. If you make the wrong purchasing decision, you may double your merchandise purchasing costs for months. Therefore, merchandising planning is the key to ensuring that expenses do not mount up for retailers and allows them to correctly meet a customer’s needs.
Components of Merchandise Planning
- Product: Retailers should buy the right amount of products to fulfill the needs of their customers and not create an unwanted inventory for themselves.
- Price: It is yet another sensitive factor, especially for price-sensitive countries. The retailer should know about the target customers and their respective ranges. If the products are outside their price range, the store may not be able to see much sales. The retailer has to price plan well to ensure stock clearance, regular sales, and adequate profits.
- Range: The range of products offered is another important factor in product merchandising planning. A store should provide ample options to its customers so they do not have to go anywhere. This involves having a range of designs, colors, textures, prices, range, and other components for the customers to choose from.
- Assortment: Grouping products so that customers can easily find them is helpful for retailers. Placing products of similar significance and category is a significant part of the merchandising planning process. This often involves presenting the merchandise category-wise and department-wise for the customers’ convenience.
- Space: Every retail shop should have adequate space for displaying their products. All items should be visible to the customers for identifying and buying them easily. All the space available in a retail store should be utilized for putting lights, hangers, mannequins, and hanging fixtures.
Role of Merchandise Planning in Making Retail Businesses Profitable
The merchandise planning process is a key aspect of the retail industry that involves managing the assortment, inventory, pricing, and allocation of products effectively. It enables you to maximize profitability and meet customer demands effectively.
Retailers use the retail planning process, data-driven analysis, and forecasting, among other strategies, to determine which products to stock, how much to order, and when to offer various discounts or promotions.
An effective merchandising planning process needs effective collaboration between departments, such as finance, merchandising, and supply chain management. This helps ensure that the right products are available at the right time and in the right quantities. Retailers can easily improve sales, reduce costs, and enhance the customer shopping experience by optimizing this process.
How to Develop a Merchandise Plan
- Define Your Target Customer: Identify your target customers based on age, interests, gender, lifestyle, and spending habits.
- Seasonal Performance Review: Analyze the previous season’s customer feedback, sales data, and inventory levels to identify all successful and unsuccessful products. This information can help you create a strategy for the upcoming season, which includes deciding which products to keep and which ones to remove to determine future pricing, promotions, and marketing strategies to maximize sales.
- Ongoing Performance Optimization: Monitor your merchandise performance on time and adjust accordingly to ensure continued success.
How to Develop a Merchandise Planning Process?
Different retail businesses will have different merchandising needs and varied merchandising planning processes. This enables the organizations to plan and acquire merchandise. Nevertheless, there are several fundamental aspects to retail merchandising planning that every company should indulge in.
Here is an introduction to these relevant steps:
- Analyze and Compare Previous Sales to Forecast Demand
Retail businesses must take out all the sales-related data for the last quarter or month. That data would help any retailer determine what should be purchased and how many quantities.
- Decide on Merchandising Needs
Retailers must do everything to provide products at the right time, price, and place. This must be followed up after they’ve forecasted demands and have a rough idea of what they need to buy and what quantities in a quarter.
This happens once they decide all the quantities to buy for their respective retail stores. Once done, the organization shall decide the budget for all the purchasing to determine all the financial needs for merchandising.
- Assortment Planning
Assortment planning involves planning how much product should be bought to meet every customer’s demands. Here, the inventory details, color, size, material brand, size, and other aspects are important for the merchandising process and planning. This helps the retailer determine the number and types of products to be bought to meet customer demand.
Bottom Line
Every retail business aims to keep its customers happy and earn good returns. Merchandise planning helps with this process by making the right product available to the customers in the right quantity, time, and place. This helps increase sales while keeping costs under control. Merchandise planning enhances brand value, maximizes returns, and improves customer satisfaction.
Retailers can easily leverage intelligent merchandise analytics to make data-driven decisions, optimize inventory levels, and anticipate customer demand more accurately. These businesses can also enhance efficiency, reduce markdowns, and stay ahead of market trends by integrating AI-powered insights and ensuring customer satisfaction.
