MERCHANDISING YOUR LICENSEE RETAIL STORE: Getting More Customers in Your Door, Spending 
More Money
by Tim Vandergrift

Merchandising: buying, presenting, and selling merchandise. It includes all the related activities of advertising, displaying, and promoting merchandise to the retail customer.

Many small business owners regard merchandising with a mixture of dread, confusion, and even a little dismissiveness. It has a reputation as being a soft discipline that requires artistic talent, and unless you’ve studied marketing, most people think it’s not a skill that’s easily acquired. In addition, with the pressures of paying for inventory, staff, rent, utilities and financing, it’s pretty easy to put merchandising into the category of unnecessary expenses. 

Merchandising is a very necessary expense, and even small retailers need to budget for a merchandising program. “If you build it, they will come” just doesn’t apply in modern retailing. In fact, some experts contend that we now live in an “attention economy”, where marketing and advertising has reached such a pitch that it’s now a form of background noise, and a retailer has to compete with many well-aimed and executed marketing efforts for the finite amount of attention consumers have to spend when looking for goods and services. 

It pays to think about wise spending: a high-rent, high-traffic location is great, but what if customers walk right by the door without breaking stride? Investments in inventory, location, staff, insurance, accountants, and advertising will be for naught if the presentation of your store doesn't attract customers. 

Effective merchandising makes the best use of available retail space, and tries to trigger customers’ purchase impulses to encourage them to buy more products, and buy up. You’ll need to look at your store to see how it influences customer behaviour, and from there figure out the best product placement and décor/atmosphere/displays to increase sales.

Merchandising One: Merchandise
Product selection is the first key to your store’s image. If you’re in an affluent area that has a good demographic for high-end wine consumption, make sure you stock premium products with a positive quality image. If you’re in a less elevated demographic, you’ll want to carry value products that convey freshness and an up-to-date image - even value-conscious consumers don’t want to think they’re sacrificing to save money. 

You’ll need to do some research to keep ahead of what’s trendy and appropriate to your area. Trade publications such as The Publican magazine as well as consumer publications such as Wine Spectator and even the LDB Matters of Taste guides can provide useful guidance. Your customers are coming to you for expertise, so arm yourself with knowledge. 

Merchandising Two: Your Store
Think of your retail space in real estate terms: location, location, location. Knowing the difference between a valuable space and a challenging one can help you sell a lot more product. In his book Why We Buy - The Science of Shopping, retail anthropologist Paco Underhill shows that the first ten feet inside your front door is a transition zone, where consumers adjust from going being outside to inside. This means that the real estate in this area goes mostly unregarded, and merchandise displays will not get attention, no matter how well presented.

Similar research shows that the majority of consumers will turn to the right after entering your doors. This makes the right side of your store very valuable, and it’s where you want to put your best-selling products, sending the message that you have what they want. 

Some hold to the notion that you should hide your most desirable goods at the farthest reach of your shop, to draw consumers through your entire store. This is very dangerous: if your customer feels resentful at having to search for an item the first time they walk through your store, they’re not going to have a good experience! On the other hand, a very desirable product placed in a lower-traffic location can still sell well, based on established demand. Be careful to balance traffic and convenience here!

Sitting down with a pad and paper with a reasonably accurate scale drawing of your store is a great first step in making a plan. Divide your store into sections. Try to section into four categories: power areas, superior areas, ordinary areas and challenging areas. 

Power areas, like the right side of the store from your entry door, are going to be the best places for your most desirable merchandise, things like promotional event products. 

Superior areas will be where you position most of your stock, and where most of your merchandising will be done - it’s your “workhorse” space. You need to make sure that high value products go here. 

Ordinary areas are for slower-selling items or discounted stock. If you have the option, locate your register here to free up other, perhaps more desirable space. If the register can’t be accommodated, then clearance items can go there, accompanied by high-impact signage to draw attention. 

Challenging areas require creative planning to make them profitable. If you can’t get customers to enter an area in your store, consider using it as a sampling station, or try setting it up as a display area for product demos or very aggressive clearance offers. 

Merchandising Three: Setting It Up
One of the first things you must decide is how to arrange your stock. Will you group wines by grape variety/blend or by region/country? Beers by style, colour, lager or ale, or by domestic/import? Traditionally licensees have grouped wines by country, colour, varietal/blend, and price, in that order. 

Marketing contrarian Seth Godin suggests a fascinating but counter-intuitive way of organizing a store. Rather than grouping by style or brand, he suggests that grouping similar products together can increase consumer spending by up to 30%. Does this mean that putting all the chardonnays together on one shelf and all the pinot noir together on another will automatically boost sales? It may well do so, if it allows the consumer to judge all the different wines at once, and find a comfortable price-point and label that suits them. It certainly would speed customer through-put. It could also give a sharp salesperson the opportunity it upsell to the next price category, or to offer a value-priced bottle that could encourage the purchase of an additional bottle - both wins for the retailer. 

However you organize your shelves, keep in mind when setting up a display the venerable wisdom of “stock sells stock”. A huge display with many cases in a prominent location looks impressive, and has inherent pull for customers. A paltry display of a few bottles tells a story of slow sales and less desirability. To move the high-volume product of Charles Shaw Vineyards (aka, “Two Buck Chuck”), Trader Joe’s in the US placed full pallets of cases at the front of their wine displays, and was rewarded with consumers taking entire cases at once. 
More minimalist stock levels can reflect well, however, on premium wines. Neatly arranged in cellar racks with well-composed tasting notes or food pairing/serving suggestions, they will be welcomed by premium wine buyers who enjoy browsing. Don’t be too minimalist though - you can’t sell from an empty wagon.

Consider potential incentives available from distributors for product placement. Your sales representative should be trying to increase your sales of their product, so accepting discounts or incentives for a popular product line in exchange for prominent floor space makes perfect sense, especially if the company supplies signage and does their own merchandising. 

Merchandising Four: Lights, Colours, and Displays
Your goal for your store should be to create an ambience that attracts people into the store, creates a sense of comfort while they are there, and encourages them to return. Most consumers live by first impressions, so what does your store say? Do you have attractive front windows, with clean, elegant displays that reflect your market position? Or are they covered in sun-faded posters? 

Signage is component of merchandising that is often overlooked. Your store might look bright and attractive in daylight, but after sunset, especially in winter, it can look dark and murky. Especially important is storefront signage with backlighting. Even a professionally lettered sign can disappear unless it’s properly lit. All other signage should be clean, clear, neat and professional, and should avoid busyness. 

Consideration of the rest of the store’s ambience can be distilled down to one question: does it look professional? In particular, paint and lighting can have a huge impact on customer perception, and well-lit displays are easier to look at than poorly lit ones. Small halogen spotlights are inexpensive and very easy to use to punch up a display. Similarly, a fresh coat of paint makes everything look sharp and new, and should be kept touched up. 

Another part of the ambience of your store is the soundtrack. Many people expect some form of music in upscale stores. Remember, as good as your own taste may be, you may have to put it aside to send the right message to your customers. Light instrumental jazz is often a good choice, and can provide a soothing background that slows consumers down to spend more time (and money) in your store. 

Merchandising Five: Getting Help
If, like many licensees, you’re pressed for time, or are still a little unsure of how to get your merchandising ball rolling, you’re in luck. Many resources are available to help you out. The Retail Council of Canada (www. retailcouncil.org) offers retailers courses and conferences on many topics. In addition to the Paco Underhill book mentioned above, there are other books on merchandising, including a “retail for dummies” type, and there are good resources on the web, along with professional merchandisers who can work wonders. 

A great place to start looking for help is through your distributors and sales representatives. They spend significant sums every year on POS materials, signage, and merchandising items. In exchange for a little placement, many of them will be happy to give you hands-on help and plenty of advice. After all, your sales are their sales. 

Merchandising can be intimidating at first, but with a little planning and a bit of practice you can make your store work hard for you at every turn, and make happy customers return to your store, and add to your profit.