How Merchandise Mix Impacts Retail

The variety of products in a retail store is key to establishing its identity

Grocery Store Aisle Showing Too Many Products
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The term "merchandise mix" is essentially the product assortment that a retail store offers. Whereas some stores have a wide merchandise mix, such as Walmart, other stores have a smaller variety of products, such as a shoe store.

How Mixed Merchandising Impacts Retail Businesses

If a store stocks too much of a variety of merchandise, it may lack focus, which could confuse customers. Certainly, consumers understand Walmart sells a wide range of products, but if your shoe store started selling tires and flowers, that would be strange. Further, stores that are niched to specific types of products, such as shoe stores, are often viewed as being knowledgeable about the product. But if your shoe store sold tires and flowers too, you might wonder just how much it knew about shoes.

With that said, if a merchandise mix is too small or limited, the store runs the risk of being overshadowed by better-stocked competitors. Using the shoe example, a consumer might choose a department store, such as Macy's to buy shoes, because they can also by the dress, jewelry, and cosmetics to go with them.

So how can a retailer figure out what items to sell and which might be better off out of the mix? There are a few key indicators to consider.

Know What to Stock

To know what products to stock, look at a few key business metrics, such as your inventory status, price-point analysis, square-inch analysis, category analysis, and gross margin percentage. Each metric provides insight into what products are selling. Also review your marketing results to gain data on average items sold per order, response rates, and response to offers.

Know Your Customer Base

It's important not only to know what your customers have bought in the past but to understand what they might buy in the future. Since most retailers don't have a crystal ball, they need to find ways to reasonably predict what customers will want. Customer surveys are one way to learn what items your customers want and are willing and able to pay for.

It can't hurt to keep track of trends as well. At one point, video rental stores were thriving, but then streaming services came along, and now they're practically non-existent. Vaping stores are a trend that might suffer from recent news about health risks and some governments taking action to limit vaping sales.

This information will lead to knowing what you should keep, add, or drop in your merchandising mix.

Get the Most Bang for Your Buck From Vendors

Let's say you've got two vendors. One has dynamite products that people are willing to pay top dollar for, and you can't keep it on the shelves. But this vendor is difficult to work with, and has cost you time and money trying to get him to deliver on time and as promised. 

The other vendor has a product that doesn't break records but is a steady, reliable seller. He delivers when he says he will, and doesn't give you any unwelcome surprises. 

In the above scenario, it might be tempting to keep using the first vendor because of the huge potential for reward. But if you consider the time and energy you have to spend on this vendor, are you getting the return on your investment that you need? Especially if the late deliveries result in unhappy customers.

Your merchandise mix should reflect who you are as a company, and that includes your customers and vendors. Consider these factors carefully before you stock your shelves.