What is Merchandising? (Why It Matters & Why I Love It)

Video Description

Hi everyone!

Merchandising is the science of how a business makes a profit through buying and selling products, but while this may sound simple, it's actually way more complex.

In today's video, I'm going over what merchandising is, the four pillars of merchandising, why you should care about merchandising, and why I love merchandising so much.

As someone who studied merchandising in college and now works in merchandise planning, I'm super passionate about this subject and hope that you'll be too after watching this video.

Please let me know in the comments if you have any questions, and be sure to follow me at the links below for more content every day.

Lastly, have a wonderful day, and thank you so much for watching!!!

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Transcript

Hi everyone, I'm Joshua Miller and welcome to my YouTube channel. I make videos on fashion, pop music, and self-improvement so that way you can live with style, confidence, and enthusiasm.

And because style is my favorite subject, today I want to talk about my major in college, merchandising, why I love it so much, and why I think that you should too.

So, to start, what even is merchandising? In college, I learned that merchandising is the sum of all activities and processes taken by a business in order to generate a profit through buying and selling products. If you think about it this way, if you are a small retailer, you probably aren't able to make every single product you sell. For example, if you are a small corner grocery store, you probably aren’t going to be able to manufacture ketchup, which means you’re going to have to buy it from a manufacturer like Heinz. And the process of how you make sure you make money through doing this and that you don’t just buy things and sell them and make no money and then go out of business is what merchandising is all about.

If I’m ever at a dinner party and someone asks me what even is merchandising, I just tell them it’s the process of making a profit through buying and selling products. And while this might sound super simple, it’s actually very complicated because there are so many things that go into creating the perfect product assortment for customers given their demand and what’s going on in the broader business world.

In college, I was taught that the four pillars of merchandising are product, price, place, and promotion.

Product is the first pillar. In order to make a profit through buying and selling products, you need to have products that people actually want to buy, or otherwise you’re not going to make any money. Merchants usually figure out what people are going to want to buy through doing one of two things. The first is hindsight analysis, which is just a fancy term for looking at everything that’s sold in the past. The second way is through trend forecasting. In fashion, it’s not uncommon for major brands to have entire teams looking at everything being worn in film, television, and on the runway to figure out what trends customers are going to want every time they go into the store.

The second pillar is price. Merchants need to make sure that they sell their products at the right price so that they can generate the right profit for each product sold, but they also need to make sure that prices aren’t so high that customers shop at competitors for the same good. This is why it’s common for retailers to have teams of pricing analysts who research what customers are willing to pay and what competitors are charging. Price also impacts a brand’s reputation. For example, if a retailer like Louis Vuitton wants to be known as a high-value, high-quality, luxury brand, they’re going to have to charge a price that reflects that.

The third pillar is place. You might think place just means the store, and while that’s true in a simple way, it’s more complex. Think about Walmart as an example. Walmart has over 4,500 stores that each have their own specific customer base with unique problems and needs. You wouldn’t expect a Walmart in Alaska to sell the same amount or type of winter jackets as a Walmart in Florida. Walmart has to make sure the correct merchandise goes to the correct store to turn inventory as fast as possible. It’s a big deal making sure that the right product gets to the right place, and it’s one of my favorite parts of merchandising. It’s so complex, and so much planning is involved, and I think it’s really special.

The fourth pillar is promotion. This pillar is concerned with all the sales and promotions that merchants do to get customers into the door. Sales take a lot of planning because merchants need to work across departments to make sure everyone understands the sales they’re pushing at a given time. They need to coordinate with supply chain to make sure the product ends up at the store in time for the sale, and they need to work with marketing to make sure the right promotions are advertised to customers. Not all retailers do sales the same way or the same frequency, and this is by design. If a product rarely goes on sale, customers are more likely to see it as high-status or luxury because the price tells them it never goes out of style.

Now that you know more about merchandising, I think I should explain why I think you should care about it. There are two main reasons. The first is that merchandising will help you be a better consumer. Sometimes retailers will sell their products at a high price knowing customers won’t buy them, but then when they put them on sale, customers see it as an extraordinary deal compared to the original price. Because you know this now, you can make sure you don’t fall for that trick. The second reason is that merchandising will help you appreciate shopping more. Once you start to understand how complex it is, you realize that every time you go into a store, there are thousands of lives, boats, ships, and trucks that were involved in getting that specific product to that shelf. It’s really cool to think about how human the retail industry is and how much planning is behind every single thing you see. It’s something that I’m super passionate about, and I hope that you will be too.

Merchandising is the backbone of how all the products we use and love every single day end up in our hands, and I think there’s something so special about that. Another thing I love about merchandising is that it’s always different, but it’s also always the same. After you study merchandising for long enough, you start to realize there’s a consistent ebb and flow of product in and out of the store. Whether it’s a change of weather, back to school, major holidays, or economic shifts, merchandising follows consistent patterns based on consumer demand. But within that schedule, things are constantly changing if there’s a supply chain problem or if something goes viral on TikTok, which is what makes merchandising so compelling as a field to me.

To conclude, merchandising is one of my biggest passions in life, and I’m so happy that I studied it in college. If you enjoyed this video, make sure to subscribe and like, and let me know in the comments if you enjoy shopping and which retailers you think are better than others at merchandising. Follow me on Instagram and TikTok at Joshua Miller for new videos every day, and most importantly, I hope you have a wonderful day. Thank you so much for watching.

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