How to Create Merchandising Strategy That Answers Retail and Marketing KPIs

The secret to a successful online merchandising strategy is ensuring it’s a highly profitable one that considers both your retail and marketing KPIs.

Why?

This enables you to balance your store's needs with your potential customers' wants — thus increasing your conversion chances while ensuring you are earning the most for each sale.

How?

By following these key steps!

Let’s dive deeper into each!

Step #1: Go Back to Your Customer Journey Foundation

The first step in optimizing or creating a winning merchandising strategy is by auditing your entire customer journey. This means reviewing every digital touchpoint along the way to see how potential customers and shoppers are engaging with your brand and interacting with your products.

You want to assess which products they are engaging with at what stage of the buying journey and what the selling points drawing them in are. You also want to ask yourself (and your data) vital questions like which areas or pages on your store are getting the most action — as this will help you determine where your prime merchandising real estate is.

Simply put, you want to review and map your customer journey. Here’s an example of such a journey map.

[Source: Shopify]

Step #2: Take a Deep Dive into Both Marketing and Retail KPIs

Next, you need to take a long look at your marketing and retail data. This will help you fully understand where each (your front- and backend) part of your business is standing and show you how you can incorporate this data.

The term for this is inventory optimization.

In a nutshell, inventory optimization refers to the balance between your capital investment, service-level goals, and changing demand and supply market volatility. It helps you set the retail goals for your store and lays the foundation for important marketing KPIs.

Here are some just of the most critical marketing and retail metrics that you will want to assess and optimize in order to make sure you meet your most important KPIs.

  • AOVs (average order values)
  • Conversion rates
  • Sales
  • Product reviews (ratings and total amount)
  • Product demand and price competitiveness in the market
  • Margins and real margins after discounts
  • Sales quantities or revenue amount
  • Pageviews
  • Discount
  • Inventory value
  • Days to finish inventory
  • Days in store
  • Days since back in stock
  • Variants stock ratio
  • Cost of customer acquisition
  • Customer lifetime value
  • Cart abandonment
  • Page engagement (bounce rates)

Ultimately, you want to build a strategy that can reach all your most vital business goals — with your front-end marketing and backend retail working together to boost profits.

Here are the case study results of a brand, Swarovski IL, that was able to do just that.

As you can see above, by adjusting their merchandising strategy to include both marketing and retail KPIs, they were able to increase their profits by 8% in four weeks while also boosting conversion rates!

You can read about this merchandising case study here.

Step #3: Optimize Your Store’s Shopping Experience

Once you have a good foundation of data from your buying journey and performance goals and KPIs, it's time to review and optimize your store’s shopping experience.

Your shopping experience plays a key role in your overall merchandising strategy.

Why? Because a streamlined shopping experience enhances product discovery.

You can have the most advanced product sorting strategy in the world for your category pages; if your customer isn’t directed to these pages to see them, they are useless.

An optimized shopping experience means:

  • Adapting your navigation to enhance popular digital touchpoints
  • Providing enough important information that is easy to find
  • Taking advantage of cross-selling to boost AOVs
  • Speeding up response and load times
  • Creating an omnichannel experience

Step #4: Go Beyond Personalization for Category and Collection Pages

Once you have had a good look at your analytics to fine-tune your most fundamental retail and marketing KPIs, you also want to ensure that your product sorting strategy is helping you achieve them. This should go far beyond simple personalization.

Why is it not enough to just offer personalized recommendations?

Yes, personalized recommendations are based on each shopper's behavior, which is great for relevancy. But it is very limiting to product exposure, especially those items that will help you reach your retail goals.

Instead, you should be adjusting your home, product, and category page product sorting to ensure personalization and relevancy while also boosting profits.

Remember the merchandising case study we referenced earlier? This is precisely the approach that they take.

[Source: Kimonix]

You can read more about why current eCommerce trends and online store experts tell us not to rely on product personalization in detail here.

Step #5: Use Prime Real Estate to Tell Product Stories

You work hard to get traffic to your online store. It’s a waste if you can’t keep their attention and move them further along in the buying process once they are there.

Therefore, visual merchandising matters in a big way — on all pages!

Visual merchandising is about far more than just pretty lifestyle product pictures on your home page. It’s about how you display strategic product discovery sections across your entire site. It includes your store’s:

  • Homepage
  • Layout and navigation
  • Category pages and product collections
  • Product pages
  • Cart and checkout sections

Combining the power of reviews and UGC with visual merchandising can be particularly effective.

Why?

Because this type of user content enables brands to tell product stories from actual customers to potential shoppers.

Here’s a minimalistic example from Bliss, who is able to visually tell a product story by simply adding product ratings to their homepage collections and visual merchandising.

[Source: Bliss]

Step #6: Upgrade Your Off-Site Merchandising

Merchandising doesn’t start and end with your online store. Your digital marketing, and the products you display on all your channels, plays a huge role in getting customers to your store, product pages — and, ultimately, your checkout.

This means, by steps in creating your merchandising strategy, you want to:

[Source: Facebook]

Step #7: Harness the Power of Automation and AI

The final step in creating an optimized merchandising strategy is to consider investing in good-quality automation and AI tools to bring it all together.

Not only do the right SaaS tools help streamline your merchandising, but with the right AI, it can also ensure you optimize for both retail and marketing KPIs. This in turn enables you to boost sales and profits. This is where Kimonix comes in!

Kimonix is the only holistic AI-powered merchandising solution that goes well beyond personalization. It offers advanced merchandising that fulfills business goals, fuels conversion, and keeps customers coming back — all while adapting to real-time market and business changes to optimize for ROIs.

Click here for a full breakdown of Kimonix's unique, advanced features. Alternatively, you can click below to get started.

Upgrade Your Merchandising Strategy

Wrap Up

There you have it, seven steps to creating a merchandising strategy that not only converts but boosts profits. The ideal strategy considers your marketing and retail needs and then ensures you build an off- and on-site strategy that is designed to push these essential goals.

But what really drives it home is to then ensure you can closely manage and optimize in real-time to changing market and retail conditions with the right automation.

Have merchandising questions? Feel free to get in touch with our online retail marketing experts here.

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