The ABC of merchandising – terms and definitions

Merchandising or the "art" of present and promote company products at the sale point, is based on a number of specific practices, combined with promotional techniques and an evaluation of the implemented program.

Companies using merchandising techniques can rely on the services offered by a team specializing in this field, or they can prepare their own internal employees through various trainings, coaching sessions and with the help of personalized merchandising manuals. Whatever method is chosen, the practice is limited to a few key elements, which must be pursued closely and which we can broadly call the ABC of merchandising.

The terminology of merchandising activities, as well as retail, is often described using specific terms. Many of these terms are used both in the industry and in reports submitted to the customer after the implementation of a merchandising program regardless of the type of channel chosen (hypermarket or traditional retailer). A number of terms used in specific merchandising activities can also be used in related domains, such as promotions or sales.

Below we present to you the list of the most used terms in merchandising and their definitions.

Main Alley: The display area in a store located immediately after entry;

Articole per tranzacție: numărul mediu de articole din cadrul unei sesiuni de cumpărături

per customer

Benefits: most often refers to the benefits of the consumer or "what he has to gain from a specific merchandising activity";

Budget: costs for merchandising programmes and promotional techniques implemented;

Gift: A promotional technique based on offering a gift product when buying a particular product; The technique used mainly in the cosmetic industry;

Marketing calendar: Tool used by retailers to mark marketing events and their results;

Campaign: The planned merchandising and advertising activity, with a specific duration;

Classification: Categories and sub-categories in which various products are included in an aisle;

Decor: Items that a buyer comes into contact when he enters in the store; Includes both visual elements and tactile, auditory or olfactory elements;

Event: An activity carried out for a period determined in stores, with the precise purpose (increase of sales, presentation of a new product or assortment, tastings, loyalization, etc.)

FIFO : merchandising and inventory technique used in retail which implies the placement of products on the shelf in the order «First-in-first-out «: The first products arriving in the warehouse are also the first place on the shelf.

Gondola: a support with shelves and display areas;

Giraffe offer: It involves offering a quantity of extra product at the same price. It usually requires modification of the pack.

LIFO : The «Last in first out« technique is used in retail and assumes that the last products in stock are the first to be placed on the shelf

Gross margin: The difference between the cost of production and the selling price;

Contribution margin: Difference between total sales profit and total variable costs;

Cross Merchandising: Positioning a product near others at the same time in a different location than in the initial planning;

News: New products to be placed in an already existing area (shelf, refrigerator, etc.) or for which new spaces need to be created;

Losses: products that can no longer be sold for various reasons (returned products, expired products, irrecoverable products, etc.);

Prevention of losses: the sum of actions aimed to discourage losses and/or thefts;

Segment (Market/customer): A category of buyers clearly delimited by lifestyle, location or shopping preferences;

Comparative Sale: Comparing the productivity and profit of retail stores opened for one year or more;

The correct understanding of the above terms and their application in your company can significantly contribute to increased sales or better cooperation with the rest of the departments.

The FMCG Marketing & Distribution team is available to you with a number of services in both merchandising and promotional activities, mystery shopping, outsourcing of sales and much more. Please  contact us for more information about our services.

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