Use Merchandising to Build Brand and Attract Consumers

Powerful Tool: What and How You Sell at the Retail Level Can Drive Just as Much Growth as Other Strategies

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These days, management and boards of directors have widely acknowledged marketing as a substantial growth driver, be it nontraditional advertising, unique partnerships, influence marketing or digital communication. However, merchandising is one tool in the marketing arsenal that senior marketing executives sometimes overlook -- which is unfortunate, given its high-value means of making an impact. Merchandising is no longer just about ads, logos and displaying your name on complementary products. When used successfully, merchandising can establish a powerful, personal and long-lasting experience between brand and consumer.
Washington Mutual made retail banking enjoyable for its customers.
Washington Mutual made retail banking enjoyable for its customers.

Using merchandising to create compelling marketing experiences is nothing new to web retailing. Every online shopper is accustomed to being presented with an array of highly customized product recommendations within seconds of logging on and "entering" the "store." But it may surprise you to learn that the forerunners to this were companies such as Nordstrom and Starbucks. These retailers were among the first to demonstrate that creating a uniquely pleasing, personal experience would contribute almost as much to their bottom lines as the marketing of specific items. Long heralded as savvy marketers, what they were really doing was focusing the vast majority of their marketing resources into one distinct discipline: merchandising. To create an emotional linkage, they were able to merchandise an experience that would be conveyed to the world through their base of loyal customers rather than through traditional media.

Nordstrom executives long have made it their business to do whatever is necessary to please the consumer -- everything from stocking every possible color and size of a pair of shoes to having a sales associate buy an out-of-stock item from a competitor only to turn around and resell it to his or her customer. It is important to note that neither the department store itself nor its products are what are being overtly proffered; instead, it's a very high-end, individualized and personally gratifying shopping experience.

Starbucks expanded upon this model to elevate the company from simple coffee retailer to iconic-ambiance merchant. Howard Schultz focused Starbucks' marketing efforts and dollars into creating a retail environment that blends community and customs with coffee. Visitors came to expect a multi-sensory experience that was replicated in each store, from the sights, sounds and smells of coffee being ground to the familiar expectations of layout, furniture, music and wireless access. Starbucks merchandised the feeling and the environment -- Schultz's "third place." Without creating another reason to visit the stores apart from the coffee, Starbucks likely would have become just another Pacific Northwest java shop and not an indelible part of global culture.

Speaks for itself
What both Nordstrom and Starbucks continue to do to perfection is leverage their in-store, bricks-and-mortar experiences to create a compelling, powerful and successful communications platforms that quite literally speak for themselves. Lest we forget, until fairly recently, Starbucks spent little to nothing on traditional advertising. Despite that, as of August 2007, Starbucks has successfully opened 14,396 (and counting) company-operated, licensed or joint-venture stores around the world.

Perhaps now more than any other time in marketing history, it is critical for brands to not just personalize their communications to their target audiences, but to personalize their selling experiences as well. In an era when Amazon will recommend your next purchase based on your ordering and browsing history -- a not-so-subtle but very successful way to encourage an impulse buy -- and when L.L. Bean will accept returns and exchanges of virtually any product no matter what the state of disrepair (Bean has successfully merchandised customer service), consumers surely will continue to demand to be catered to and insist that their needs are understood on a nearly individual level.

Target, too, has used the lessons of successful merchandising to design its stores around the purchasing needs of customers in each local market. Taking a cue from retail web sites that track the purchases of each individual shopper, Target undertook rigorous consumer research to determine specific consumer-shopping patterns within the store -- where they went and how they bought in different markets. It used the results to organize stores in based on highly specific consumer segmentation. For example, hand-sanitizing lotion may be at the front of an urban Target location, while bug spray and garden equipment may draw visitors in to a more suburban store. By carefully assessing the shopping patterns of customers in all of its stores, Target has been able to create almost personalized shopping experiences for greater appeal to local audiences. The company used research to develop a merchandising strategy that led to a substantial increase in sales volume. Target has told its consumers that, no matter what market they're in, it understands precisely what they need.

Costco has made its shopping experience a veritable delight for consumers, who turn each corner and enter each aisle wondering what they might find next. Originally established as a warehouse club offering value-price products for the small-business market, Costco quickly realized that its loyalists had no shortage of money to spend on high-end treats for themselves. So in addition to offering economy-size packages of fax paper and good prices on paper shredders, Costco expanded its product so that club members can shop for everything from floor wax to furniture and gasoline to golf clubs.

The value of merchandising the intangibles of a brand can never be overestimated. The questions that every senior marketing officer must ask about his or her brand are:
  • How does my linkage with the brand come to life within the store setting?
  • Do I understand what my consumer wants?
  • How can I turn my customers into evangelists?
  • Does my consumer feel delighted after interacting with my brand?
  • Does my sales force effectively communicate the essence of my brand?
  • How does the layout of my store define my brand? My consumer?
  • How attentive is my customer service?
  • How good is my return policy?
  • What is my repair policy?
  • How far will I go to keep a disgruntled customer?
All of these questions represent tangible components of marketing and selling; together they add up to the one greater intangible that is the actual brand experience.

Asking and answering such questions led Washington Mutual to being named one of the top 40 best retail "stores" in the world -- and the only financial institution to make the list -- in 2004 by the Retail Industry Leaders Association. During a time when competitors were driving customers out of the bank through ubiquitous ATMs and myriad online programs, Washington Mutual redesigned its locations into pleasing, welcoming environments with unrivaled customer service that made people want to go to the bank. Washington Mutual merchandised an inviting, one-on-one interaction with their financial institution.
Nordstrom was a pioneer in recognizing the benefits of personalized shopping.
Nordstrom was a pioneer in recognizing the benefits of personalized shopping. Credit: Elaine Thompson

In its best form, merchandising can be one of the most powerful marketing languages, one that communicates with consumers in a multi-sensory way. The more you can reach consumers through sights, sounds, touch, smells (and when appropriate, taste), the better you can strike a chord and establish a strong emotional connection. After all, a 30-second ad, no matter how clever, is unlikely to create a long-lasting bond.

It's a critical mission for senior marketing officers to think beyond traditional marketing vehicles and to create experiences that do more than resonate with consumers, but speak to them one-on-one. When consumers believe you are speaking to them, they will go out to the world and speak for you.
Jane Stevenson is global managing partner of Heidrick & Struggles' marketing-officers practice.
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