Once upon a time, data was a playground for computer geeks sitting behind big computers stuffing numbers in Excel, building confusing and complex charts left for management to decipher. But today we live in a world where analytics, and those who work with numbers, are downright sexy. So it should come as little surprise to see data now guiding merchandising strategy where creativity once reigned.

From a past characterized by a ‘get it in, get it out’ philosophy, merchandisers have joined the data revolution to drive sales, productivity and performance. Whether it’s through store assortments, shelving displays or end-user purchasing decisions, numbers are driving insight, allowing some of the most creative minds in merchandising to marry their inspiration with intuition.

Creativity and gut-instinct decision making no longer live independently of analytics, a science revolving around numbers and bonafide best practices. Instead, the two feed each other, maximizing efficiency, effectiveness and aesthetics for businesses. And this trend will only continue. 

Yet, in order for us to understand the future we must understand the past. So strap in and come for a journey through data, numbers and merchandising analytics as we explore what merchandising was, is and will be in a data-driven world.

The Past

In the beginning, function ruled over form in merchandising. Your best products at the front; your worst at the back. Commerce was characterized by need rather than want – so if your product lived on the shelves, it was often only by request.

Unlike today where the art and science of merchandising analytics incorporate many nuanced factors, simplicity was the name of the game. Shopping ‘hubs’ were a combination of arcades (hence the term window shopping) and wholesalers, both of which arose with the industrial revolution. Product assortments were hastily arranged to maximize turnover, and the concept of data wasn’t even a seed in the collective brains of merchandisers.

layouts_before_merchandising_analytics
As post-industrial nations moved away from a ‘wholesale model’, destination department stores rose in prominence. A strategic view of contemporary merchandising became more relevant as store owners sought to maximize profit on their investments. More subtle merchandising techniques became the norm and, though not quite realized, the initial concept of merchandising analytics was slowly beginning to take hold.

The Present

Today in merchandising, analytics has become essential. Check out this infographic from KISSmetrics to see an interesting application of what I mean. Data is now used both internally and externally for merchandisers. Assortment decisions are often driven by trends identified through statistics. eCommerce cataloging is developed from cues derived from historical web traffic. And how consumers identify and assess different product offerings has changed dramatically with the advent of smartphones.

Internally, data is becoming more important in measuring the success of merchandisers, both at the retailer and vendor level, as metrics and KPI’s have become more transparent with the rise of data. It’s become easier than ever before to see stock levels, assess store sales and identify regional trends to measure the impact of merchandising.

The Future

For retail merchandising, the future is extremely bright. No longer are in-store video cameras solely used for security, nor is guest wi-fi only a convenience designed to help customers. For example, brands like RetailNext are mastering retail traffic measurement by leveraging in-store cameras in retail stores to calculate just how much time shoppers are spending in front of shelves (dwell time), which has enormous implications for how merchandisers assess the effectiveness of their planograms. And with the help of A/B testing techniques they can see which merchandising alternatives are most successful in attracting shoppers and improving dwell time and retail conversion rates.

rfid_beacon_future_merchandising_analytics
Brands will continue to employ data in merchandising, and merchandisers will continue using data to drive their strategies. Powerful insights gathered from analytics will justify decisions across all the different functions of merchandising, allowing art and science to bond over the shared successes of merchandising best practices.

Like analytics in general, merchandising analytics will continue to become the norm as both vendor and retailer discover the benefits of marrying data and merchandising creativity to yield the best possible results. Forward-thinking retail brands already understand this, as they have been increasingly investing in data and analytics to improve their businesses. Yet, many brands still feel they can do more.

Ultimately, data is imperative for a sound merchandising strategy, and if what we see today is an indication of the future, art will only combine more with science to create a comprehensive, holistic approach to merchandising, allowing retailers and brands to make the most of their product assortments.