How to Merchandise a Retail Store [Display Strategies and Cross Merchandising Ideas]

Merchandising a retail store is a strategic process that influences customer behavior, sales, and brand experience. A well-merchandised store attracts shoppers, encourages impulse buying, and increases customer retention.

In this guide, you’ll learn step-by-step merchandising techniques, store layout optimization, and proven visual merchandising strategies to boost sales. We’ll also cover how to display merchandise in a retail store for maximum impact.

What Is Retail Merchandising?

Retail merchandising refers to the strategic planning, design, and presentation of products in a store to maximize sales and enhance the customer experience. It involves everything from store layout and product placement to visual merchandising, promotions, and signage.

Effective retail merchandising ensures that customers can easily find products, feel engaged by the store environment, and are encouraged to purchase. It covers multiple elements. 

Key Elements of Retail Merchandising

• Product assortment – Selecting the right mix of products to meet customer demand.
• Pricing strategies – Using competitive pricing, discounts, and psychological pricing to drive sales.
• Store layout & displays – Organizing shelves, aisles, and promotional areas to maximize exposure.
• Visual merchandising – Using lighting, colors, signage, and displays to create an engaging shopping experience.
• Seasonal & promotional merchandising – Updating product displays based on seasons, trends, and marketing campaigns.

Retail merchandising applies to physical stores and e-commerce platforms, where digital merchandising involves optimizing website layouts, product images, and recommendations to enhance online shopping experiences.

What Is In-Store Merchandising?

In-store merchandising focuses on how products are displayed and promoted inside a physical retail store to enhance the customer shopping experience and drive sales. While retail merchandising covers both online and offline merchandising strategies, in-store merchandising focuses exclusively on brick-and-mortar stores and how products are displayed.

Core Aspects of In-Store Merchandising:

• Shelf & Display Layouts: Designing visually appealing product arrangements that catch the customer’s eye and efficiently guide customers through the store.
• Product Placement Strategies – Positioning high-margin and best-selling products in high-traffic areas.
• End Cap Displays  & Promotional Zones – Using high-traffic aisle ends for promotions, limited-time deals, seasonal items, or new arrivals.
• Retail Signage & Messaging – Communicating offers, product benefits, and store navigation.  
• Sensory Merchandising – Using lighting, scents, and music to create an inviting atmosphere.
• Space Optimization: Ensuring aisles, checkout zones, and product sections are structured for easy access.

Example: Supermarkets use in-store merchandising by placing staple goods (milk, eggs, bread) at the back of the store, encouraging customers to walk past other products and increasing impulse purchases. 

Fact: Studies show that stores with well-optimized in-store merchandising increase sales by up to 20% due to improved product visibility and ease of shopping.

How In-Store Merchandising Differs from General Merchandising

While general merchandising encompasses product development, branding, packaging, and online marketing, in-store merchandising focuses on physical store strategies like shelf positioning, display arrangement, and sensory marketing (lighting, scent, and music).

How to Merchandise Your Retail Store

Step 1: Plan Your Store Layout for Maximum Sales

Choose the Right Store Layout

Your store layout should guide customers through an engaging shopping journey. Common layouts include:

Pro Tip: Place "speed bumps" like promotional displays or seasonal products along the main shopping path. This slows customers down, encouraging them to explore more store sections.

Data-Driven Insight: Studies show that stores with a well-structured layout can increase customer dwell time by up to 20%, leading to higher conversion rates.

Step 2: Use Visual Merchandising to Attract Customers

Apply the Rule of Three

Grouping products in sets of three creates an aesthetic balance that appeals to shoppers.
For instance, in a clothing and accessories store, displaying three bags of different sizes and colors instead of just one makes the display more attractive.

In a grocery store: Place three variations of a featured product (small, medium, large) to encourage upselling.

In an electronics store: Arrange a smartphone, matching wireless earbuds, and a phone stand to promote cross-selling.

In beauty stores, combine three related skincare items—cleanser, toner, and moisturizer—to create an easy-to-follow customer routine.

In baby stores, three best-selling baby essentials, like diapers, baby wipes, and a baby lotion bundle, are displayed, making it convenient for new parents.

Optimize Lighting & Color Psychology

• Warm lighting (yellow, soft white) → Cozy & inviting (fashion, home décor)
• Cool lighting (blue, bright white) → Modern & energetic (tech, gadgets)

Use color psychology:

• Red & orange → Stimulate urgency & impulse buys
• Blue & green → Create trust & Relaxation

Use spotlighting to highlight premium or new arrivals. Well-lit displays increase product visibility and can boost sales by up to 30%.

Pair lighting with textures—glossy surfaces reflect more light and make products appear more premium, while matte surfaces create a cozy, relaxed shopping vibe.

Step 3: How to Display Merchandise in a Retail Store to Increase Sales

Place High-Margin Products at Eye Level

Eye-level products sell 35% more than those on lower or upper shelves.
Put high-profit items in the center of aisles or at eye-level shelves.

For kids’ products, eye level should be adjusted to match their height. This is why toy stores place the most eye-catching items on lower shelves where children can see them easily.

Use Cross-Merchandising

Pair complementary products together to increase cart value.

For example, display phone cases near smartphones or wine glasses beside wine bottles.

In DIY stores, pair together paint cans + paintbrushes/rollers + painter’s tape + drop cloth

In sporting goods store display together dumbbells + yoga mats + resistance bands + protein bars.

Pet Store: Pet food + Treats + Matching feeding bowls

Home Décor Store: Candles + Matching decorative trays + Seasonal tableware

Garden Center: Potted plants + Fertilizer + Decorative planters

Fashion retailers can display mannequins with full outfits (shoes, bags, and accessories) near clothing racks to inspire customers to purchase complete looks.

Grocery stores can pair fresh pasta with gourmet sauces and cheese, suggesting meal ideas to increase basket size.

Create an Engaging Focal Point

A well-placed focal point display draws customers in and highlights specific products.

Best locations:

• Store entrance → Captures attention immediately
• End caps of aisles → Increases impulse purchases
• Checkout counter → Boosts last-minute add-ons

Step 4: Seasonal & Promotional Merchandising

Create Thematic Seasonal Displays

Use creative, seasonal displays to boost sales.

Example:

• Back-to-school setups in August.
• Holiday-themed gift guides in December.

Use storytelling in displays. For example, instead of just stacking winter coats, create a cozy "winter adventure" display featuring coats, boots, and scarves alongside a fake snow setting.

Rotate monthly promotional themes to keep displays fresh and engaging for returning customers.

Use Signage for Promotions

End-of-aisle displays → Great for limited-time promotions.

Clear pricing signs → Help customers make quick decisions.

Step 5: Measure & Optimize Merchandising Performance

Key metrics to track:

• Foot Traffic Heatmaps: Identify high-traffic areas & optimize displays accordingly.
• Sales Data Analysis: Identify which product placements drive the most revenue.
• A/B Testing: Experiment with different store layouts and signage to see what works best.
• Use Technology: Retail analytics tools like Datawiz BI to analyze sales and planogram software like PlanoHero to manage and analyze planogram implementation.

Heatmap analytics can reveal the most visited store areas, helping optimize display placement for maximum impact. Consider planogram tools that suggest the best product placements based on past sales data.

Common Merchandising Mistakes to Avoid

• Cluttered Store Layouts – Overwhelming product displays lead to decision fatigue.
• Inconsistent Branding – A lack of theme can make the store feel disorganized.
• Ignoring Seasonal Trends – Stores that don’t update displays risk looking outdated.
• Overloading shelves—too many products on display can make it harder for customers to focus. Keep displays simple and curated.
• Not training staff—associates should understand merchandising strategies and be able to direct customers to featured displays effectively.
• Ignoring mobile shoppers—integrate QR codes into displays so customers can scan and read product reviews or see styling suggestions online.

How to Display Merchandise in a Retail Store – Pro-Level Tips

• Use the Decompression Zone – The first 5-15 feet inside the store should be open and inviting.
• Follow the Right-Hand Rule – Most customers naturally turn right upon entering a store—place high-margin products there.
• Use the Power of Contrast – Place bright-colored or best-selling items near neutral backgrounds to draw attention.
• Rotate Displays Every 2 Weeks – Keeps regular shoppers engaged and prevents "merchandising blindness."

FAQs 

Q1: What is the best way to merchandise a retail store?

To maximize sales, a well-merchandised store follows a strategic layout, strong visual displays, and smart product placement techniques.

Q2: How can I improve my store’s visual merchandising?

Use lighting, color psychology, and cross-merchandising to create attractive, engaging product displays.

Q3: How often should I change my store displays?

Regularly refresh displays every 2-4 weeks, with major updates during seasonal promotions.

Implement These Retail Merchandising Strategies Today!

Merchandising is a powerful tool that directly impacts sales and customer experience. You'll attract more customers and increase sales by implementing store layout optimization, product placement strategies, and seasonal merchandising.