Merchandising
Meaning, Types & Retail Example
5 min readA shop can stock exactly the right products and still sell them slowly, because of where and how they sit.
What Is Merchandising?
Merchandising is everything a store does to help its stock sell once it is inside the shop: choosing which items to carry, where each one goes, how much of it is on show, and what price or offer it carries. In Indian retail it applies to a 300-square-foot kirana as much as to a supermarket chain, and it works within rules such as the ban on selling packaged goods above their printed MRP.
Four decisions between the stockroom and the bill What to carry Where it sits How much Price and offer Brands, pack sizes Shelf, aisle, counter Facings, units Tag, combo, discount Purchasing gets stock into the store. Merchandising is the set of decisions that gets it from the shelf to the billing counter.The Four Decisions Merchandising Covers
Every merchandising choice falls into one of four questions. Grouping stock into a clear item category structure first makes all four easier to judge.
| Decision | What you decide | Kirana example |
|---|---|---|
| Assortment | Which brands and pack sizes to carry | 250 g and 1 kg tea, but not 500 g |
| Placement | Which shelf, aisle or counter an item gets | Chocolates at the billing counter |
| Quantity | How many facings and units sit on show | Three facings for the best-selling atta |
| Pricing | The price tag, offer or combo | Oil and atta as a Diwali-week combo |
That last row is cross-selling done on the shelf rather than at the counter.
There are three main types of merchandising, and stores often split them between people:
- Product merchandising: the assortment and quantity calls, made from sales and stock figures
- Visual merchandising: how the store looks, through displays, lighting and signage
- Online merchandising: the same four calls on a website or app, where the “shelf” is a category page
In a larger store, category management sets the sales and margin target for each category. Merchandising is how that target gets met on the floor.
Merchandising vs Visual Merchandising
Visual merchandising is one part of merchandising, not another name for it.
| Aspect | Merchandising | Visual merchandising |
|---|---|---|
| Scope | All four decisions | Only how the store looks |
| Main tools | Sales data, stock levels, prices | Displays, lighting, signs, windows |
| Measured by | Sales and margin per shelf | Whether shoppers stop and pick up |
A beautiful window cannot fix a pack size nobody wants. And a well-chosen range still sells slowly if it sits on the bottom shelf, so if you are planning a new layout, a retail store setup checklist covers both sides.
Merchandising Example
A 2,400-square-foot supermarket in Kakkanad, Kochi, carried a packaged millet snack on the bottom shelf of aisle 5. It earned Rs.21 of margin a pack, against Rs.9 for the namkeen brand sitting at eye level above it.
In November 2025 the owner swapped the two: the millet snack moved to eye level facing the billing queue and gained a second facing, still at Rs.85 against its Rs.90 MRP.
| Item | Margin a pack | October packs | November packs | Margin change |
|---|---|---|---|---|
| Millet snack | Rs.21 | 46 | 112 | +Rs.1,386 |
| Namkeen | Rs.9 | 138 | 121 | -Rs.153 |
| Both lines | Mixed | 184 | 233 | +Rs.1,233 |
Note: this is an invented example for illustration only.
One shelf swap added Rs.1,233 of margin in a month without a rupee spent on stock. One month is a short test, though, so the owner planned to check again in December before touching the next aisle.
Where Merchandising Wins or Loses Margin
Wasted shelf space is where many stores leak money: a line that has not sold in 90 days still holds a facing a better item could use, the quiet loss this piece on how small retail shops lose profit describes.
Running out is the other leak. Across the retail counters we work with, the costly miss is rarely a badly lit display; it is usually a best seller with an empty shelf while its cartons sit in the back room.
Pricing has a legal edge in India. Under the Legal Metrology (Packaged Commodities) Rules, 2011, a pre-packaged item cannot be sold in a retail sale above the MRP printed on it, though selling below it is allowed. Loose goods weighed out from a bin carry no MRP, so the rule does not cover them. A shopper who is overcharged can complain through the National Consumer Helpline.
Drinks served at a restaurant table are disputed ground: the Supreme Court held in 2017 that the MRP rule does not reach them, though some consumer commissions have since fined restaurants for charging above it.
Before you run a festive offer, this discount calculator shows what the offer price leaves you.
See Which Items Earn Their Shelf Space
Every merchandising decision works better when you can see what actually sells. For retail businesses, Petpooja Invoice offers product categorisation, barcode scanning and Business Intelligence Reports, and helps you identify underperforming items.
For restaurants, the menu is the shelf. Petpooja POSS lets you manage your online menu and gives 100+ downloadable reports about your sales, so you can see which dishes earn their place on it.
Pick one aisle or menu section you have not changed in a year and see what its sales say.
Frequently Asked Questions
Is merchandise the same as merchandising?
No. Merchandise is the goods themselves, and merchandising is the work of getting them sold.
What does a merchandiser do in a retail store?
A merchandiser decides what the store stocks, where it sits and how it is priced, then checks the sales to see whether it worked. In a small shop the owner does this, while a chain hires merchandisers for each category or region.
Can a shop sell a product below its MRP?
Yes. The Legal Metrology (Packaged Commodities) Rules, 2011 stop a shop from charging more than the MRP on a packaged item, not less. Discounts, combos and offer prices below MRP are all allowed.
Does merchandising apply to restaurants?
It does, with the menu doing the shelf’s job. Where a dish sits on the menu, how it is described and which items are paired as combos all shape what diners order, on paper and on delivery apps.