How much does poor visual merchandising cost U.S. retailers?

U.S. retailers lost $125 billion in sales over the past 12 months due to poor visual merchandising, according to GlobalData’s latest study, The Cost of Poor Merchandising: A report for One Door.

This loss, representing 3.3% of the size of the entire physical retail market, highlights the importance of effective merchandising practices for driving sales and retaining customer loyalty. This is consistent across luxury, mid-market, discount and needs-based stores; however, the degree of impact varies by store type and shopper profile, the study found.

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Key findings:

• Poor merchandising manifests itself through hard-to-find products, cluttered displays and disorganization. The most frustrating area of poor merchandising for consumers was "hard-to-find products," with 33.3% of consumers saying they had been frustrated by this.
• Products being hard to find is a shared frustration among all types of shoppers, and a customer’s propensity to purchase an item is severely dampened if they have to spend time and effort locating it within the store. Messy, cluttered and disorganized displays are the next three main points of frustration for shoppers.
• The mid-market had the highest level of losses from poor merchandising in the last year, with retailers in this segment losing out on a potential $54.1 billion. However, all types of stores face significant consequences from poor merchandising.
• Of the discount shoppers who have experienced poor merchandising, only 51.5% are likely to return. While more tolerant in some areas, this group also exhibits lower tolerance for inefficiency in product accessibility.
• Meanwhile, for luxury shoppers, cluttered and messy displays were the most common frustrations.
• According to the report, 73.4% of surveyed consumers are not completely satisfied with visual merchandising in retail stores they visited within the past year.
• Almost 50% of shoppers walked out of at least one store over the past 12 months due to poor merchandising. The frustration was caused by a dozen merchandising factors, such as hard-to-find products, poor display practices and damaged fixtures.
• Demographic trends reveal that younger shoppers, particularly those aged 25-34, are the most likely to leave stores due to poor merchandising, with nearly 24% having done so in the past year. This age group, along with bargain hunters and research shoppers, is particularly sensitive to product visibility and clutter-free environments, as they rely on clear displays to find deals or locate specific products.
• A higher percentage of women and shoppers with children are prone to abandoning stores when they encounter disorganized merchandising, further compounding the issue.

“For years, retailers have implicitly understood the linkage between great visual merchandising and sales results, but no one has ever really measured the impact,” said One Door CEO Tom Erskine. “As retailers look to prioritize their investments, this data will shed light on the potential downside of cutting corners related to the in-store experience.”

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Neil Saunders managing director retail, at GlobalData said, “It’s well known that good merchandising can drive sales, but the reverse is also true – poor visual merchandising is highly damaging to the revenue line. Consumers these days are time poor and have a low tolerance for friction in stores. Retailers that make life difficult with messy displays, hard to find products, or excess clutter are driving their consumers to shop elsewhere. And in today’s competitive market, there are plenty of alternatives – including online shopping.”

The full study is available here.