An exploratory study on the topic of merchandising: for MBA students (information from perplexity.ai)
My question 1: "What is merchandising business all about as a type of business model and a business sector:
The reply: "Overview of Merchandising Business
A merchandising business is a type of business model that involves purchasing finished goods from manufacturers or wholesalers and reselling them to end consumers. This model is prevalent in retail sectors, where businesses act as intermediaries between suppliers and customers, focusing on the distribution and sale of existing products rather than manufacturing them14.
Key Elements of a Merchandising Business Model
Sourcing and Procurement: Merchandising businesses select products based on market demand, consumer preferences, and industry trends. They establish relationships with suppliers to ensure a consistent supply of high-quality merchandise1.
Inventory Management: Efficient inventory management is crucial to balance stock levels, minimize carrying costs, and avoid excess inventory. This involves tracking inventory turnover rates and forecasting demand1.
Pricing and Profitability: Merchandisers set prices that balance profitability with competitiveness, considering factors like cost of goods, market demand, competition, and desired profit margins1.
Visual Merchandising: Creating visually appealing displays and arrangements to capture customers' attention and enhance brand image1.
Market Analysis: Conducting thorough market analysis to identify trends, consumer preferences, and emerging opportunities1.
Supply Chain Management: Establishing solid relationships with suppliers, negotiating favorable terms, managing inventory levels, and ensuring timely delivery1.
Types of Merchandise
Core Merchandise: Primary products defining the business's identity and customer base.
Seasonal Merchandise: Products relevant to specific seasons or holidays.
Trend Merchandise: Products aligned with current trends or popular culture.
Private Label Merchandise: Products developed and sold under the business's brand1.
Merchandising Operations
Merchandising operations involve the transactional activities of purchasing goods, selling products, collecting payments, and paying vendors. These operations are essential for maintaining profitability and growth2.
Market Trends and Growth
The global merchandise unit market is expected to grow at a CAGR of 5.9% from 2024 to 2033, driven by rapid industrialization and urbanization, which increase demand for consumer products3. Standard products dominate the market, providing stability and efficiency in supply chain management3.
Conclusion
In summary, a merchandising business is a vital sector that focuses on the distribution and sale of existing products. It involves strategic sourcing, inventory management, pricing, and visual merchandising to drive sales and customer satisfaction. The sector is expected to continue growing due to increasing demand for consumer goods."
My question 2: "What are the academic theories to study the topic of merchandising?"
The reply: "Academic theories related to merchandising encompass a broad range of disciplines, including marketing, psychology, architecture, and neuroscience. Here are some key theories and frameworks used to study merchandising:
1. Consumer Behavior Theory
Impulse Purchasing: Studies have shown that merchandising strategies, such as visual displays and shelf design, significantly influence impulse buying decisions (Kacen et al., 2012)1.
Human Behavior and Buying Habits: Retail merchandising involves understanding human behavior to optimize store layouts and product displays (Hardware Association)7.
2. Marketing and Merchandising Integration
Merchandising is often seen as a component of marketing, focusing on how products are presented to align with consumer preferences and enhance sales (Buttle, 1984)1.
It intersects with marketing functions, particularly in mass merchandising, where supply increases can affect pricing strategies (Lee et al., 2002)1.
3. Visual Merchandising Theory
This involves creating visually appealing displays to attract customers. Elements like color, lighting, and store design are crucial in influencing consumer perceptions (Somoon and Sahachaisaree, 2018)1.
Effective visual merchandising can differentiate a retailer from competitors and drive sales (Small Business - Chron.com)5.
4. Interdisciplinary Approaches
Merchandising incorporates insights from psychology, architecture, and neuroscience to understand consumer reactions to store environments (Workman and Caldwell, 2007; Ha and Lennon, 2010)1.
These interdisciplinary studies help in designing more effective store components, such as online and physical store layouts (Zheng and Li, 2018)1.
5. Merchandising Maturity Models
Merchandising 3.0 focuses on localized and personalized product assortments based on micro customer segments, integrating both online and offline data (Arlyn Knox, MBA)8.
This approach aims to enhance merchandising effectiveness by tailoring offerings to specific customer needs.
6. Strategic Retail Merchandising Frameworks
These frameworks help retailers optimize their merchandising strategies even with limited resources, focusing on maximizing space and budget efficiency (Bouaissi)4.
They emphasize the importance of aligning merchandising strategies with overall business objectives and market conditions.
These theories and frameworks provide a structured approach to understanding and improving merchandising practices in various retail environments."
My question 3: "What have been the research gaps and research issues on this topic over the past 20 years?"
The reply: "Over the past 20 years, research in merchandising has highlighted several gaps and issues, particularly in areas such as visual merchandising, consumer behavior, sustainability, and technological integration. Here are some key research gaps and issues identified:
1. Visual Merchandising and Consumer Behavior
Gap in Understanding Consumer Response: There is a need for deeper insights into how consumers respond to different visual merchandising strategies, especially in the context of varying levels of fashion involvement (Kim et al., 2020)1.
Limited Demographic Focus: Many studies focus on specific demographic groups, leaving a gap in understanding how visual merchandising affects diverse consumer segments (Kim et al., 2020)1.
2. Integration of Technology and Sustainability
Adoption of Emerging Technologies: While technologies like AR and VR are increasingly used in merchandising, there is a lack of comprehensive studies on their impact on consumer behavior and sales (Wedel et al., 2020; Krasonikolakis et al., 2018)3.
Sustainability in Merchandising: Despite growing interest in sustainability, there is a need for more research on how merchandising strategies can be adapted to reduce waste and promote circularity (McKinsey, 2024)4.
3. Data-Driven Merchandising
Insufficient Use of Data Analytics: While data analytics is recognized as crucial for merchandising, there is a gap in effectively integrating data insights into merchandising decisions across all stages of the supply chain (McKinsey, 2024)4.
Operational Challenges: Ensuring that digital solutions are integrated across the merchandising process without becoming siloed remains a significant operational challenge (McKinsey, 2024)4.
4. Conceptualization of Merchandising
Lack of Clear Conceptualization: Merchandising as a discipline lacks a clear conceptual framework, leading to confusion with other marketing functions (Kumar, 2015)3.
Need for Bibliometric Analysis: There is a call for more bibliometric analyses to map the intellectual structure of merchandising research and identify key themes and gaps (Lima et al., 2018)3.
5. Evolving Consumer Attitudes and Market Dynamics
Shifting Consumer Preferences: Rapid changes in consumer attitudes towards sustainability, newness, and brand storytelling require merchandising strategies to adapt quickly (McKinsey, 2024)4.
Channel Dynamics: The evolving mix of direct-to-consumer, wholesale, and third-party marketplaces presents challenges in optimizing merchandising across different channels (McKinsey, 2024)4.
Addressing these gaps will help in developing more effective merchandising strategies that align with contemporary consumer needs and technological advancements."
My question 4: "What have been the public media-reported issues on this topic over the past 20 years?"
The reply: "Over the past 20 years, public media has reported several issues related to merchandising, particularly focusing on retail media, consumer behavior, and technological advancements. Here are some key issues that have been highlighted:
1. Retail Media Expansion and Challenges
Growth and Competition: The retail media market has experienced significant growth, with projections reaching $179.5 billion by 2025. However, this growth also brings increased competition among retail media networks (RMNs), making differentiation and innovation crucial for success (Financial Express, 2025)2.
Operational Challenges: As demand for retail media surges, many networks face operational challenges in scaling efficiently to meet this demand (LBB Online, 2025)3.
2. Technological Advancements and Personalization
AI and Data-Driven Personalization: Retail media has seen advancements in AI and machine learning, enabling more personalized advertising and improving campaign performance. However, these technologies also raise concerns about data privacy and transparency (Financial Express, 2025)2.
Programmatic Advertising: The use of programmatic advertising has increased efficiency in ad placement across multiple RMNs, but managing these complex systems remains a challenge (Financial Express, 2025)2.
3. Consumer Behavior and Market Dynamics
Shifting Consumer Preferences: Consumers are increasingly seeking personalized experiences and sustainable practices, which merchandising strategies must adapt to. This includes integrating digital and physical shopping experiences seamlessly (Financial Express, 2025)2.
Market Fragmentation: The proliferation of RMNs has led to a more fragmented market, making it challenging for brands to navigate multiple platforms effectively (LBB Online, 2025)3.
4. Economic and Environmental Concerns
Economic Impact: The economic downturns and inflation have affected consumer spending, making it essential for retailers to diversify revenue streams, including through retail media (Financial Express, 2025)2.
Sustainability: While not extensively covered in recent media reports on merchandising, sustainability remains a broader concern in retail, with growing pressure on companies to reduce waste and promote circular practices (OECD, 2025)8.
5. Media Coverage and Firm Representation
Media Influence: The way firms are represented in media can significantly impact their reputation and market performance. This includes how merchandising strategies are perceived by consumers and investors (SAGE, 2020)4.
These issues highlight the evolving landscape of merchandising, particularly in the context of retail media, technological innovation, and consumer behavior."
My question 5: "What have been the Hong Kong public media-reported issues on this topic over the past 20 years?"
The reply: "Over the past 20 years, Hong Kong's public media has reported several issues related to merchandising and retail, focusing on economic challenges, consumer behavior shifts, technological advancements, and market trends. Here are some key issues that have been highlighted:
1. Economic Challenges and Retail Decline
Retail Sales Decline: Hong Kong has experienced significant declines in retail sales over recent years, with a nearly 10% drop in December 2024 and a projected 5% decline for 2025 (The Standard, 2025)1. This trend is attributed to factors like global economic uncertainty and shifts in consumer spending patterns (Marketing Interactive, 2025)2.
Impact on Specific Sectors: Jewelry, watches, and clocks have been particularly affected, with sales declines reaching up to 20.7% in January 2025 compared to the previous year (Trading Economics, 2025)5.
2. Consumer Behavior and Market Dynamics
Changing Consumer Preferences: Consumers are increasingly prioritizing essential goods over luxury items, leading to challenges for sectors like retail and hospitality (Marketing Interactive, 2025)2.
Cross-Border Shopping Trends: Residents often travel to mainland China for shopping, impacting local retail sales (Marketing Interactive, 2025)2.
3. Technological Advancements and Smart Retail
Adoption of Smart Retail Solutions: There is a growing need for Hong Kong retailers to adopt smart retail solutions to engage consumers emotionally and provide interactive experiences (Hong Kong Business, 2025)3.
Role of AI and Data Analytics: AI-powered tools are being used to optimize sales strategies, refine pricing, and manage inventory effectively (Hong Kong Business, 2025)3.
4. Sustainability and Environmental Concerns
While not extensively covered in recent reports, there is a broader trend towards sustainability in retail, with companies facing pressure to adopt environmentally friendly practices (Marketing Interactive, 2025)2.
5. Market Trends and Opportunities
Intellectual Property (IP) Products: There has been a significant increase in demand for IP-related products, such as character merchandise, which saw a 448.94% year-over-year increase in gross merchandise value in 2024 (Hong Kong Business, 2025)3.
Retail Media Growth: Retail media is expected to play a crucial role in advertising spend, with platforms like Alibaba and Shopee leading the charge in APAC (Campaign Asia, 2025)4.
These issues highlight the challenges and opportunities facing the merchandising and retail sectors in Hong Kong, including economic fluctuations, technological innovation, and shifts in consumer behavior."
My question 6: "Please suggest 4 related research objectives on this topic, in the context of Hong Kong. And then. comment on the originality, academic and practical values of these 4 research objectives?"
The reply: "Here are four research objectives focused on merchandising in Hong Kong, along with an evaluation of their originality, academic merit, and practical relevance:
Research Objectives
Assess the impact of Hong Kong’s increasing retail space supply on market competition and tenant mix strategies
Focus: Investigate how the doubling of prime retail space supply (2023–2027) affects pricing, tenant diversity, and landlord-tenant collaboration.
Explore the integration of experiential retailing with digital platforms to enhance mainland Chinese tourist engagement
Focus: Analyze how hybrid online-offline strategies (e.g., virtual showrooms, AR/VR) can cater to mainland tourists’ preferences for unique experiences.
Evaluate the effectiveness of AI-driven merchandising tactics in optimizing inventory and pricing for Hong Kong’s fashion retailers
Focus: Study how AI tools address markdown challenges and align with rapid consumer demand shifts in fashion retail.
Identify critical success factors for sustainable merchandising practices in Hong Kong’s shopping malls
Focus: Examine how sustainability (e.g., circular economy models, waste reduction) influences consumer loyalty and operational efficiency.
Evaluation of Research Objectives
Originality
Retail Space Supply Dynamics: While global studies examine retail oversupply, Hong Kong’s unique context—high dependence on tourism and competition from Hainan’s free trade port—offers fresh insights into localized tenant mix strategies13.
Experiential-Digital Hybrid Models: Combines Hong Kong’s reliance on mainland tourists with emerging tech like AR/VR, a novel approach compared to generic omnichannel studies36.
AI in Fashion Markdowns: Addresses gaps in applying behavioral economics and AI to markdown strategies, which are understudied in Asia’s fast-paced markets58.
Sustainable Mall Practices: Extends sustainability research beyond environmental metrics to include operational and emotional loyalty drivers in dense urban malls34.
Academic Value
Theoretical Contributions:
Methodological Innovation:
Practical Value
Retail Strategy Optimization:
Policy and Investment:
Conclusion
These objectives address Hong Kong’s distinct challenges—oversupply, tourism dependence, and tech adoption—while offering actionable insights for retailers and policymakers. They advance both global merchandising theory and localized strategies, ensuring relevance to academia and industry."
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