A study conducted by analysis and insight firm GlobalData and visual merchandising software provider One Door has revealed a $125bn loss in US retail sales over the past year due to poor visual merchandising.

The research sheds light on the critical role that effective visual merchandising plays in retaining customers and maximising sales for brick-and-mortar retailers.  

It indicates that nearly half of consumers have exited stores without making intended purchases due to unsatisfactory visual merchandising. Plus, an overwhelming majority (73.4%) of shoppers reported their dissatisfaction with the visual merchandising they encountered in stores over the past year.  

The implications of these findings are considerable, as poor visual merchandising accounts for a 3.3% loss in annual sales for physical retail outlets in the US.  

Visual merchandising report’s key findings

Mid-market stores experience the biggest decline: Shoppers in this category are particularly puzzled by elusive products and chaotic displays leading to an exodus of more than 39m consumers. The resultant financial impact on this segment alone is reported to be $54bn and is exacerbated by disordered displays and complicated store layouts. 

Discount shoppers who encounter substandard merchandising demonstrate only a 51.5% likelihood of revisiting the store. Although they may exhibit some leniency, especially where prices are competitive, their patience wears thin when faced with hurdles in product accessibility. Conversely, luxury consumers cite cluttered displays as a primary source of frustration. 

Core merchandising issues – product visibility and display: The most pervasive merchandising issue identified is ‘hard-to-find products’, which frustrates 33.3% of consumers. This is closely followed by untidy and dishevelled displays, which are significant irritants for shoppers. Retailers must confront these fundamental issues to curtail the substantial annual revenue losses and maintain customer loyalty. 

Shopper profiles and reactions to poor merchandising: Demographic analysis reveals younger consumers, particularly those aged 25-34, are most inclined to abandon a store due to poor merchandising with nearly 24% having done so within the last year.  

These shoppers are frequently frustrated by stores that are cluttered and difficult to navigate, which often results in them leaving without making a purchase or opting for online shopping instead. This issue is particularly pronounced among women and parents, who are more likely to abandon stores when faced with disorganised displays. 

GlobalData retail managing director Neil Saunders states: “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.” 

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