Why Good Merchandising Software is Essential for Mid-sized Retailers

Medium-sized retailers operate in a challenging space—large enough to require structured merchandising strategies but often lacking the resources of major retail chains. Managing inventory, optimizing shelf space, and maintaining consistency across multiple locations can become overwhelming without good merchandising software. Investing in technology provides a data-driven solution to these challenges, enabling retailers to streamline operations, improve sales, and enhance the customer experience. Here are the top pain points that merchandising software helps resolve:

Biggest Retail Challenges that Are Tackled by Merchandising Software

The global planogram software market is projected to reach 1,7M$ by 2031, growing at a CAGR of 15.06% during the forecast period (VMR). This growth is driven by retailers’ increasing focus on data-driven strategies to optimize store layouts, enhance product visibility, and improve overall operational efficiency. Let’s break down the most significant pain points and how technology can address them:

1. Inefficient Inventory Management

One of the biggest challenges for medium-sized retailers is maintaining the right inventory balance—ensuring that shelves are neither overstocked with slow-moving products nor empty due to stockouts. Traditional inventory management methods, such as manual tracking or outdated spreadsheets, make it challenging to keep up with real-time demand, supply chain fluctuations, and sales trends. This inefficiency leads to significant financial and operational issues, including wasted resources, lost sales, and decreased customer satisfaction.

Merchandising planning solutions integrate directly with inventory management systems, providing real-time visibility into stock levels across multiple store locations. Using advanced analytics and automation, it aids retailers:

Reduce Stockouts: The software analyzes sales patterns, demand trends, and restocking schedules to keep popular products available, preventing lost revenue from empty shelves.
Minimize Overstocking: Excess inventory ties up capital and causes markdowns or spoilage for perishable goods. Merchandising solutions optimize ordering, ensuring retailers stock only what they need.
Improve Demand Forecasting: Statistical tools, including AI, unlock higher accuracy in demand forecasting.
Enhance Stock Replenishment Efficiency: Automated replenishment recommendations reduce reliance on guesswork and manual ordering, ensuring stock levels are adjusted dynamically based on actual demand.

2. Lack of Planogram Consistency Across Locations

Without standardized merchandising guidelines, store teams might arrange shelves differently, resulting in inconsistent product placements, reduced sales effectiveness, and a fragmented customer experience. This inconsistency can confuse shoppers who expect to find products in familiar locations, potentially leading to lost sales and frustration.

A centralized planogram management app allows the creation, distribution, and enforcement of uniform shelf layouts across all locations. Retailers can monitor compliance in real-time, ensuring that stores follow corporate merchandising strategies. Some advanced solutions even employ image recognition technology to verify implementation and make adjustments as necessary. Consistent planograms enhance visibility, brand cohesion, and the strategic placement of high-performing items to maximize sales. This boosts operational efficiency and strengthens the retailer’s competitive position.

3. Poor Shelf Space Utilization

Retailers often underutilize or misallocate valuable shelf space, resulting in slow-moving items occupying prime real estate, while high-demand products are placed in less-visible areas. Sales data is used to optimize shelf layouts, ensuring that the most profitable products receive the best positioning to drive sales. It also helps retailers make data-backed decisions on product facings and shelf allocations.

Software like LEAFIO.AI improves shelf space optimization by generating planograms four times faster using a data-driven approach, enabling retailers to manage their product placements effectively. Furthermore, it offers regularly updated reports and detailed store analytics, such as ABC categorization and heatmaps, to maximize sales per meter or foot of shelf space.

4. Difficulty Adapting to Consumer Trends

Consumer preferences and market trends shift rapidly, and retailers who fail to adjust their merchandising strategies risk losing market share. Manual adjustments are slow and reactive, causing missed opportunities in high-demand categories. The software provides real-time analytics and automated recommendations, allowing retailers to quickly adapt their store layouts based on shifting consumer behavior and seasonal trends.

5. High Labor Costs and Time-Consuming Manual Processes

Medium-sized retailers often lack the dedicated merchandising teams of larger chains, meaning store staff must spend valuable time manually setting up displays and adjusting layouts. Merchandising software automates planogram creation, reducing the need for manual adjustments and allowing employees to focus on customer service and sales. According to LEAFIO.AI, automating planogram generation can cut time spent by up to 50%.

6. Lack of Performance Insights on Merchandising Decisions

Many retailers make merchandising decisions based on intuition rather than data, leading to ineffective product placements and lost revenue. Data-driven insights into shelf performance enable retailers to measure which layouts boost sales, monitor planogram compliance, and optimize displays for maximum impact.

7. Challenges in Managing Promotions and New Product Launches

Retailers frequently struggle with strategically placing promotional items and new products to maximize visibility and sales. Without a structured approach, promotions may fail to generate expected results. Promotional displays and new product launches are positioned effectively, increasing their chances of success and maximizing revenue from limited-time offers.

8. Inconsistent Customer Experience

Medium-sized retailers must compete with large chains that offer highly polished and strategically designed shopping experiences. Disorganized or poorly structured product displays can frustrate customers and reduce purchase likelihood. Data-driven approach helps retailers create logical, visually appealing store layouts that enhance customer experience, making shopping easier and more enjoyable.

9. Ineffective Supplier Collaboration

Retailers must establish strong relationships with suppliers to negotiate better product placements, enhance stock availability, and ensure timely deliveries. In the absence of proper merchandising analytics, these negotiations often rely on guesswork instead of performance data. Comprehensive panels help gain insights into product performance, enabling retailers to collaborate more effectively with suppliers to optimize shelf positioning and stock levels.

10. Slow Response to Market Changes

Market conditions, consumer behaviors, and competitive landscapes are constantly evolving. Medium-sized retailers often lack the agility to respond quickly due to manual processes and outdated merchandising strategies. Merchandising software provides predictive analytics and scenario planning tools, allowing businesses to proactively adjust merchandising strategies, test new layouts, and stay ahead of competitors.

Conclusion

Medium-sized retailers face numerous merchandising challenges impacting sales, customer experience, and operational efficiency. Merchandising software offers a scalable, data-driven solution that automates processes, optimizes shelf space, and enhances inventory management. By investing in the right merchandising technology, retailers can improve store performance, increase revenue, and create a consistent, engaging shopping experience that drives long-term success.

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Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.

Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.

Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:

SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $300 if you complete a direct deposit.
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US Bank Business. US Bank is currently offering new business customers a $900 signup bonus after opening a new account and meeting certain requirements.
M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
Empower. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.

Feel free to send Kevin a message here.