Merchandise Hierarchy and its Relevance in Planning

Shared Space Retail Business

We visit numerous stores daily and never encounter mismanagement while browsing for our favorite products. We see products placed at specific store locations due to the merchandise hierarchy. For example, you visit a clothing store searching for women’s mom-fit new jeans. The salesman will direct you to the department of women’s clothing. There you will observe categories and subcategories of products. There will be a jeans category, and subcategories will include mom-fit, slouchy, straight, and wide-legged jeans. Breaking products into categories and subcategories helps clients and helping staff locate the product without much hassle.

Merchandise Hierarchy Levels

The hierarchical system starts at the broadest level and becomes more specific as it shimmies down. The goal is to simplify shopping and invigorate the atmosphere of the store. Retailers, wholesale dealers, and manufacturers can benefit from merchandise hierarchy, and e-commerce businesses can organize their products in categories for the customers to access their desired products quickly.

During online shopping, you may encounter filters on the top of the website that allows you to narrow down the search result to your price range, color choices, promotions, cloth material, and much more. Generally, a merchandise hierarchy contains four to six levels depending on the brand’s requirements.

Level One: The Store

The store is the broadest and most general level of hierarchy. Supermarkets and retail stores, on the whole, lie under this category.

Level Two: Departments

In a store, various sections represent different products. In a supermarket, we observe different sections for dairy products, fresh produce, utensils, clothing, and more. These departments give us a general idea of what to expect in that section. The department comprises categories.

Level Three: Category

Under the children’s clothing department, different sections will represent jeans, shirts, dresses, jumpers, hats, etc.,

Level Four: Subcategory

There will not be a single type of jeans present. Thus, the brand will stack jeans having similar styles in the same section. This practice is not just applicable to jeans but all the products displayed in the store.

Level Five: Class

The division of products on the quality of the raw material and their intended purpose is class division. Some dresses on display are for everyday use, some formal, and some

semi-formal. This distribution comes under the level of class.

Level Six: Item

Specific numbers (SKUs) are assigned to individual items to keep track of their inventory. It is the most pinpointed tier of the hierarchy. The brand’s employees use SKUs to identify products.

E-commerce businesses also use the hierarchy levels to maintain their website. Division of products into six ranks saves the customers a lot of time.

Role of Merchandise Hierarchy in Planning


Merchandise hierarchy plays a vital role in the progress of retail and e-commerce businesses. The information provides valuable insights into customer trends and other


factors influencing businesses’ revenue generation. Listed below are some ways in which merchandising hierarchy supports business planning.

Assortment of Products

Often one product sells better than the other, even in the same category. Producing products that don’t market well will be futile, and the products will only be heavy on the pocket.

Analyzing the data obtained from merchandising hierarchy helps decide whether to restock a specific product.

Manage Inventory

It would be strenuous for brands to keep track of their stocks without a merchandise hierarchy. Division of products in categories helps keep an eye on stock levels. It helps avoid stockouts and overstocking and ultimately improves the inventory turnover rate.

Price Tiers

Price tiers allocate products into different segments depending on their quality and characteristics. This practice helps identify price sensitivity. Price sensitivity aids in appealing to customers from all financial classes.

Promotion and Marketing Campaigns

Data analysis obtained from merchandise hierarchy determines the success of a product. After getting the statistics, the marketing team can devise campaigns to target specific audiences and create optimized content for that segment.

Data analysis obtained from merchandise hierarchy determines the success of a product. After getting the statistics, the marketing team can devise campaigns to target specific audiences and create optimized content for that segment.

Elevate In-store Experience

An organized store is a treat to sore eyes. Hierarchy management helps design a smooth store layout and visual merchandising displays. It also assists customers in finding their desired products with ease minimizing the chances of unnecessary scruffles.

Rhapsody Merchandising (RMS), Dubai-based retail and merchandising company, provides unparalleled services to various businesses in Dubai. It assists in retail planning and execution and market research and audit. Both these tasks are vital to successful in-store executions. The professionals at RMS analyze statistical data and formulate successful results. They know the importance of merchandising hierarchy in planning a brand’s future and take this task very seriously.

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