Smart Merchandising Tactics for 2025

Smart merchandising combines technology and data-driven strategies to optimize product placement and presentation across your storefront. Its primary objective is to increase conversions by ensuring customers can efficiently find and purchase products that match their needs.

Smart merchandising technology transforms business performance across several key areas.

Increase Your AOV (average order value)

On the revenue front, strategic product placement and intelligent cross-selling naturally increase average order values (AOV). Conversion rates climb when customers see relevant products at just the right moment in their shopping journey. This reduces the need for constant discounting, as more products sell through at full price. Marketing budgets work harder too, since visitors are more likely to convert once they arrive on site.

Streamline Merchandising Operations

Behind the scenes, automation streamlines merchandising operations by handling repetitive tasks that traditionally consume staff time. Data-driven product placement leads to faster inventory turnover, while smart visibility adjustments based on stock levels help prevent markdowns. When market trends shift, merchandising teams can respond swiftly rather than playing catch-up.

Improve Customer Experience

The customer experience becomes noticeably smoother. Shoppers find what they want more quickly, leading to fewer abandoned carts. Improved search accuracy means customers see precisely what they're looking for, while personalized experiences make them feel understood and valued. This tailored approach builds lasting loyalty and encourages repeat purchases.

These capabilities create meaningful competitive advantages. Businesses can adapt rapidly to changing market conditions, backed by clear analytics that inform smart decisions. The merchandising system scales seamlessly as operations grow. Perhaps most importantly, it enables retailers to offer something unique – a shopping experience that stands out in the marketplace and keeps customers coming back instead of turning to competitors.

Smart merchandising consists of a set of tactics you can apply to your business. You don’t have to introduce everything at once – analyze your data and choose options that will answer your current business challenges.

Visual Merchandising

Visual merchandising is all about presenting products in a way that captures attention and aligns with customer preferences. This tactic focuses on optimizing how products are displayed across the site to drive engagement and sales. Visual merchandising can consist of:

Product Pinning

Highlight top-performing, in-stock, or promotional items by pinning them to prominent positions on category or search pages. This approach is more manual and goal-oriented, giving businesses full control to strategically promote specific products. It’s particularly useful for achieving targeted goals like showcasing items with the best margins, clearing out overstock, or emphasizing trending products.

↑ Zalando promotes top items using product pinning.

Dynamic Merchandising

Use AI-powered tools to reorder product listings dynamically based on real-time data, such as trends, customer interactions, or business goals. This method is more automated and data-driven, continuously adapting product rankings to reflect customer behavior, seasonal demand, or inventory levels. For instance, it can prioritize in-stock seasonal products or highlight items with the highest likelihood of converting without requiring manual updates

Intelligent Site Search

Research indicates that 43% of retail website users utilize the search bar directly, with these users being 2.4 times more likely to make a purchase and spending 2.6 times more than non-search users.

AI-Powered Search Tools

Utilize tools with AI capabilities like Natural Language Processing (NLP) to interpret complex queries, typos, or conversational language. For example, when a shopper searches for “red summer dress under $50,” the system should identify and present relevant options.

Key Features:

• Autocomplete: Speeds up search with real-time suggestions as users type.
• Synonym Recognition: Ensures results match customer intent even if the exact term isn’t used (e.g., “sneakers” vs. “trainers”).
• Intent Detection: Understands the context of queries to show the most relevant products.

One of the tools that introduced AI in their search component is Klevu, used now by, among others, Pangaia, an apparel brand. For Pangaia, a brand that is known for its quality clothes in bright and bold colors, intelligent search was one of the most important features.

Klevu Search understands color variations. For example, when a user searches for "Brownish circular rugs 115cm jute material," Klevu recognizes “brownish” as a color attribute, and using inflection normalization, shows similar colours like brown, beige and maroon.

↑ Search experience on Pangaia website is smooth and user-friendly.

Klevu Search automatically understands synonyms and related terms, so users can search for products using different words or phrases. For example, the tool understands not just synonyms like "sneakers" for "shoes" but also different inflections, such as "gold" versus "golden".

Personalized Product Recommendations

Personalized recommendations are a great way to connect with customers and boost sales. By using customer data and smart technology, businesses can create shopping experiences that feel natural and genuinely helpful.

Product Detail Page (PDP) Recommendations

On PDPs, recommendations help customers visualize how products can work together or fit into their lifestyle.

• “Shop the Look”: Showcase items that complement the main product, like a complete outfit or matching accessories.
• “Pairs With”: Suggest complementary products, such as a phone case for a newly purchased smartphone or shoes for a dress.

↑ Customers can complete the whole look on Pangaia's website.

Checkout Page Recommendations

At the checkout stage, recommendations focus on last-minute additions to the cart.

• “Don’t Forget”: Remind customers of essentials they might have overlooked, like batteries for an electronic item.

↑ A good practice is to show any additional items customer might need.

• “Complete Your Order”: Suggest small, high-margin items that complement the current cart contents, such as a reusable water bottle alongside sports gear.

↑ While shopping at Sephora, customers can easily complete an order with additional items.

Conversational eCommerce Search

Conversational search takes product discovery to the next level by allowing customers to search in a more natural and intuitive way. By enabling users to ask questions or describe their needs in everyday language, businesses can create a shopping experience that feels more personal and efficient.

Enable Natural Language Queries

Use AI-driven tools to interpret queries like, “I need a summer dress for a wedding” or “What’s the best laptop for gaming under $1,000?” These systems analyze intent and context to provide tailored product recommendations.

Chatbots for Real-Time Assistance

Introduce chatbots or virtual assistants that interact with customers in a conversational format. These tools can answer questions, recommend products, or guide users through the shopping process, creating a more engaging experience. Many eCommerce managers already discovered the benefits of using chatbots – the use of chatbots has increased by 92%

Conversational chatbots will help you enhance sales by providing individualized product recommendations and provide users with answers quicker.

↑ Chatbots can help find the answers to most common customers questions.

There are various tools available, for example, Tidio or Zendesk. There are several factors you need to consider when choosing a chatbot. One of the most important is whether you can seamlessly integrate it with your existing systems, such as CRMs, eCommerce platforms, and payment getaways.

Another thing to consider is omnichannel support. Do you want to implement the chatbot only on your website or are you planning on activating your users on social media as well? The broader the reach (from Instagram to Facebook or WhatsApp), the easier it is to engage your customers on the platform they are most comfortable with.

And last but not least, chatbot design. If your bot is not easy to use, it will cause more frustration than good. The design should be intuitive and engaging. Create an easy-to-follow conversation flow and incorporate visuals and interactive elements when possible.

Perplexity and other AI solutions

In October 2024, Perplexity introduced a new shopping feature for its paid customers in the US. The platform offers shopping recommendations within its search results as well as the ability to place an order without going to a retailer’s website.

Clients can store their address and credit card details in Perplexity; the platform also calculates taxes for the user's address, so you can purchase goods with one click.

Since AI solutions have been gaining momentum, we will see more searches and purchases done via Perplexity, ChatGPT, or any other generative AI tool.

Voice search

Smart speakers, such as Amazon Echo or Google Home are already integrated in daily activities. According to Statista, 142 million individuals utilize voice search technology and 50% of the population in the United States employs this technology. Voice search closely resembles our conversational style of communication.

NLP can personalize the results of voice search. It takes into account’s user’s location, interest, and past search history. NLP also applies sentiment analysis, where NLP is used to help voice search technologies understand how the speaker is feeling about the topic they are discussing or inquiring about.

To implement the strategies discussed, eCommerce businesses can leverage powerful tools designed to enhance product discoverability, improve customer engagement, and streamline operations. Below are three standout solutions, each with unique features tailored to different aspects of smart merchandising.

1. Klevu

Klevu is an AI-powered search and merchandising platform that enhances product discovery and personalization for eCommerce stores.

Key Features:

• Search and Discovery: Provides intelligent, typo-tolerant search results with dynamic filtering.
• Personalized Recommendations: Uses machine learning to offer tailored product suggestions throughout the customer journey.
• Visual Merchandising: Offers tools to automate product placements based on business goals or trends.

Best For: Businesses looking for an all-in-one solution to improve both site search and merchandising.

Visit site: Klevu

2. Tagalys

Tagalys specializes in visual merchandising, helping businesses automate and optimize how products are displayed.

Key Features:

• Dynamic Category Merchandising: Automatically reorders products in categories based on performance, trends, or business priorities.
• Product Pinning: Enables manual curation of high-priority products for specific pages.
• Analytics: Provides insights into how merchandising strategies impact sales and engagement.

Best For: Merchandising teams focused on optimizing category pages and promoting key products efficiently.

Visit site: Tagalys

3. Algolia

Algolia is a high-performance search and recommendations platform tailored for businesses that require a tech-driven approach to enhance product discovery.

Key Features:

• Advanced Search: Offers scalable and typo-tolerant search with features like synonym recognition and intent-based results.
• Personalized Recommendations: Dynamically suggests products based on customer behavior and preferences.
• Developer-Friendly: Provides robust APIs and tools for custom integrations and advanced use cases.

Best For: Tech-savvy teams or larger businesses seeking a customizable search and recommendation solution without built-in visual merchandising.

Visit site: Algolia

Smart visual merchandising is about making it easier for customers to find and buy what they love. By using strategies like personalized recommendations, smarter search, and dynamic product displays, businesses can create a shopping experience that feels simple and enjoyable. With the right tools, you can tackle common challenges like helping customers find the right products faster, boosting sales, and making the most of your traffic. It’s all about connecting with shoppers in a way that works for them and helping your store stand out.