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BBRC Merchandise Planning

Academy

PlaceSizeLocationLayout

ProductStyle/FashionIntensityAssortment

ValuePriceQuality

CommunicationsPositionalPromotional

PeopleServiceKnowledgeClimate

System

LogisticsSuppliers

ProductStyle/FashionIntensityAssortment

ProductIntensityAssortment

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4

The History of Merchandise

Planning.

Data versus Opinion

• Stock counters

• Store based replenishment

• Information technology

• Nationalisation

• Data versus opinion

• Globalisation

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6

Our Market/Philosophy

What's our market and why?

• MAINSTREAM is the positioning: we must

have success in the main market

• Don’t chase fringe, styles, sizing, colours

- Bed jackets

- Dance

7

Product Curve

Core Customer

(our market)

Fringe Fringe

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Your Role

Your Role

• Right product (P)

• Right place (MP + P)

• Right time (MP + P)

• Right quantities (MP)

You and your department are the data/facts.

The product team is the “fluffy/creativity”

What role does your CEO play in merchandise

planning?

11

• CEO is head of product

• Will be involved

• Must be involved

• Time allocation

Head of product

Product Merchandise

planning

Responsible For:

• Product and quantity

• How we display it

• What costs what

• What we sell it for

• Listen to merchandise planning

Responsible for:

• Supporting product team with right brain and data based thinking

• Look forward (option

based)

• Create product

• Fashion

• Ongoing

• Promotional

• Core

• GMROM

• GMROI

• Planograms

• Store product layout

• Supplier relationships

• Negotiation – cost

• Retail pricing

• Timing

• Order placement and

tracking

• OTB compliance

• Analysis

• Stock balancing

• Allocations

• GMROM

• GMROI

• Store rankings

• Category ranking within

store ranking

• Look back(data based)

• Recommend markdowns

• Managing OTB

• Input and

recommendations into

buying decisions,

merchandising, timing, etc

• Sense check

• Very trendy, generally more expensive than rest of assortment

• Image enhancer

• “One and done" (no replen: Sell-through or mark-down in short time

frame)

• Often bought to minimum order quantities

• Seasonal SKUs but less trendy than "fashion"

– product in store for 2-6 months

• Sell-through, but mark down to clear out at end of season

• Used to identify "new" anchors/basics

• Typically some replen

• Long-term styles

– carry through of >12 months, or cyclical

• Typically larger buys, with several Key Items

• Generally, largest profit share

• Sales driven by competitive pricing

• Replenishment and ensuring "never out of stock" critical

Basics

Fashion

Core

Assortment Mix

Your Role

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• Measure, Measure, Measure - everything that matters

- People

- Product

• Analyse and act

• Min/max management - Monthly/Event

- Follow the life cycle of each SKU

- Up and down

- Cull/add fringe sizes

• Quarterly review of ongoing lines

• Quarterly review of store gradings

• Semi Annual Reviews (SARs)

• GMROM & GMROI

• Tail Management

• Replenishment - 96% in stock at store and SKU level

Measure Your Performance

• Measure yours and the brand’s performance

- Sell through %

- First margin, final margin

- % aged inventory

- % in stock of basics (replenishment) at store

and SKU level

- GMROM

- GMROI

- Weeks cover/ stock turns

If you do not understand or are not getting this info,

please do something about it

Know Your Stuff

• Know your business well, be on top of all

aspects of your role:

- Be interested

- Know the system well

- Know the quantity you sell by week

- Know what's on order and the quantity on

order

- Know the good, bad and ugly

These are all signs of your commitment and

confidence in your role

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Training. Teaching

• Who does the training?

• Who is responsible?

• What happens if we don’t train?

• Is this a shared responsibility

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What Do We Teach?

• Our business

• Our market

• Our customer

• The systems/processes

• Lead times

• Our culture

• Urgency

Replenishment / Repeats

Exercise

Topics we will cover in today’s session

✓ Formula versus outcome driven

✓ Our ‘pull’ system and what that means

✓ Allocations - how they work

✓ DNR (do not reorder) - methodology

✓ Stock smoothing/transferring

✓ MIN/MAX management

✓ Product lifestyles

✓ Markdowns - clearance store methodology

✓ Online

✓ Ongoing & Repeats

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Opening Truths

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• The bra business is unique

• Size range is unique

• Requires different disciplines

o Longer life

o Wide customer base

• Has a unique cost versus benefit threshold

• Must be a focus

o Merchandise planning

o Operational excellence

o Data integrity

• One SKU, one store, one sale at a time

o Then repeat in multiple stores

• One in one out

• Keep it simple

Formula versus outcome driven

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▪ Issue we have to focus on: outcome

driven as opposed to formula driven

▪ See example on following slide

▪ Sweet spot between efficiency and

effectiveness

▪ Being outcome driven means having

stock

- In the right store

- In the right quantities

- ...and at the right time

Briefs examples

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8 10 12 14 16

1 1 1 1 1

1 1 3 2 1

- 1 2 2 1

1 2 2 1 -

2 2 1 - -

Outcome drivenFormula driven

Ideal SOH

BRIEFS 10 – 12

units

Pull vs Push

Discussion and commitment to our ‘pull’ system and what that means for Bras N

Things, when it's appropriate to push

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Go to RECAPS WEEK 36

• Line 600

• “New Lines” tab

• ITEM CODE: 11299304

CATEGORY DESCRIPTION COLOUR SEASON C.P. RRP STORESSALES U

LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM% Offer

Bottoms WISH BRAZ PINK 14W 1.76 14.99 182 335 243 114 13.8% $2,544 $1,941 76.3%

• Allocations

Order allocation

Store grading

Store turnovers

Category grading within store grading

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Go to RECAPS WEEK 36

• “New Lines” tab

• Line 1109

• ITEM CODE: 217401

DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO

N C.P. RRP STORESSALES U LW

SALES U LW-1

SALES U LW-2

SALES U LW-3

SALES U LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM% TOTAL SALES

STORE SOH

Bras-Playboy Push UpELECTRIC BUNNY STN & LCE

BUNNY BRA BLACK 14W 11.38 64.99 176 204 212 116 6.3% $11,666 $9,344 80.1% 2,735

Stock smoothing/transferring up

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Go to RECAPS WEEK 36

• “New Lines” tab

• Line 733

• ITEM CODE: 218801

DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO

N C.P. RRP STORESSALES U

LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM% TOTAL SALES

STORE SOH

Bottoms-Playboy Mini-VSECRET SOCIETY STN & LCE

MINI-V WHITE 14W 5.94 24.99 137 73 6.5% $1,594 $1,160 72.8% 782

• The very last SKU of any style should be sold through the location with the highest probability of selling

• Review of the current process of stock smoothing

• Progressively discontinue product

• Min units to transfer

• Frequency and rhythm

• Do we stock smooth ongoing lines?

• Do we stock smooth ‘sell out’ lines?

Product lifestyles – birth until death

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Methodology

• Trending - up and down

• Whole style vs stepped approach - by size and store gradings

• Add or delete sizes

• Timing/frequency

• Sign offs/ approvals

• Importantly, never zero model/Min Max fringe sizing or style until zero stock in DC

Go to RECAPS WEEK 36

• “ONGOINGS” tab

• Line 126

• ITEM CODE: 85601

DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO

N C.P. RRP STORESSALES U

LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM% TOTAL SALES

Bras-Ongoing Contoured NINE TO FIVE MF CONT U/W BLACK ONG 7.45 49.99 192 101 127 122 142 133 1.7% $4,564 $3,830 83.9%

Product lifestyles – birth until death

29

Go to RECAPS WEEK 36

• “New Lines” tab

• Line 606

• ITEM CODE: 11299408

DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO

N C.P. RRP STORESSALES U LW

SALES U LW-1

SALES U LW-2

SALES U LW-3

SALES U LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM% TOTAL SALES

STORE SOH

Bottoms-Ongoing

Offer Bottoms WISH B/LEG PINK 14W 2.01 14.99 176 221 178 75 8.7% $1,662 $1,209 72.7% 2,325

Go to RECAPS WEEK 36

• “Ongoings” tab

• Line 5 & 35 & 121

• ITEM CODES: 10034401, 11273201 & 86902

DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO

N C.P. RRP STORESSALES U

LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM%

Accesories Lingierie

Accessories REVEAL ADHESIVE LIFT STICKER NUDE (SKIN) ONG 1.74 9.99 190 1,142 1,105 1,040 1,117 1,140 7.2% 78.4% $10,278 $8,337 81.1%

Accesories Washbag LINGERIE PRINT BAGWHITE/PINK (2

TONE) ONG 0.97 5.99 51 3 11 24 51 75 2.3% 99.7% $17 $15 83.3%

Bras-Ongoing ContouredNINE TO FIVE FULL CUP MF CONT

U/W NUDE ONG 9.04 49.99 189 162 150 183 189 202 7.1% $7,313 $5,873 80.3%

Markdowns

• Weeks cover is the only criteria to

determine the markdown price. Ignore

margin

• Clearance store methodology and

transferring

• Online clearance methodology and

transferring process

• Diligence is essential in sale periods for

stock smoothing

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General discussion

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Go to RECAPS WEEK 36

• “ONGOINGS” tab

• Line 184 & 186

• ITEM CODE: 87902 & 82901

DEPARTMENT CATEGORY ITEM CODE DESCRIPTION COLOURSEASO

N C.P. RRP STORESSALES U

LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM%

Lingerie Extras-Ongoing Shapewear 87902

MICROFIBRE CUPLESS BODYSUIT BLACK ONG 9.12 39.99 190 37 30 27 31 19 2.1% $1,336 $1,072 80.3%

Lingerie Extras-Ongoing Shapewear 82901

MICROFIBRE HIGH WAIST LONG LEG BRF BLACK ONG 7.73 39.99 190 33 39 27 31 31 1.2% $1,199 $944 78.7%

Ongoing and basics reorders

• Methodology

• Minimums

• Frequency

• Forecasting

• Random check

• Regular and often… don’t over order

See hand out example

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General

• Confirmation that online is the last place to

hold the very last SKU in a style and how

that occurs

• Ongoing: 95% in stock by location by SKU

• Grading - online AAA stands alone

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Replenishment

One question related to replenishment

BB retail capital

Rules, Tips and Tricks

36

• Best sellers must have lower weeks cover

• Ongoing styles need to run tighter cover

• If we're not getting lower weeks cover on best

sellers we're not forecasting properly

• Stock smoothing (transfers/reallocations)

Rules, Tips and Tricks

On Fashion

Your first order is your best order:

repeats quite often fail

37

Never, never, never stop replenishing basics

(ongoing):

38

• Overspend

• Freeze on all orders

• No OTB

Basics are demand driven

Replenishment considerations are:• Sales rate

• Lead time

• Product cycle

• Being in stock

All new products are seasonal and one off, until

sales and customers say otherwise

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There is not ‘a one size fits all’ methodology for

order forecasting, or replenishment

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DC cover “buffer” is a flawed

process - it is actually the ‘we

screwed up’ cover

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Address unacceptable MOQs –

smaller orders more frequent

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Rules, Tips and Tricks

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Holding fabric, raw

materials or forward

order commitments

almost always ends in

tears

Don't think of an "all stores" and

"all product“ approach - one

at a time!

44

Stores

Go visit stores – with a plan

45

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Fast, Flat and Flexible

Structure

46

Less is more

• It’s too easy to fall into the trap of more and

more product

• Depth and width of ranging - we tend to go

too wide and too deep

• Less is more

- in allocations

- in ranging

- in order quantities

• A golden rule - ”one in, one out”

Less is more

We work our store space hard

• High stock intensity (width and depth)

• ‘Less is more’

How do these work together?

48

Why we mostly have too much stock and rarely,

too little

• Afraid to give something up

• Hang on to the last

• If we put in more options, we sell more

• Never range or range extend to fill space or

fixtures

Our Methodology

• Pull system versus push system

• Pull gives the best results for us

with few exceptions

Margin Management

• It’s not the first margin that matters, it’s the final

margin

• There is no secret formula on margin policy

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Open to Buy

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Why we have Open to Buy:

• It tells us exactly how much we are allowed to

spend on product each month

• Is the key control to prevent us from being

overstocked or understocked

• It’s a blunt instrument that forces communication

between merchandise planners, buyers, finance

and the CEO

Open To Buy

What is your role (merch planner) in open to

buy?

▪ Forecasting customer demand

▪ Forecasting replenishment of basics (ongoing)

▪ Make sure there is a %$ for when we find a

gold-vein or a ‘must have’

▪ Based on data, challenge the product team

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Open to Buy

54

• Has failed on too many occasions

• Blunt instrument

• OTB is set around current trend % positive or negative

(not budget)

• CEO sign off/CFO audits

• 1% over trend is acceptable

• GM forecast secondary to sales, GM mustn’t be driver

in OTB, Sales is the primary metric

• Need to determine ideal stock holdings (build up and

decreases) by month fluctuations prior and post

Christmas etc

• Ongoing doesn’t have an OTB – it has a demand

requirement (sales rate and lead time) – demand

driven

What is Data Integrity?

55

• Data integrity is about how accurately the physical

product in our stores is reflected in our system

-Physical quantity of items versus system quantity

-Physical price of item versus system price

• Getting data integrity right is critical to sales

-Overstocks (mark downs)

-Missed sales

• Also important because future decisions/forecasts

are based on historic sales data – if this data is

wrong, we can end up making wrong decisions

• Fraud

What is Data Integrity?

56

• Data Integrity is everything

- You have to be paranoid

- If you see a negative stock on hand, action MUST

be taken

• Tending the garden - keep cleaning it up

• We need to be part of the solution - issues are

inevitable, it’s ongoing, correct it and stay positive

• Everything must go through the system

- No paper

- No workarounds

• Keep a tally/records

• Product hierarchy and descriptions need to be

accurate

• Our data is to be perfect

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Sale and Markdown

Sale and markdown

Clearing our product and quantity mistakes

• It is never an exact science but we can always do better

• Your first markdown is the best markdown

• The numbers never lie

- No emotion

- A dog is a dog

• Weeks cover drives your markdown, nothing else

- Margin does not

- Hopes and wishes do not

- Price pointing does not

• Once a week

• Use similar data from previous sales to determine what

will happen – proactive learning not reactive – but don’t

over think it!58

Sale and Markdown

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When do you take second

markdowns?

60

Rules, Tips and tricks

• IOP

• What is its purpose?

61

ONE QUESTION

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