retail

Retail Merchandising 1

Shri rangan

Objectives

To demonstrate the importance of a sound merchandising philosophy

To outline the considerations in devising merchandise plans: forecasts, innovativeness, assortment, brands, timing, and allocation

To discuss category management• To study various buying organization

formats and the processes they use

Retail Merchandising

Definition & the Concept of Retail Merchandising

Role & Responsibilities of a Merchandiser

Fashion Merchandising Merchandise Characteristics Merchandise Management-

Merchandise Mix & Merchandise Budget Basics of Merchandise Accounting

RM - DEFINITION

Retail selling effort that is the principal task of in-store sales personnel through the use of promotions designed by a manufacturer, such as unique displays, giveaways, or discount and premium offers. In this case, merchandising is the act of managing and arranging the merchandise on display in a store so as to promote its sale.

Role & Responsibility of Merchandiser

PlanningDirectingCo-ordinatingControlling

Merchandising Versus Store Management Career Tracks

Functions of Merchandisers at Shopper’s stop

Inventory-turn Management Achieving Sales & Margins Plans Merchandise Availability Management, as per range plan Merchandising strategy & planning Processing of purchase orders Analysis of Data & Sales Budgeting Profitability Targets & Expense Control Vendor/Supplier relations for both, in-house

products as well as for brands.

ARRANGING -MERCHANDISE

Merchandising arrangement

MERCHANDISING ARRANGMENT………

Why making effective use of your space is so important. How to position your departments and products. How to improve store lighting. The importance of atmosphere and cleanliness in your store. How to create great displays and signage.

WHAT WE WILL ACHIEVE AS A BUSINESS……….

The consistently best Display standards against Competition in India

A great environment that will attract & satisfy Customers Showcase to best advantage our product offer Dramatically enhance Customer Service

Managing the Merchandise

Developing a sales forecastDetermining the merchandise

requirementsMerchandise controlAssortment planning

Developing Sales forecast

Reviewing Past salesAnalyzing the changes in Economic

ConditionsAnalyzing the changes in the sales

potentialAnalyzing the changes in the

marketing strategies of the retail organization and the competition

Creating the sales forecast

Forecasts These are projections of expected

retail sales for given periodsComponents:

Overall company projectionsProduct category projections Item-by-item projectionsStore-by-store projections (if a chain)

Determining the merchandise requirements

Merchandise MixRetail communication Mix

Basics of Merchandise Accounting

Merchandising Accounting

Cash FlowThe Balance sheetFinancial RatiosIncome statementsGross- Margin-Return on

Investment

Cash Flow

Cash In Cash Out Negative Cash flow = Cash In <

Cash OutPositive Cash flow = Cash out >

Cash In

Cash Flow Curve

The Balance Sheet

The Balance Sheet is a statement of an organization's Assets, Liabilities and Owners’ Equity at a Particular Point in time.

AssetsLiabilitiesOwner's Equity

Assets

Assets – Owned by an organizationa. Short term (or) Current

Assetsb. Long term

Liability

Liability: Debts owed by an organizationPayment on Short term

Ex: Payment to supplierPayment on Long term

Ex: Mortgage on Land & Building

Investment on Extension, Expansion & renovation

Owner’s Equity

Owner’s Equity : Difference between asset and Liability.

Relationship: Assets = Liabilities + Owner’s Equity

Income statement

Income statement

Profit performance for a specific period of time Income statement is otherwise called

Statement of earnings or Profit & loss statement

Income statement: Revenue – Expenses = Net Income

Profit = Expenses < Revenue = positive Net Income

Loss = Expenses > Revenue = Negative Net Income

Income statement contd…

Income statement can be computed for an entire organization

Individual Store A Group of Store Department

Profit and loss is based on the revenue & expenses directly associated with each unit of business.

Income statement contd…

Components : 5 major components Revenue Cost of goods sold Gross margin Expenses Net Profit

Relationship among the components

Net revenue – Cost of goods sold - Expenses Gross margin Net Profit

Income statement contd…

Relationship among the components Net revenue – Cost of goods sold - Expenses

Gross margin Net Profit

Net revenue : composed of sales, Leasing or renting property or interest on accounts

Net sales = Gross sales – Customer return Gross sales are used to determine the

customer return rates Customer return rate = Customer returns x100

Gross sales

Income statement contd…

High customer return rate is often indicates of issue related

a. Customer serviceb. Qualityc. Fit of merchandise

High sales attest to the ability of an organization buyer to select assortments of goods that are appealing to the store’s target customers.

Income statement contd…

Cost of goods sold (or) Cost of Merchandise sold (or) cost of sales

Cost of goods sold = Billed cost of Merchandise + work room costs +shipping cost – cash Discount - Returns to vendors

Income statement contd…

Shipping cost : Delivery cost for transporting goods from supplier

Workroom costs: activities that prepare merchandise for sale ( steaming & pressing apparel)

Return to vendors : defective or slow selling goods returned to suppliers for credit

Cash discounts : Invoice concessions from suppliers for prompt payment

Income statement contd…

Expenses: Payroll, rent, Utilities, advertising and interest on debt.

Direct Expense: attributable to a specific unit ( store rent )

Indirect Expense: is not attributable to a specific unit. ( news paper advertisement )

Income statement contd…

Gross margin : Difference between sales and cost of goods sold.

Net Income : Gross Margin – Expenses Income can be increased by Increasing sales

Increasing Gross Margin Decreasing cost of goods sold Any combination of above

Component Percentage : Cost of goods sold = cost of goods X 100

Net sales Gross Margin = Gross Margin X 100

Net Sales Expenses = Expenses X 100

Net Sales

GMROI

Particulars Category A Category BSales 300000 250000

Cost of Goods Sold

180000 100000

Gross Margin 120000 150000

Gross Margin % 40% 60%

GMROI

Gross Margin Return on Investment Integrates two performance

Gross Margin Turn Over

To create a single measure of performance

GMROI = Gross Margin X Net sales Net Sales

Average InventoryGMROI = Gross Margin / average Inventory

Key terms

Assets

Balance sheet

Cash discount

Cash Flow

Component Percentage

Cost of goods sold

Current ratio

Expenses

Factor

GMROI

Gross sales

Income statement

Liability

Net Income

Net Loss

Net Sales

Return to Vendor

Owner’s Equity

Time Series Comparison

Workroom cost