Retail

Merchandise

Planning

By-

Shahbaaz Ahmed

PGFB1345

Introduction-• Merchandise Management-

Activities involved in acquiring particular goods and services and making them available at

the places, times, prices and quantities that enable a retailer to reach its goals.

• Termed as the analysis, planning, acquisition, handling and control of merchandise

investment of retail operation

ANALYSIS-

• Needs & wants of the target audience

PLANNING

• For future sale of merchandise

ACQUISITION

• Procurement from distributors and mfgs

HANDLING

• Merchandise available at required store at right time and right condition

CONTROL

• Amount of money spent on buying

Factors Affecting the Merchandising Function

Role of Merchandising Manager• Planning :

Policy formulation, forecasting sales for budget period, estimate consumer demand and

impact of changes occurring in retail environment

• Directing:

Guiding and training of buyers

• Co-ordinating:

Coordinate buying effort of many buyers and fit into stores image

• Controlling:

Assessing buyers performance

Divisional Merchandise

manager

Buyer

Associate buyer

Assistant buyer

Planning process-

• Analysis of consumers needs and wants, consumer buying process, sale of high selling products,interaction with sales staff ,analysis of external sources of information

• Steps:

1. Developing a sales forecast

2. Determining a merchandise requirements

3. Merchandise Control- The Open to Buy

4. Assortment Planning

1. Developing a sales forecast-

• Forecasting involves what a consumers may do under a given set of conditions

• Determines the inventory need for the product or category

• Typically answer : How much, new products, price?

• Process:

o Reviewing past sales.

o Analysing the economic conditions.

o Analysing the sales potential

o The marketing strategy of the competitors.

o Creating the forecast.

2. Determining a merchandise

requirements

• Planning at Merchandise takes place at two levels:

1. The creation of merchandise budget

2. The assortment plan

• There are two methods of developing the merchandise plan

1. Top down planning

2. Bottom up planning

Merchandise Budget & Inventory

Planning-• Sales plan- product to be sold

• Stock Support plan- stock needed to achieve sales

• Planned reductions- for weak products

• Planned purchase level-Quantity to be procured

• Gross margins (of each department)

Methods of Inventory planning-

• The Basic Stock Method

• The Percentage Variation Method

• The Stock / Sales Ratio Method

• Stock turn over Rate

The Basic Stock Method

• Basic Stock = Avg.stk for the season – Avg monthly sales for the season

• BOM(Beginning of month) Stock = Planned Monthly Sales + Basic Stock.

The Percentage Variation Method-

• Used when the stock turnover rate is more than 6 times/year

• BOM stock = Avg stock for the season x ½ [1+planned sales for the month / Average Monthly Sales ]

The Stock / Sales Ratio Method-

• Stock to Sales Ratio = Value of Inventory / Actual sales

• Planned BOM Inventory = Stock – Sales Ratio x Planned Sales

Stock turn over Rate-

• Planned Sales (for a period)/ Planned average Inventory (for the period)

3. Merchandise Control- Open to Buy

• Depends on the sales for the month & reductions, merchandise buying can be adjusted.

• Maintains relation between stock and sales

• Limits overbuying & under buying

• Prevents loss of sales due to unavailability of required stock

• Open to Buy = Planned EOM Stock – Projected EOM Stock

4. Assortment Planning• Selection of merchandise a retailer carries.

• Quality of the merchandise- expensive/moderately priced/inexpensive items

• Width of assortment: number of distinct goods and services (product lines) a retailer carries

• Depth of assortment: Refers to variety in any one goods /service category (product line) a retailer

carries

• Store brands or National Brands

Depth & Breadth of merchandise

DEPARTMENT

PRODUCT LINE

BREADTH

DEPTHSTYLES COLOURS SIZES

ZODIAC VAN HEUSEN LOUIS PHILLIPPE ARROW

SHIRTS TROUSERS ACCESSORIES

MENSWEAR

RETAIL ASSORTMENT STRATEGIES

• Wide & Deep : (many product lines & large variety in each)

• Wide & Shallow : (many product lines & limited variety in each)

• Narrow &Deep: (few product lines & large variety in each)

• Narrow &Shallow: (few product lines & few variety in each)

Thank you