retail merchandising strategy for fashion merchandise

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AMITY SCHOOL OF FASHION TECHNOLOGY AMITY UNIVERSITY Project Report On “Retail Merchandising Strategy for Fashion Merchandise” SUBMITTED TO: SUBMITTED BY: SHIKHA CHANTIYA VISHWA VARUN A7820413001 MA-FRM, 2nd SEM Amity School of Fashion Technology AMITY UNIVERSITY, UTTAR PRADESH

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AMITY SCHOOL OF FASHION TECHNOLOGY

AMITY UNIVERSITY

Project Report

On

“Retail Merchandising Strategy for Fashion Merchandise”

SUBMITTED TO: SUBMITTED BY:

SHIKHA CHANTIYA VISHWA VARUN

A7820413001

MA-FRM, 2nd SEM

Amity School of Fashion Technology

AMITY UNIVERSITY, UTTAR PRADESH

Content

Chapter: 1-Introduction 1-27

Merchandising Organization

Responsibilities of the buying line

Responsibilities of buying line

Buying Preparations

Buying & Merchandise planning

A-Procurement and Inventory Management 28-35

B-Information technology in retail business 29-38

C- Comparative Merchandise analysis of National Brands 39-53

Chapter: 2-Objective 54-54

Chapter: 3-Hypothesis 55-55

Chapter: 4-Reserch Methodology 56-60

Chapter: 5-Data Collection 61-61

Chapter: 6- Findings 62-62

Chapter: 7-Reccomendation 63-63

Chapter: 8-Bibliography 64-64

Chapter: 9-Conclusion 65-65

Chapter: 10-Glossary 66-68

DECLARATION

I VISHWA VARUN hereby declares that the project entitled

“RESEARCH ON RETAIL MERCHANDISING STRATEGY FOR FASHION MERCHANDISE”

Carried out at Amity School of Fashion Technology, Lucknow, Uttar

Pradesh has been submitted during the academic year 2013-14 under the valuable guidance of

Ms.Pooja Verma, Director, Amity School of Fashion Technology, Lucknow, Amity University and

keen supervision of Ms. Shikha Chaintia in partial fulfillment of the requirements of the MA-

Fashion Retail Management (MA-FRM) degree of Amity University. Further I extend my declaration

that this report is my original work and was previously not formed the basis for the award of any

degree or diploma.

VISHWA VARUN

Enrollment No: A7820413001

ACKNOWLEDGEMENT

I extend my sincere acknowledgements to Ms.Shikha Chantia my teacher Amity University, Lucknow, without her teaching, this research would have meant meaningless.

I am greatly indebted to Ms.Pooja Verma, Director, Amity School of Fashion Technology ,Amity University Lucknow Uttar Pradesh, for his encouragement, guidance

and assistance in availing this opportunity of practical training.

It gives me immense pleasure to acknowledge and thank all those who have given consistent guidance like my

family member Surabhi Singh, My Father, Shishram Shivrayan, Advice and encouragement in my endeavor. I

would also like to thank all those persons who have spent their Valuable time to contribute the required

information to me and gave me support while doing this project.

I indebted to the reports published on RETAIL MERCHANDISING STRATEGY FOR FASHION MERCHANDISE. All data

and graph belongs to the above reports, wherever used have been duly acknowledged.

VISHWA VARUN

VISHWA VARUN Page 5

Executive Summary

Research provides a basic understanding of the merchandising concept to

underline the relevance of merchandise planning in a retail organization. To

provide information on merchandise grouping, defining the concept of

merchandise hierarchy. It explains what is meant by merchandise buying and

replenishment planning.

This research also covers the planning and carrying out of buying and selling

activities including the responsibilities of buyers. It follows the flows of

merchandise from arrival in the store to purchase by the customers. Today, stores

use aggressive merchandising techniques for men’s and children clothing too.

Fashion influence has also spread to all other areas of retailing from cosmetics

and home furnishings to cookware.

Every area of merchandising responsibility needs planning and organization to

make it function properly and to ensure successful buying and selling.

Merchandising responsibilities are usually divided between two chains of

command .The buying line has responsibility for merchandise content and

assortment; the store line is the liaison between the merchandise organization

and customers. The buying line works behind the scenes; the store line interface

with customers on a daily basis. The goal is to sell merchandise.

The merchandise managers and buyers of the buying line must do all the planning

and other activities necessary to bring the right merchandise in to the store at the

right time to satisfy the store customers.

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Chapter-1-Introduction

Merchandising is the term used to signify articles for sale; it derives from the

word merchant, the actual seller or retailer. Fashion merchandising includes all

the planning and activities necessary to supply the fashion wants and needs of

retail customers. In the past fashion merchandising was usually associated only

with women’s apparels and accessories.

Today, stores use aggressive merchandising techniques for men’s and children

clothing too. Fashion influence has also spread to all other areas of retailing from

cosmetics and home furnishings to cookware.

This research covers the planning and carrying out of buying and selling activities

including the responsibilities of buyers. It follows the flows of merchandise from

arrival in the store to purchase by the customers

Merchandising Organization:

Every area of merchandising responsibility needs planning and organization to

make it function properly and to ensure successful buying and selling.

Merchandising responsibilities are usually divided between two chains of

command .The buying line has responsibility for merchandise content and

assortment; the store line is the liaison between the merchandise organization

and customers. The buying line works behind the scenes; the store line interface

with customers on a daily basis. The goal is to sell merchandise.

VISHWA VARUN Page 7

Responsibility of the store line:

The main responsibility of the store line are operations, to coordinate receiving

and the movement of goods and people within the store, to train sales associates,

to provide customer services, to control expenses, to maintain the building, and

to maintain the security. Above all store line executives must work together, with

merchandise managers, buyers, sales associates to produce positive sales results.

Everything and everyone involved in the operation of the store must be organized

to achieve this goal.

The director of store lines supervises individual store managers in multiple unit

organizations. Store managers are responsible for merchandising, sales,

employees, and the general success of the store. They in turn, usually delegate

responsilities to group sales managers. Department managers and their assistants

run the department, communicate and distribute information about merchandise

to and from management and buyers, putout stock, mark sale merchandise and

supervise sales associates. It is also very important for buyers to have the

experience of working with customers in the store line.

Responsibilities of buying line:

The merchandise managers and buyers of the buying line must do all the planning

and other activities necessary to bring the right merchandise in to the store at the

right time to satisfy the store customers.

General Merchandise Managers:

The retail chief executive officer delegate merchandise responsibilities to several

general merchandise managers or corporate merchandise managers. They set

merchandising policies for the entire store and are responsible for sale volume.

The general or corporate merchandising managers are in charge of several

divisions. The divisions may be related such as general merchandise managers for

women’s wear and accessories, or the divisions may be totally unrelated.

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Divisional Merchandise Managers:

Merchandising responsibility is further segmented into single divisions such as

women’s sportswear or men’s furnishings, directed by divisional merchandising

managers. In the women’s area divisional might be in charge of missy dresses,

missy sportswear, junior dresses. A national retailer with decentralized buying

would have regional merchandising managers instead.

Buyers:

Each division is composed of departments. These departments may be based on

life style, styling categorizes, price ranges or vendors. According to life style,

women’s dresses might be divided into social occasion and career. If categorized

by price ranges the departments might be divided into designer, bridge

better,contemporary,moderate,and budgeting a large chain, buying

responsibilities may be further subdivided, Accessories are subdivided into

handbags,hosiery,hats,jewellery and so on.

Each department is further segmented into classifications, a related group of

merchandiser. A buyer is responsible for the success of one or more

classifications, one department or several departments. One buyer may buy just a

few bridge or designer collections. Each retailer has its own unique breakdown of

classifications and buyer responsibilities.

Buying Preparations:

Careful planning is done to help merchants buy merchandise efficiently and

successfully

The Merchandise Plan:

Management determines a fashion merchandising policy, a long range standard

for fashion buying, selling and related activities. Retailers make up a merchandise

VISHWA VARUN Page 9

plan within the framework of the policy, goals and fashion direction set my

management. Actual sales figures and evaluations from the corresponding season

of the previous year, recorded in computer based forecasting and planning

systems, are used as a basis for the new plan.

The merchandising plan is a financial plan for allocating specific amounts of

money to each department or division for the purchase of an appropriate

assortment of fashion merchandise that will meet consumer demand ad sales

goals. Usually management determines financial plans for the company as a

whole, divides the totals and assigns sale goals to general merchandise managers.

These plans are then further subdivided to divisional managers and buyers who

also work on developing their part of the plan.

Merchandise plans are based on a fiscal calendar, are determined four months to

a year before the selling season, and cover a six month or one year period, the

spring season (February through July) and the fall season (August through

January).The plans are developed on computer spreadsheets which show what

needs to be purchased and sold per month to reach sales and profit goals.

Merchandise Plan Components:

Receipt Plans: Cost of goods that need to be received to sell in the store.

Sales Plans

Mark-up Plans: Adding on to prices to cover costs, see retail pricing.

Mark-down-Plans: Reducing prices to move goods.

Inventory shortages

End of month stock levels: Goods that are in the store

Weeks of supply: How long it will take to sell out merchandise.

Gross Margin: Profits

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Promotional Plans

Stock Turn: Figured by sales /Average stock

Planning Sales Goals

The retailer’s goal is to exceed its own merchandise plan. To make a realistic

estimate of prospective sales, a buyer must consider the following points:

Economic Conditions: Anticipating a recession, buyers tend to buy conservatively,

whereas in a good year, they may buy more in hopes of an increase in business.

Market Trend Analysis

Shifts in Population

Local Retail Competition

Variations in Consumer Demand

Seasonal Consumer Demand: swimsuits for resort and summer and back to

school, for example.

Weather: Mild winters result in poor cost sales.

Holidays: How holidays will affect buying patterns including the number of

shopping days, especially weekends, between thanks giving and Christmas,

weather Easter is early or late.

Physical alteration or expansion of store.

An individual department’s ability to house and display the merchandise

effectively.

Which marketing activities are needed to support the merchandise?

Basic stock merchandise in consistent demand throughout the year or during the

same season each year.

VISHWA VARUN Page 11

The effect of casual dress in the workplace, causal cloths are less expensive than

dress cloths which mean average sales are lower.

Units:

In many cases, the plan also exactly specifies the units, number of garments and

accessories, to be purchased to meet these sales goals. Accessory units are

divided according to the number of handbags, belts, scarves and so on, that

should meet demand. The scarf classification would be further broken down into

the numbers of shapes, prints and solids and desired fabrications. The

merchandise plans may be directed by management or buyers. Unit plans are

recorded into merchandising information system that is used for ordering,

allocation and unit control.

Planning Stock:

The next step in planning is to determine the amount of stock, in terms of rupees

investment, necessary to meet consumer demand and thereby to support

planned sales. Stock must be brought to a peak just before the expected time of

peak selling and enough units must be available to fill the floors. Stock plans are

part of the retailers computer organized financial systems.

The Buying Plan:

The buying plan is a description of the types, quantities, prices and sizes of

merchandise that a buyer expects to purchase from vendors within a specific

period of time. The totals state exactly how much may be spent on merchandise

in each category in line with sales goals and the financial merchandise plan.

The more detailed the buying plan, the less confusing buying decisions will be,

allowing the buyer to concentrate on the fashion aspects of the merchandise

during the seasonal market. The plan must be flexible enough, however, to allow

for revision if conditions change, for example should buyers not find what they

want in the market.

VISHWA VARUN Page 12

Assortment Planning:

A merchandise assortment is a collection of various styles, quantities and prices of

related merchandise, usually grouped under one classification within a

department. The buyer plans to buy a balanced assortment of merchandise to

meet consumer demand and appeal to a particular group of target customers.

Open –To-Buy:

Considering stock on hand at the beginning of any month, the buyer has to

calculate the amount of purchases that can be made if stock and sales are to be

kept in balance. The difference between actual stock and planned stock equals to

Open-T-Buy, the value of planned purchases.

Open -To- Buy=Actual Stock-Planned Stock

The open-To-Buy budget is adjusted according to business. When business is

good, stock is low and needs to be replenished. When business is slow, buying has

to be reduced addition; open-To-buy often has to be based on the amount of

space or real Estate that a buyer has available for specific categories and

merchandiser or for particular vendors.

Buying:

The buyer purchases merchandising accordance with merchandising

plan and sales and profit goals.

Buyer’s role:

A buyers knowledge of merchandise stems from both experience and education.

The ability to evaluate merchandise and judge whether it is suitable for a

customer develops over year of examining all type of merchandise for quality,

styling and price.

It is very important for buyers to have store line experience; they need to be on

the sales floor to learn about customer’s wants and needs.

VISHWA VARUN Page 13

Research:

Market and trend research becomes second nature to the buyer; buyers must

constantly research the following influences.

Demographics and Psychographics.

The effect of economic conditions on demand for certain types and prices

of merchandise.

Global influence on styling and sourcing.

Market and fashion trends.

Influence of the media and celebrities on fashion.

The competitors merchandise offerings.

The buying process is analytical and creative part. The mechanics involve

knowledge of sales histories and the development of merchandising plan.

Buyer-Planner system:

Some retailers separate buying functions into a buyer planner system. Under this

system buyers are able to focus on shopping the market and merchandise

selection as well as financial control, while planers concentrate on distribution.

Planners shape the buy, monitor adherence to the plan, plan distribution to

individual stores, and team up with buyers to maximize their business. Planners

analyze regional differences, designating appropriate merchandise for particular

stores based on sales histories of color preferences, life style needs, climate

variations, and ethnic tastes and so on. They also relocate merchandise to stores

where it is selling best and make sure basic merchandise is kept I stock. Most

stores now have computer based forecasting and panning systems that include

allocation.

VISHWA VARUN Page 14

Buyers as editor:

Buyer can influence consumers buying to a large degree by their selection of

merchandise, which narrow the choice for the consumer. By determining what

parts of a collection will be sold in store and in what quantity. Buyers affect the

consumer perception of a manufacturer’s line .However they have to show

enough of a line or collection to represent them properly.

The buyer’s role in Marketing:

Ideas on how to market and sell the merchandise are thought out ahead. The

buyer makes plans for advertising, including direct mail and e-commerce, visual

merchandising, and special events.

Advertising:

Buyers request ads on the basis of their merchandise plans and negotiate with

vendors for co-op money. They must provide complete information about

merchandise –concerning fabric, colors, styling details, price, sizes, to the

advertising copywriter. The garment or accessory itself must be given to the

illustrator, layout artist, and photographer. The buyer helps determine the

proportion and position of the ad and must carefully check ad copy for accuracy.

He or she must then make sure that the merchandise has delivered and is on the

selling floor with appropriate sign copy when ad runs.

Visual Merchandising:

Buyers may also request window and in store displays for particular merchandise.

They must also make sure that a good selection of that merchandise is on the

selling floor for possible customer purchase.

VISHWA VARUN Page 15

Special Events:

Buyers may initiate special events and fashion shows. For example, the buyer of a

designer collection might arrange with the fashion office for a designer to make a

personal appearance to introduce a new collection.

To evaluate marketing strategies, buyers compare sale statistics two weeks

before ad, presentation, events, the day of, and two weeks after. They try to

determine if these strategies were successful in promoting sales.

Target customers:

The buyer tries to select the right styles, color assortment and fabrics at

acceptance prices for their target customer. Buyers need to keep in touch with

their customers “Lifestyle” to buy merchandise to fit their needs.

Micro versus Macro Merchandising:

Because of the large number of market segments, based on age, ethnicity and

lifestyle, there is increasing need for customizing merchandise. Micro

merchandising, identifying and serving one market-niche, is in response to the

recognition of diverse society with diverse tastes and needs. This means that

national retailers must differentiate their tastes and needs. At retailers with

centralized systems, planners use computer based allocation system to distribute

merchandise appropriately .Micro merchandising is an opportunity for small

retailers and manufacturers because a narrow focus is easier for them.

Buying and Selling Cycle:

The buying and selling cycle is related to the fashion cycle of consumer

acceptance. Therefore a buyers responsibility involve a complete cycle, Planning

what to buy, searching the market and selecting the right merchandise, working

with advertising, display and special events to promote merchandise, training

sales personnel and making down leftover merchandise.

VISHWA VARUN Page 16

Broad Assortment Buying:

Ideally buyers would like to buy broad, but shallow assortment of merchandise at

the beginning of a season to test consumer reaction and then as certain styles

emerges as best sellers, increase stock in depth. By comparing current sale of a

particular style with previous weeks or months figure, a buyer can determine

either sales are rising or declining.

Narrow and Deep Buying:

If a category of a merchandise is very popular or if the buyer feels strongly about

a style, he or she may buy narrow (Just a few style) and deep (Many merchandise

in each size and color)

Short - Cycle Buying:

Buyers use short-cycle buying (Buying close to selling season) to judge market

conditions and trends to respond quickly to the market. Particularly for junior and

contemporary fashion and styles. Also refers to Just in Time Merchandising,

short cycle buying helps in reducing inventory. This is completely dependent on

the manufacturer’s production cycle and availability of merchandise.

Panning Promotions:

Buyers have to plan for ahead for promotions, special buys at low prices. When a

particular item is popular, such as cashmere sweaters, for instance, a buyer might

arrange for a volume purchase at a special price and then pass the savings on to

customers. Many retailers would like to cut down on the practice of constant

sales and promotions, but it is difficult because consumers now expect them.

Planning Markdowns:

Buyers hope to select merchandise with full sell through; they also have to plan

ahead for inevitable markdowns .many stores mark down prices after the

merchandise has been on the selling floor for appropriately eight weeks. Retailers

are speeding inventory turn by marking down to clear the stock.

VISHWA VARUN Page 17

Retailers usually charge manufacturers for markdown allowances to help offset

their losses. Some manufacturers may even suggest to the retailers when it is

permissible to mark down merchandise to make room for new merchandise.

Shopping the Market:

After the buying plan established, fashion buyers shop the market to view the

merchandise available for the coming season. For the retailer the manufacturer is

the supplier, vendor or resource of fashion merchandise.

Buying tips are timed to cover markets that are important for the buyer’s

particular category of merchandise.

Buyers visit different market centers for different needs. Many people imagine a

buyer’s job to be a glamorous one involving many trips to abroad. However only

designing department buyers and fashion directors of large stores attend the

tours.

Many French and Italian designers now have NY showrooms so that buyers do not

necessarily have to go to Europe.

Line Buying versus Trend Buying:

The buyer shops for new fashion both key resources and new ones. Key resources

or core vendors are those who have maintained a reputation for dependability

and whose merchandise sells through because of appropriate styling, quality,

price and nationality advertised brand name. The practice of buying from these

major resources is called line buying.

Matrix System:

Some retailers are requiring that 80 to 90 % of all merchandise be purchased from

core vendors. The most restrictive is the matrix system, strict centralized

merchandising developed by the many companies.

Buyers are limited to a list of this system cuts out small manufacturers who

cannot supply all the store of large group of retailers.

VISHWA VARUN Page 18

Trend Buying:

Buying merchandise for its innovative styling is referred to as trend buying. Trend

buying is especially important for leading fashion stores. Because buyers do not

always have limit to seek out new resources, some retailer is providing vendor

days when manufacturers can come to the store to show their merchandise.

Finding an exciting unique resource can mean an important merchandising

statement for a fashion store.

There is increased focus on fashion, newness and uniqueness so that all stores

should do some trend buying.

Corporate buying:

In the case of major store making a large purchase, buying is often done

management to management by a group of executives including the buyer.

WALMART for example tries to do all of its buying in this manner. In this case, the

buyer is part of buying team.

Retailer –Vendor Alliances:

Manufacturers and retailers try to work together toward mutual success. Vendor

executives, designers, merchandisers and sales representatives suggest

appropriate merchandise for each retailer’s particular customers. Buyers sand

sales representatives continue to work together throughout the selling season

regarding advertising, reorders, markdowns, and sell through .Buyers also provide

vendors with weekly selling reports.

Purchase Orders:

Placing an order for merchandise is considered a contract between the store and

the vendor. Therefore writing an order commits the store to taking the

merchandise if it meets quality expectations and delivery requirements .Standard

purchase orders specify the date of the order, the name and address of the

resource, the term of sale, shipping instructions, the store address, the name of

the department, the quantity ordered, descriptions, prices of styles ordered and

VISHWA VARUN Page 19

obligations between buyer and seller. Purchase orders are most efficiently done

by internet vendor linked computer system, which can instantly supply

information on what goods are available or are in work and what shipping dates

are expected.

The purchase order information becomes part of the retailers total merchandise

information system, which keeps track of merchandise as it is ordered, received

and finally sold. Deliveries are timed so that sufficient quantities or merchandise

are in the store to meet various peaks in the customer demand cycle. The vendor

is committed to meeting these delivery dates or the order may be cancelled or a

discount required.

Automatic Replenishment:

In an effort to maintain stock of basic merchandise, retailers use automatic

replenishment, made possible by electronic data interchange systems that link

them to vendors. This system sends sales and inventory information directly to

vendors so they can plan production.

To implement automatic replenishment, retailers must be willing to adopt a

continuous open-to-buy position for basic merchandise to let suppliers replenish

without any retail management approval. The use of automatic replenishment is

especially important for hosiery and shoes, to make sure that all sizes, colors and

so forth are in stock. The use of automatic replenishment is also growing for other

merchandise.

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Merchandise Planning

For a retailer the objective of merchandise planning is clear, achieving the

following seven ‘RIGHTS’

The Right product

The right place

The Right quantity

The Right Quality

The Right Price

The Right Assortment

The Right Time

In order to satisfy every customer needs the retail store must have the right

product in the right place, in the right quantity with the right quality at right price

with the right mix with the right sizes and at the right time. The function of

merchandising is to achieve all the rights so that sales are high with an ideal level

of inventory holding and thus more profits.

Merchandise Hierarchy:

While planning the merchandise mix, a retail organization has to start with a clear

definition of its merchandise hirerarchy.The merchandise hierarchy is a

disciplined way of grouping the merchandise mix at different levels, starting from

a high level grouping to the lowest level of the stock keeping unit. The grouping

may at times have even more than four –five levels as shown in the following

example.

The merchandise hierarchy forms the platform needed to create the store

merchandise mix.

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DIVISSION Apparel Supermarket Electronics

-Ladies, Kids, Accessories

DEPARTMENT Men’s

-Trousers, Suits

CATEGORY Shirt’s

-Half sleeves

SUB CATEGORY Full sleeve Formals

-V.Heusan, Polo, Blackberry

BRAND Arrow

-Cut away collar

STYLE Button Down collar

SAIZE COLOR DESIGN PRICE

HIRERARCHY EXAMPLES

OPTIONS

VISHWA VARUN Page 22

Attributes in product:

Attributes can be classified into two categories-

Product Category:

Different types of product categories are offered under each product group.

Men’s wear

Women’s wear

A-Product Specific

Category

Sub Category

Color

Texture

Region

Theme

Design Description

Material Used

B-Customer Specific

User

Occasion

Look

Design Style

Price

VISHWA VARUN Page 23

Men’s wear:

Formal wear

Casual wear

Suits and Coats

Track pants

Shorts

Denim shirts

Ethnic wear

Innerwear

VISHWA VARUN Page 24

Women’s wear:

Formal Shirts

T-shirts and Tops

Denim Skirts

Cargoes

Shorts

Denims

Belts

Slips and spaghettis

Kid’s wear:

VISHWA VARUN Page 25

Category Management

Category management in retailing is defined as the process of managing

categories as strategic business units. This produces enhanced business results by

achieving a robust bottom line for each category.

A category is a merchandise group that addresses similar consumer needs and

wants. Goods in a category are displayed and sold together in a retail

environment so that consumer choices are easier, thus enhancing the shopping

experience.

It is felt category management in retailing is similar to brand management in

manufacturing, as product group become the focal point in terms of

development, merchandising and marketing. The category management process

in retailing involves the following steps:

Category Vision

Category Definition

Category Role

Category Assessment

Category Balance

Category Strategies

Category Tactics

Category Implementation

Category Review

VISHWA VARUN Page 26

Category Vision:

This refers to the top management‘s view of what each category out to achieve in

terms of customer satisfaction or value offering and the differentiation thus

achieved for leadership.

Category definition:

This is made based on customer segmentation and the specific SKU’s that belong

to the category. For example a broad category definition can be ‘soft drink’ a

narrower can be ‘aerated soft drink’ and one of the SKU’s within the same can be

‘Pepsi 500ml’.

Category Role:

This defines the objective of the category in the entire merchandise mix and

determines its relative importance. Some categories may play a ‘destination’ role

in the product mix-as in the case of the grocery category in a supermarket-and

some an ‘impulse’ role.

Category Assessment:

The category assessment is done to identify gaps if any between the category

vision and the existing contributing SKU’s to the category. This assessment helps

improve the category’s business by identifying opportunity gaps in sales, stock

turns and profits.

Category Balance score Card:

This helps measure the performance of the retail business. It establishes specific

business target for the category while reflecting on its performance.

Category Strategies:

This aim at achieving the customer off take from the shelves, ringing the

maximum number of transactions, earning maximum margin other objectives.

VISHWA VARUN Page 27

Category Tactics:

Category tactics refer to the tactical requirements to achieve the score card

targets. These tactics are compared with those of the competition to attain the

best advantage and edge and many centre on the areas of assortment, pricing,

space planning, promotions etc.

Category Implementation and Review:

This refers to the store level execution of the category business plan and

strategies and monitoring category performance against the plan to take action

on an ongoing basis.

Successful category management in retailing is a customer driven process. It

enables the retailer to have the right category mix through the preparation and

implementation of an efficient category plan.

Markups and Markdowns in Merchandise Management

Markup is the percentage amount (calculated on cost) added to cost in order to

arrive at the maximum retail price (MRP) for a product. Hence

Markup=Percentage of margin calculated on cost added to arrive at the

MRP.

Cost=MRP--Margin

Margin=MRP—Cost

MRP=Cost+ Markup

MRP=Maximum Retail Price

Markup is based on cost and is expressed in percentage terms.

VISHWA VARUN Page 28

Problem: What is the markup percentage for a dress that cost is 200 rupees and

retails for 400 rupees?

Markup %= MRP—Cost/Cost *100

=400—200

=200/200*100

=100%

Sometime the retailer needs to look at the cost of an item and determine what

the item should retail for. It is fixed if the target customer is willing to pay that

price.

Markdown is the amount reduced from the MRP to arrive at the new retail price.

Markdown is calculated as a percentage of MRP.

Problem: What is the markdown percentage for address whose original MRP is

400 and the new MRP after markdown is 200.

Markdown % = Difference b/w old MRP—New after markdown/old MRP*100

=400-200/400*100

=50%

VISHWA VARUN Page 29

Understanding the Retail Value Chain of Merchandise

To propose a competitive retail strategy it is imperative to first understand the

various functions involved in the different channels of fashion merchandise. A

brief outlook is provided below to understand the value chain. Each function has a

range of processes for successful implementation which is described below-

VISHWA VARUN Page 30

Merchandise Budget Plan for Fashion Merchandise

The merchandise budget plan aims to setup specific merchandise objectives and

to plan financial aspects of the merchandise side of the business. It involves

bellow steps.

Planning Data:

Assortment Plan: Historical precedence is the starting point for developing

assortment plan for any season.

Sale Forecast: It is a simple way to adjust past sales to make projections into

the future. Sources of information for sales forecast could be

Previous sales volumes with real trends are identified.

Published sources

Customer information-Through observation, sales people and market

research.

Observing competition.

Vendors, Distributors, Channel partners and expert judgments.

Method of forecast is mainly

A. Time series-Moving average-Average of several months’ sales, as each new

period sale data is added the average the oldest period is removed from total.

B .Time sales-exponential smoothing-often used for short range forecasting.

New forecast =Old forecast+ f (Actual demand –Old forecast) where f is constant

between 0 and 1 that determine influence actual demand on the new forecast.

Reduction: To have enough merchandise levels apart from sales volume of

inventory may go down due to markdowns, shrinkage and discounts.

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GMROI: Goal for category is planned based on past performance of same

merchandise.

Inventory Turnover: when inventory turnover is planed gross margin is ignored

as the budget plan is an inventory plan and not a pricing of margin control plan.

Average stock to sale Ratio: To achieve planned inventory turnover purchase

must be kept in line with sale forecast with the period. The average BOM stock to

sale ratio helps to do this.

Monthly Planned Purchase: Monthly sales Monthly reductions +EOM Stock+

BOM Stock.

Evaluating the Merchandise Budget Plan

GMROI, Inventory & sale forecast are used for both planning and control as it is

based on top down planning process. After the selling process the buyer

determines how well they actually performed compared to the plan. If actual

GMROI, turnover and forecast are greater than planned then performance is

better than expected. Question should be answered as to why the actual

performance is above or below planned.

Open to Buy Analysis (OTB):

OTB analysis starts where merchandise budget plan ends. The merchandise

budget provides a plan for purchasing merchandise to be delivered in a particular

month. The OTB keeps track of how much is spent each month and how much left

to spend such OTB acts as a buyer checkbook. The purpose of OTB is to keep

actual spending in line with the planned level of purchase to avoid over

investment and can maintain rate of inventory turnover at planned lebels.OTB is

usually kept at retail price.

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Steps in Buying Merchandise:

Gathering data from customers, suppliers, sales staff, competitors and

internet.

Selecting and interacting with merchandise sources-agents, manufacturers.

Evaluating the merchandise-Inspection, sampling.

Negotiating the purchase terms.

Concluding purchase

Receiving and stocking merchandise-storing.GRN, Invoice, Monitoring.

Reordering merchandise-Inventory holding vs ordering costs, turnover, and

cash outlay.

Re evaluating on regular basis.

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A: Procurement and Inventory Management

Sourcing can be defined as the process by which companies acquire raw

materials, parts, components, different product and services from various

suppliers in order to carry out their operations. Such process is called

Procurement. The sourcing process comprises of the bellow mentioned stages.

Supplier selection

Supplier contracts designing

Product design collaborations

Procurement of material

Performance evaluation of suppliers.

Supplier Scoring and Assessment:

Supplier scoring and assessment means rating the supplier‘s

performance.Tradionaly price was the primary characteristic ,however suppliers

were ignored on other characteristic like lead time,quality,reliability and design

capability and moreover the impact of total cost doing business with them. With

the help of detail received by supplier scoring. Supplier selection is done to

identify appropriate suppliers.

Once suppliers are identified supplier contracts need to be formulated and

negotiated with the suppliers and in turn product design collaboration takes

place. While doing this it is necessary to ensure that these designs are

communicated effectively to all parties involved in the production and operations.

The next stage is procurement in which suppliers sends the products in response

to the orders paced and delivered on schedule at the lowest opportunities where

buyers are able to decrease overall cost of the product

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Benefits of sourcing process are

Aggregation of orders resulting in economies of scale.

Reduction in overall cost s and distribution of risks with better co-

ordination.

Better forecasting and planning due to better supplier relations.

Help to reduce inventories.

Some of the scoring points while identifying the right supplier using supplier

scoring and assessment are noted bellow.

Replenishment lead time

Scheduled performance

Supply flexibility

Delivery frequency

Supply quality

Transportation cost

Pricing

Coordination of information

Product design capability

Exchange rate and taxes

Supplier visibility

Supplier Quality Feature Supplier A Supplier B Supplier C

Product Quality 2 5 3

Service Quality 3 4 1 On time Delivery 4 1 3

Customer Focus 2 4 3 Customer service 2 4 4

Reputation 2 4 3 AVERAGE 2.5 3.6 2.8

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Vendor Management

The use of the following sourcing practices makes sourcing easier and managing

vendors efficiently resulting in order costs and increasing the overall profitability

of firm.

Use of multifunctional teams:

Multifunctional groups help develop better strategies for sourcing. It helps

purchases to stress and focus on purchase price. Collaboration between the

purchasing, manufacturing, engineering and planning departments is much more

likely to identify correct costs. This collaboration must be continued up to the

procurement stage to realize the benefits of a good sourcing strategy.

Coordination across regions and business units:

To maximize economics of scale in purchasing and reducing transaction cost,

coordination of purchasing across all levels of firm and supplier is essential.

Evaluation of total cost of ownership:

An effective sourcing strategy should not make price reduction its main objective.

Primarily the factors that influence total cost of ownership should be identified

and use for supplier selection. The performance of the supplier should be

evaluated and its impact on the total cost be quantified. Focusing on total cost of

ownership also allows a buyer to identify opportunities in designing and planning

in better way.

Building long-term relationship with suppliers:

Sourcing itself is essential to both supplier and buyer working together as this

generates more opportunities for savings than two parties working

independently. Trust should be established between the buyer and supplier in

order to maintain long term relationship.

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Inventory Management

Inventory is very large and costly investment that every stage of the supply chain

needs to incur. Every stage works independently to make supply chain

profitable. Thus it is very important that every stage of supply chain co-ordinates

and together forms the inventory policy. A large number of firms make use of

following two approaches in combination when managing the inventory in order

to meet profitable variability.

Use of common components:

This approach involves manufacturer to design common components that can be

used in multiple products which have a predictably variable demand that result in

overall constant for the components.

Developing Inventory for highly demanded Products:

Products that are highly demanded or that have a high predictable demand it is

important to decide upon which of their products will have highest demand and

therefore build inventory for that product in the off season in the off season

because there are less chances of fluctuation in demand for these products closer

to peak season.

Need for Holding Inventory:

Achieve economies of scale.

Balance demand and supply.

Specialization.

Protection from uncertainty and order cycle.

Act as a buffer between the stages of the supply chain.

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Types of Inventory:

a) Cycle Inventory

b) Safety stock

c) Speculative Inventory

d) Seasonal Inventory

e) Dead Stock

a) Cycle Inventory:

Defined as average inventory that exists in the supply chain either due to

production or purchase of products in lot sizes that are larger than those

demanded by the customers.

b) Safety Stock

Safety inventory can be defined as inventory carried for the purpose of satisfying

the demand that exceeds the amount forecasted for a given period of time. Due

to the uncertainty in the demand a product shortage may result. The table bellow

shows the summary of alternate service labels, safety stock levels and also the

total average inventory to be maintained. Fill rate represents the magnitude of a

stock out .It represents the percentage of units demanded that are on hand to fill

the customer’s orders.

Safety Level

Of Std.devi requirement

Safety Stock Requirement

Average cycle Stock

Total Average Inventory

84.20% 1.0 176 500 676 90.30% 1.3 230 500 730

94.50% 1.6 280 500 780 97.70% 2.0 350 500 880

98.90% 2.3 406 500 906

99.50% 2.6 450 500 950 99.90% 3.0 530 500 1030

VISHWA VARUN Page 38

C) Speculative Inventory:

Stock held for reason other than satisfying current demand .Reasons can be bulk

purchases larger than demand to get bulk discounts of a failure of a future price

increase or future shortage expected.

D) Seasonal Inventory:

Form of speculative demand accumulation of inventory before a season begins.

E) Dead Stock:

Products which have no demand registered over a large period of time. Products

are obsolete and block working capital.

Symptoms of Poor Inventory Level:

Increase in number of back orders.

Increase in inventory investment with back orders remaining constant.

High customer turnover rate.

Lack of sufficient space.

Increase in number of orders being cancelled.

Deteriorating relationship with intermediaries in stage of supply chain.

Inventory Holding Cost:

Holding cost is estimated as the sum of the following mentioned costs .Usually

the holding cost is a percentage of the cost of the product.

Cost of Capital:

Weighted average cost of capital on inventory is calculated before taxes are paid.

Spoilage Costs:

Rate at which value of product the firm stores drop following drop in market

value due to quality deterioration usually high on perishable food items.

VISHWA VARUN Page 39

Handling cost:

Include receiving and storage cost of products.

Occupancy cost:

Show an incremental charge in the space cost due t the change n the cycle

inventory. If a firm is charged on of units stored we call it direct occupancy costs.

Miscellaneous costs:

Deal with large number of costs such as costs due to theft, damage, tax and

insurance that may be incurred by the company.

Ordering costs:

Cost associated with placing or receiving an extra order independent of the size of

the order.

Transportation cost:

A fixed transportation cost is often incurred by firms regardless of the size of the

order.

Objective of Inventory control:

Avoid shortage of material

Prevent excess material

Reduce cost.

Provide proper customer service.

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Selective Inventory Control:

Visual Control: Examine inventory visually to determine if additional inventory

required.

Tickler Control: Physically count small portion of inventory each day.

Click sheet control: Record items as it is used on paper for reorder purposes.

Stub Control: Retain a portion of price ticket when an item is sold.

Point of sale Terminal: Relay information on each item used or sold.

ABC Analysis: 20% of the items contribute to 80% of total sales. Decision based

on 80-20 rule

A-Important-Moderate Important-Less Important

FSN Analysis: Based on speed of movement of inventory-Fast, S-Slow, and N-Non

moving goods.

Two Bin Systems: Principle of reorder level physically separates entire stock into

two bins. Reorder quantity EOQ.

Second bin quantity =Minimum STK+Lead time Consume

First bin quantity=Order quantity-Lead time consumption.

HML analysis’-High priced item-Medium priced item-Low priced items.

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B: Information technology in retail business

IT would help retail in providing the right product at the right place at the right

time with a price tag acceptable to customers. It provides hardware and software

capabilities to cover end to end retail business operations and also critical in

efficiently and effectively carrying out all the core functions which would include

global sourcing ,procurement, merchandising compliance,logstics,demand

forecasting ,product innovation, point of sale data management, property

management,marketing,CRM,Loyality Management.

It can leverage sales history and anticipated demand to create an accurate

forecast of customer demand.

Simulate midterm and long term planning options allocate resources and

make strategic sourcing decisions in a timely fashion to best meet

operational goals.

Integrate sourcing, purchasing, production, distribution and transportation

to create a demand plan.

Create a calculated, time phased replenishment plan based on customer

demand forecast and using automated state of the art algorithms within

the supply chain.

Institute real time inventory tracking across all channels enabling the

retailers to manage and monitor stocks and values and minimize the

inventory levels while avoiding out of stock situations.

Ensure an efficient warehouse management system, picking and packing,

controlling logistics documents and in bound monitoring.

Move from a product push to a customer pull approach and reap the

rewards of reduced operating costs and larger profit margins.

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IT applications: The technology perspective

Applications of IT in retail span a very wide spectrum from store front right up to

business intelligence tools integrated with ERP/SCM and CRM applications and

further to MPLS/VPN.

The front end applications are mainly in the form of point of sale terminals and

barcode readers for faster clearance. There are the SCM tools for constraints

based supply chain planning and forecasting.CRM tools cater to trend analysis,

customer usage pattern, purchase, promotion management and lifecycle analysis.

E-Commerce covering inventory visibility, onsite merchandising, cross selling,

price compression and multi channel congruity would be the next phase in retail.

Point of Sale:

POS system capture data about orders at the POS are frequently found in fast

food chains and grocery stores. The POS provide immediate update to sale and

inventory systems and allow firms to monitor sales trends as they happen.

The information available from POS becomes input to the financial accounting

systems which then supply data to marketing information systems.

Bar code/ UPC:

Bar code or Universal Product Code is used in point of sale systems in

supermarket and retail stores. It is a product identifier and is made up of series of

bars and spaces which represent alphanumeric information pertaining to product

code, price. Barcode helps enhance accuracy in demand forecast, real time stock

management, faster checkout at POS, product tracking and tracking and reduced

labeling and administration costs.

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RFID:

Radio frequency identification is a wireless barcode which provides wireless

communication between objects and readers. FID uses embedded microchips

containing information about item, location. It has the ability to identify and track

products and equipment in real time without contact or line of sight. Its offers

reading, waiting, transmitting and storing and updating information. It can track

inventory and tasks performed by employees in store, customer profiles,

transaction history and levels of stock.

VPN:

Virtual private network is a secure connection between 2 points across internet,

enables private communications to travel securely over public infrastructure. It

saves long distance communication costs.

EDI:

Electronic data interchange is the in charge of business information through

standard interfaces by using computers without requiring re-keying information.

Main benefits are saves time and data transmission is immediate, reduced

manual errors, no paper handling.

Data warehousing and data mining:

Retail organizations are data rich but information poor, hence data warehousing

and data mining provides users with tools to store summarized information

analysis tool involves automated discovery of patterns and relationship in data

warehouse.

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C: Comparative Merchandise analysis of national brands

Determining the Competitors:

SHOPERS STOP LIFESTYLE WESTSIDE POSITIONING Excellent shopping

experience Trendy, Vibrant

,Youth Brand Style & affordability

FORMAT TYPE Multi brand Multi brand Exclusive

PITCH Shopping experience

Latest Fashion Affordable Style

TARGET CUSTOMER

Affluent consumers Affluent consumers Affluent consumers

Determining the key success factors:

The competitor’s analysis is done with respect to the following key parameters of

5 P’s.

Positioning

Product

Price

Promotion

People

VISHWA VARUN Page 45

Positioning

Parameters Shoppers Stop Lifestyle Westside

How started The Raheja’s had a property which they wanted to make commercially viable.

Lifestyle is part of the landmark group, a Dubai based retail chain which made its way in India through fashion retailing.

Lakme took over Littlewoods of UK store.whch is now known as Westside owned by Trent.

When Started 1991 in Mumbai 1999 in Chennai 1998 in Bangalore

Taglines First campaign idea emerged‘Shperstop:The Ultimate shopping experience ‘Second idea ‘Feel the experience while you shop ‘New idea ‘Start something new’

Your store. Your Style

Started with ‘Surprisingly affordable price’ New idea ‘Keep your style alive’

What they did

Started its loyalty program in 1994: First citizen card. First citizen member base is 1100000. Contribution to sales 66%

Started its loyalty program in Jan 2001: The inner circle. The inner circle has a customer base of 750000. Contribution to sales 40%.

Started its loyalty program in may 2001: Club west. Club west has a customer base of 50000 in Hyderabad. Contribution to sales 60%.

Present positioning

Currently operating more than 24 store

Currently operating more than 13 store

Currentl operating morethan 29 store.

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Comparison of various Parameters

Shopper stop:

Trial room:

More in no.

Mirrors on 2 sides. Size of mirrors smaller.

Mirrors not aligned from edge to edge due to which the size seems smaller

although it is bigger than that of lifestyle.

Store ambience:

Well designed, beautiful and air conditioned ambience

Gives a classy royal feeling, round decorative staircase in the centre of the

store.

Aisle Space:

Maximum aisle space for convenient movement of both customer and CSA

(during stock replenishment)

Wall and ceiling textures and colors:

Light base color walls and moderate height ceilings.

Wallpapers as per the merchandise segment.

Signage:

Sale signage’s in green color.

Other signage’s in black white

Signage’s depicting styles and size not properly arranged.

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Lifestyle:

Trial room:

More than that of Westside but lesser than that of shopper stop.

Mirrors on three sides aligned from edge to edge which makes it look

spacious.

Store ambience:

Well designed beautiful ambience

AC not sufficient as per the footfalls in the store.

Aisle space:

Sufficient aisle space for convenient movement of both customers and CSA

(during stock replenishment).

Wall and ceilings and colors:

Cream color walls with high ceilings.

Signage:

Less use of signage’s

Only signage’s denoting different sections present

Westside:

Trail room:

Least in no, only 4 in each floor.

Biggest in size but mirror on one side only.

Store ambience:

Well designed interiors, sprawling space and air-conditioned ambience.

VISHWA VARUN Page 48

Gives an energetic, youthful effect.

Use of electronic media to intensify the effect.

Sofas provided for the comfort of the customer.

Aisle space:

Cluttered arrangement of merchandise and less aisle space.

Arrangement of merchandise in a circular format to give an attractive

display.

Wall and ceiling textures and colors:

Cream color walls and low ceilings with extensive use of wood works.

Signage:

Proper and effective use of signage denoting sizes, segment etc.

Special offers like BEST BUY highlighted.

For kids swear distinction made clearly by mention of the relevant age

group.

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Product

It is noted that in most of the categories the no. of style option available in

lifestyle is 20-25% lesser than that of shoppers stop: except footwear category –

Lifestyle shoe mart collection far exceeds that of shopper stop.

In most of the categories the no of style options available in Westside is almost

half of Lifestyle.

4-5 colors are available for most of the styles like for T-shirts, Tops, and Kurtis.

Assortment plan for Men’s Wear:

Private label in shoppers stop and lifestyle does not exist for categories like

Suits and Coats

Jackets

Track Pants

Shorts

Denim Shirts

Ethnic wear (lifestyle had both but price point was not distinct)

Innerwear like vests, underwear, belts etc.

Style option available in formal trousers in shoppers stop, lifestyle and Westside

and almost equal.

Value pack of 3 T-shirts in a set in different colors was being promoted in both

shoppers stop and lifestyle whereas it was not present in Westside.

Innerwear was mostly available in sets.

More of singles counts are used for sport /casual wear shirts across all the brands.

Fast moving sizes 40 & 42 in shirts. 32 &34 in Trousers

Least moving 44 & 46 in shirts and 38& 40 in Trouser.

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Assortment plan for women’s wear:

Presence of only private label in lifestyle and shoppers top.

Formal skirts

Casual skirts

Presence of only national brands in shoppers stop and lifestyle in categories

Cargoes

Track pants

Shorts

Denim Skirts

Category SKD in lifestyle and Westside had almost similar style option.

IKAT, Khadi, mangalgiri are popular among kurtis and SKDs.

Style options available in lifestyle and shoppers stop are almost same in

categories.

Formal shirts

T-shirts and Tops

Denim Skirts

Cargoes

Shorts

Denims

Belts

Slips and spaghettis

Style options available in lifestyle are more than that of shoppers stop for

categories.

Scarf’s

Kurtas

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Assortment plan for kids wear:

There is a dominance of the blue and pink colors.

Party wear frocks present wear constructed by material poly cotton, poly viscose

and other synthetic blends.

Wider options are available for smaller sizes.

Assortment plan Footwear:

Lifestyle has got a very strong merchandise mix as compared to its competitors.

Hawai chappals and kolhapuri shoes are only present in lifestyle.

Lifestyle has got more than double collection of women’s slippers than that of

shoppers stop.

Lifestyle has got more than the four times the collection of women’s casual shoe’s

than that of shoppers stop..

Westside has very limited style options especially for men’s category.

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Price

Price points of lifestyle and shoppers stop are almost head on head: except

Men’s Jacket

Women’s slippers

Women’s sports shoe

The price point of Westside is prominently low as it comprises only of private

labels.

Men’s wear observation:

Maximum options were present in the price point 1199 for both shoppers stop

and lifestyle in formal shirts while it was in price point 699.

Highest price point for suits and jackets present at shoppers stop at 16499

Women’s wear observation:

No distinct price points for private label and national brands in shoppers stop as

well as lifestyle for

Formal shirts

Jackets

Ethnic wear

Scarf

It was observed that there was a vast difference in price points of private labels

and those national brands in shoppers stop and life style for

Suits and coats

Kurtas with yolks (priced at 549) were present in lifestyle and not in shoppers sop

and Westside.

Kurtas with bet at 399 were present in Westside while not in shoppers and

Lifestyle

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Kids wear observation:

Maximum options were present in the price point 399 for both shoppers stop and

lifestyle in tops while Westside it was in price point 299.

Maximum options were present in the price point for both 699 for both shoppers

top and lifestyle in bottoms while in Westside it was in price point 299.

Basic products of lifestyle and shoppers top start at higher price points than those

of Westside.

Footwear wears observation:

Lifestyle has got maximum options available at price point 799 for

women’s slippers.

Lifestyle has got maximum option available at price point 1399 for

women’s casual shoes.

Gap exists in price point of kid’s footwear in lifestyle-like girls shoes are available

for 1500 and 1000 and there is no price point between them

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Promotion

Generally sales promotions used in red color but Shoppers stop is doing in normal

black at white colors, because Black and white became the identity of shoppers

stop.

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Comparison of promotion elements

60.75 62.5

84.5

0

10

20

30

40

50

60

70

80

90

Shpper Stop Lifestyle Westside

Series1

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People

Shoppers stop:

CSA Intensity:

Per 2 brand 3 CSA

CSA capability:

Strong knowledge base.

Proper training for 3 months at the time of joining.

Good PR and communication.

Well groomed and emphasis on customer satisfaction.

No direct recruitment for senior CSA .Juniors are promoted as seniors based on

their performance.

Remuneration structure and incentive scheme:

12th pass 4000 and graduates 6000-8000.

Incentives on sale.

Lifestyle:

CSA intensity:

Per brand 1 CSA.

CSA capability:

Strong knowledge base

Proper training for 6 months at the time of joining.

Good PR and communication skill.

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Recruitment as per their qualification and experience.

Qualification graduate as seniors CSA and 10+2 as junior CSA.

Remuneration structure and Incentive scheme:

Senior CSA 6000-8000

Junior CSA 4000-6000

Incentives on the basis of sale

Westside:

CSA intensity:

Per segment 3-4 CSA’s

CSA capability:

Basic knowledge of the particular segment.

Proper training for 6 months at the time of joining.

Good PR and communication skills.

Remuneration structure and incentive scheme:

Gross salary 6200 in hand 5664 incentives on the basis of sale.

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Chapter: 2-Objective

The objectives of the project work are:

To provide a basic understanding of the merchandising concept. To underline the relevance of merchandise planning in a retail organization. To provide information on merchandise grouping, defining the concept of

merchandise hierarchy.

To explain what is meant by merchandise buying and replenishment planning.

To define category management and focus on its advantages.

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Chapter-3: Hypothesis

During my research I found that Merchandising is a significant function of retailing. It deals with merchandise planning, presentation and management in a retail store with the objective of having the right product in the right place, in the right mix, in the right price at the right time. The merchandise range and mix in a store has to be planned meticulously and grouped in a merchandise hierarchy for a better understanding and analysis of sales and stock. Merchandise presentation too is important for a retail store. Hence a planogram depicting the placement of merchandise in the right places and right quantities requires to be worked out. Category management with a strategic business unit approach helps manage merchandise profitably besides enabling a speedy response to customer’s requirements. Carefully planning of markdowns and prevention of shrinkage will yield better margins for a store. Today market is full of competition, same product offered by various brand, so

need to understand the trends and taste of consumer, for that proper

merchandise and assortment plan is needed. All the finding and

recommendations may be or may not be true; this research is based on data

available as today.

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Chapter-4: Research Methodology

Que 1: Which one is your favorite brand? a. Shoppers stop b. Lifestyle c. Westside

Remark: sample size of 100 people of my research.

Que 2: which store has more convenient layout planning?

50

30

20

0

10

20

30

40

50

60

Shoppers stop Lifestyle Westside

Series1

30

50

20

0

10

20

30

40

50

60

Shoppers Stop Lfestyle Westside

Series1

VISHWA VARUN Page 62

Que 3: Which store has easy availability of sizes?

Que 4: Which brand exchange and return policies are easy?

23

50

27

0

10

20

30

40

50

60

Shopper Stop Lifestyle Westside

Series1

20

30

50

0

10

20

30

40

50

60

Shopper Stop Lifestyle Westside

Series1

VISHWA VARUN Page 63

Que 5: Which one is the most sophisticated outlet?

Que 6: Which brand have latest trend in terms of fashion?

20

30

50

0

10

20

30

40

50

60

Shopper Stop Lifestyle Westside

Series1

50

35

15

0

10

20

30

40

50

60

Shopper Stop Lifestyle Westside

Series1

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Que 7: Which brand’s employee give prompt services?

Que 8: Which brand give great shopping experience?

26 24

50

0

10

20

30

40

50

60

Shopper Stop Lifestyle Westside

Series1

35

25

40

0

5

10

15

20

25

30

35

40

45

Shopper Stop Lifestyle Westside

Series1

VISHWA VARUN Page 65

Que: Factor which determine the purchase of customer.

10 5

8 12

45

20

0

5

10

15

20

25

30

35

40

45

50

Color Fabric Price Quality Style Brand

Series1

VISHWA VARUN Page 66

Chapter-5: Data Collection

Data available on apparel brands website Data analysis of various brands. Direct interview of company executives. Visiting various store and category analysis I visited to stores of Shoppers stop, Lifestyle, Westside.

VISHWA VARUN Page 67

Chapter-6: Findings

Why Merchandising is important for retail business. Crisis of unorganized retail in Inventory control. The lead time between the order and the delivery of different SKUs was not

too high (about 1-2 days). However, in the case of beverages, the lead time needs to be brought down.

The outlets used the option of buying on credit and sometimes they bought the merchandise on cash also. As regards the credit period available for the retailers, the period varied and mostly one month credit period was common.

Premium brands do not have much growth. It is the higher priced merchandise which is contributing to the overall Gross Margin.

Despite being a bottoms centric brand, the Tops market shows some potential.

Frequent replenishments lead to less cycle inventory.

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Chapter-7: Recommendations The new retail store should be positioned in between lifestyle and shopper

stop with emphasis on quality and fashion and latest trends that provides value for money to the customer giving them a wonderful shopping experience.

The upcoming store should have loyalty program. Te outlet should emphasis on brand building as people buy product not as a

brand but as a store product. Same color story should be used both for nesting table as well as for wall

display. The nesting table should be stacked low or else it creates an effect of a

hypermarket. Fast moving sizes should be determined and provisions should be made for

stock replenishment. There should be sufficient style options across all segments and categories.

Merchandise should cover a wide range in terms of price points so that it

caters to different customer segments having different disposable income. Since in different parts of India festivals are important, the store should

promote its merchandise according its demography to Ancash on the festive mood of the customers.

New offerings should be clubbed and displayed in reasonably size and

place. An increase in forecast error accuracy decreases both overstocked and

under stocked quantity and increases firm profit. There are a number of cases of bar code mistakes due to wrong printing or

tagging. Ruggers are the performing brand of the store and Bay Island is a non performing brand for the store.

The store is facing problem of stock out in certain brands and excess stock in other which needs to be balanced.

VISHWA VARUN Page 69

Chapter-8: Bibliography

Marketing Management By-Philip Kotler. Retail Management By-Gibson G.Vegamani Data available on website of Apparel Export Promotion Council of India. Annual reports of India Brand Equity Foundation. Google Direct Interview

VISHWA VARUN Page 70

Chapter-9: Conclusion

Merchandising is the term used to signify articles for sale; it derives from the

word merchant, the actual seller or retailer. Fashion merchandising includes all

the planning and activities necessary to supply the fashion wants and needs of

retail customers. In the past fashion merchandising was usually associated only

with women’s apparels and accessories.

Today, stores use aggressive merchandising techniques for men’s and children

clothing too. Fashion influence has also spread to all other areas of retailing from

cosmetics and home furnishings to cookware.

Implementation of Retail Intelligence software to address the lacunas identified in the current buying process. Proposed and implemented Retail Performs to increase operational efficiency in the Retail Environment. Monitoring of Key performance Indicators. Tracking planned vis-à-vis Actual store wise sales data. Comprehensive Rating methodology for front end sales staff.

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Chapter-10: Glossary Action Alley: The sales area of a store located immediately after entering.

Ad Slick: Ad slicks refer to the final, camera-ready advertisement. It gets its name from the glossy paper on which it is printed.

Anchor Store: A major retail store used to drive business to smaller retailers that physically surround it. These larger department stores or grocery stores are generally part of a retail chain and are the prominent business in a shopping mall.

ANSI: American National Standard Institute

Average Inventory Cost: Average inventory cost is found by adding the beginning cost of inventory for each month plus the ending cost inventory of the last month in the period. If calculating for a season, divide by seven. If calculating for a year, divide by thirteen.

Big Box Stores: Large stand-alone store with varying market niches.

Bill of Lading: A bill of lading is a document used as evidence that a transport company or carrier received goods from a shipper.

Black Friday: Black Friday is the day after Thanksgiving- it's the biggest shopping day of the year.

Brand: A brand is a name, symbol, or other identifying mark for a vendor's goods or services. It is distinct from other vendors.

Break pack: A carton received in the warehouse with two or more inner selling units that can be broken down and shipped to the stores.

Break-even Point: The point in business where the sales equal the expenses. There is no profit and no loss.

Brick and Mortar: Brick-and-mortar store are retail shops with permanent physical locations.

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Business Plan: A detailed document describing the past, present, and future financial and operational objectives of a company.

Case Pack: Merchandise shipped in full cases. Cartons cannot be broken into smaller cases.

Cash Discount: A percentage reduction in price for payment within a specified period of time.

Cash Flow: The movement of money in and out of a business and the resulting availability of cash.

Category Killer: A large retail chain store that is dominant in its product category. This type of store generally offers an extensive selection of merchandise at prices so low that smaller stores cannot compete.

Chain Store: One of a number of retail stores under the same ownership and dealing in the same merchandise.

Comp Sales: Comparable-store sales are a measurement of productivity in revenue used to compare sales of retail stores that have been open for a year or more. Historical sales data allows retailers to compare this year's sales in their store to the same period last year.

Contribution Margin: Contribution margin is the difference between total sales revenue and total variable costs. The term is applied to a product line and is generally expressed as a percentage.

CO-OP: An advertising allowance offered by a vendor, payable upon proof of an ad having been run.

Cost of Goods Sold: The price paid for the product, plus any additional costs necessary to get the merchandise into inventory and ready for sale, including shipping and handling.

Coupon: A promotional tool in the form of a document that can be redeemed for a discount when purchasing goods or services. Coupons feature specific savings amount or other special offer to persuade consumers to purchase specific goods or services or to purchase from specific retailers.

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CRM - Customer Relationship Management: Customer relationship management (CRM) is a business strategy designed to reduce costs and increase profitability by strengthening customer loyalty.

Cyber Monday: Cyber Monday is the Monday after Thanksgiving and one of the busiest shopping days of the year for online retailers. Retailers notice a spike in sales on this day as many consumers who were too busy to shop over the

Thanksgiving weekend, or who did not find what they were looking for, head to the web on Monday from work or home to find bargains.

“People are fretful about lifestyle retailing because the idea that anyone's

immortal soul and deepest longings can be quite so readily anticipated and consolidated with several hundred thousand other like-minded types is worrying.”

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