This action might not be possible to undo. Are you sure you want to continue?
Store strategy Merchandise planning •Product •Price •Range •Assortment •space Sourcing •Make or buy •Vendor •Identification •Negotiations •Placing the order
Merchandise Business strategy strategy
Allocation of merchandise to stores
Performance monitoring &evaluation
Store operation planning
The process of merchandise management
The implications of merchandise planning
Finance Payments to suppliers Profitability measurements
Warehouse and logistics Details of purchase order Details of allocations
Marketing New product introductions Developing advertisements Developing sales promotions
Store operations Space planning Communication about new products& their features
The implications of merchandise planning The following implications on other departments: ØFinance ØMarketing ØWarehousing and logistics ØStore operations 3 .
when the purchase order (PO) is raised on a particular supplier.Finance At the end of the merchandise planning process. Marketing The marketing department needs to be aware of the products that are being purchased. as they may want to create campaigns for advertising the products or for sales promotion. the finance department needs to be informed about it as they are finally the ones who will be making the payments. 4 . Finance will also look into the evolution of the profitability of the merchandise purchased by the buyer.
In case the store has the authority to make purchases at local level.Warehousing and Logistics In many retail organizations. it would help by ensuring that duplication of products does not happen. the features also need to be communicated. When orders are placed for new merchandise. 5 . In case the product is a new product. these functions may be handled by one department. this department needs to know as it is the one that actually received the products and the physical verification of the same. The quantities mentioned in the purchase order need to be tailed with the quantities actually received. information on merchandise to be received in the stores also helps in space planning in the retail store. Store operations The information on the merchandise being purchased needs to be communicated to the retail stores.
THE OPEN TO BUY STAGE IV: ASSORTMENT PLANNING 6 .The process of merchandise planning In these we have four stages to implement the merchandise planning STAGE I: DEVELOPING THE SALES FORECAST STAGE II: DETERMINING THE MERCHANDISE REQUIREMENTS STAGE III: MERCHANDISE CONTROL.
7 . 4. 2. 3.Analyzing changes in the sales potential.Analyzing changes in the economic conditions.STAGE I: DEVELOPING THE SALES FORECAST The process of developing sales forecasts involves the following steps: 1.Analyzing changes in the marketing strategies of the retail organization and the competition.Reviewing past sales.Creating the sales forecast. 5.
The planned purchase levels 5.The gross margins 8 . The creation of the merchandise budget.The stock support plan 3.STAGE II: DETERMINING THE MERCHANDISE REQUIREMENTS Planning in the merchandising is a two levels: 1. The assortment plan. The merchandise budget usually comprises of five parts 1.The sales plan 2. and 2.The planned reductions 4.
The merchandise hierarchy Company Department Merchandise classification category subStyle price point Merchandise category Merchandise SKU 9 .
The language of the budget should be easy to understand. 4.The six-month merchandise plan The following points need to be kept in mind while creating this plan 1. 10 .The merchandise budget should be prepared in advance of the selling season. 3. 2. the merchandise budget must be planned for a relatively short period of time-six month is the normal norm.Since economy is ever changing.The budget should be flexible enough so that changes are not impossible.
Maintains purchases with in the budgeted limits. Open to buy ensures that the buyer 1.Limits over buying and under buying. 11 .Reduces markdowns which may arise due to excess buying. 4.STAGE III: MERCHANDISE CONTROL. 2. 3.THE OPEN TO BUY The purpose of the concept of open to buy is twofold.Prevents loss of sales due to unavailability of the required stock.
STAGE IV: ASSORTMENT PLANNING Assortment planning is both externally important and challenging for retailers. •The range planning process should ensures that overbuying and under buying is limited. so that all the stores can be serviced and the product should be available at all stores across various locations. The term assortment can be defined as ‘the combination of all products made available in a store’ and ‘a set of products offered within a product category’. 12 . •Sufficient quantities of the product should be available. Range plan Good range planning should essentially take care of the following: •The number of items/options available to the customers should be sufficient at all times and should be such that it helps customer make choice.
The model stock plan After determining the money available for buying. This results in the creation of the model stock plan. 13 . a decision needs to be on what to buy and in what quantity.
Analyzing vendor performance.Merchandise Sourcing The term sourcing means finding or seeking out products from different places.Establishing vendor relations. The process of merchandise buying is a five –step process.Contacting and evaluating the sources of supply. 3.Identifying the sources of supply. 14 . 5.Negotiating with the sources of supply. 4. 2. which involves the following: 1. manufacturers or suppliers.
Tariffs: also known as duties. 15 .Country of origin effects: many a times. Costs associated with global sourcing include: 1.Cost of carrying inventory: purchase of goods is always at a price. 2. whether the product will be sourced from the domestic market or from the international market. 3. Important tariffs shield domestic manufacturers from foreign competition and raise money for the government. GATT & MFA affect such matters. It needs to be decided at this time. Depending on when this merchandise is finally sold makes a very big difference on the carrying costs. where the merchandise has been manufactured makes a difference in the final sale of the product.Step I: Identifying the sources of supply The first step in the process of sourcing is to identify the sources of supply. it is a list of taxes placed by a government on imports.
The merchandise and prices offered. 4.Terms and services offered by the vendor. 3.Step II: Contacting and evaluating the sources of supply Contacting a source of supply may be as simple as having a representative visit the office and meet with the buyer and showcase a collection of the merchandise. 16 .The vendor’s reputation and reliability. The decision now need to be taken on the potential vendors. 2.The target market for whom the merchandise is being purchased. The following criteria need to be kept in mind: 1.The image of the retail organization and the fit between the product and the image of the retail organization. 5.
Cash discounts 17 .Step III: Negotiating with the sources of supply The retail buyer then needs to negotiate the price. the delivery dates. Seasonal discounts 5. the discounts. the shipping terms and possibilities of returns. Trade discounts 2. Chain discounts 3. Quantity discounts 4. The following are the types of discounts that could be available to the buyer: 1.
Step IV: Establishing vendor relations Retailers have for long been wary of sharing information with their suppliers. Credible commitments 18 . Mutual trust 2. to create a competitive advantage. To maintain strategic partnerships with vendors. Open communication 3. Common goals 4. Times have changed. and many retail organizations work with their suppliers as a team. the buyers needs to build on: 1.
Merchandise quality 19 . Key criteria considered while analyzing vendor performance are: 1.Adherence to company policy 3.Customer acceptance level 4.Gross margin contribution 2.Step V: Analyzing vendor performance Buyer can draw conclusions on vendor performance by listing out the following: •The total orders placed on the vendor in a year •The initial markup on the products •The markdowns •Transportation expenses if borne by the retailer •The sales performance of the merchandise.
Europe. Second. category management replaces the brand bias that steps from a supplier's interest in maximizing market share with a more objective view based on the consumer’s desires. it involves a systematic process that has been shown to be robust in various retail situations across the US. 20 . it emphasises decisions-making based on complex analyses of consumer data. This is based upon strategic retailing principles that attempt to maximize sales and profits and may also include trade partnerships. Third. South Africa. Australia and Latin America.Category Management Deff : Category management is related to decisions over groups of products that are selected and placed to satisfy use occasions or consumption patterns. scanner data and market-level syndicated data. First. Category management is considered as the ‘new science of retailing’ for three basic reasons.
The key reasons are: § §Consumer changes §Economic and efficiency considerations §Competitive pressures §Information technology advances 21 .The reasons for the emergence of category management A number of specific industry trends are driving the emergence of category management.
an important outcome of the changing economy conditions has been. impacting at. 22 . and will continue to be. population growth rates in Europe and many parts of the developed world have declined and consumer-spending power continuous to shrink.home food spending. In addition.Consumer Changes Consumer needs and lifestyles across the world have changed dramatically over the past decade. increasing consolidation in all segments of the industry. Economic and efficiency considerations Economic factors may also induce the need to adopt a new approach towards managements of products.
23 . Advances in information technology Category management provides the business for the effective development of these new skills and information sources without neglecting to provide for the security considerations of protecting proprietary data.Competitive pressures The emergence of new formats of retail like hyper markets and category killers and the breaking down of global boundaries requires retailers to become more competitive. Success to these formats has typically come at the expenses of traditional retail formats.
without which category management cannot be started and these are therefore called core components. The other four needed to enable the process. without these category management can be started but not institutionalized on an on-going basis. 24 . Two of these are considered essentially.The components of category management Performance measurement Organizational capabilities strategy Trading partner relationships Business process Information technology There are six components that are key to the functioning of category management.
Advantages of CAO •Reduction in manpower costs •Enhancement of efficiency •Assistance in inventory management •Increase in margins •Reducing in variations 25 .Buying systems Computer assisted ordering (CAO) The following crucial aspects must be well-understood and adequately available for the success of CAO •An extremely accurate item inventory record keeping •Financial resources to procure the software •Human resources to manage the system •Strict discipline in operating the system •Complete commitment of all staff members during the process of implementation.
26 . The SKU-based system The SKU based system of inventory management is a more mechanical system and is used for staple merchandise.The SKU-based system.Different buying methods 1. Open-to-buy system The open to buy method of inventory management is the system primarily used for buying fashion merchandise.The open-to-buy system. 2.
2. Making consistency store visits.Coordinating buying and store management activities The four common approaches that are usually adopted by large retailers to coordinate their buying and selling functions: 1. 27 . 4. Assigning employees to coordinate rules. Involving store management in buying decisions. Constantly improving communications between buyers and sellers. 3.
The document that transfers these goods from the warehouse to the respective stores and vice versa is known as ‘stock transfer challan’ (STC) 28 . the merchandise is allocated to stores based on historical demand. the inventory position at the distribution center as well as the stores need. In case of a push distribution strategy.Allocation of merchandize There are primarily two major strategies adopted by retailers globally for allocating merchandise to their stores the push and the pull distribution strategies.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.