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
MERCHANDISE

Carried out at

RETAIL

MERCHANDISING

STRATEGY

FOR

FASHION

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 MAFashion 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

Lucknow, without her teaching, this research would have meant meaningless.

Amity University,

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

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 mens 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 womens apparels and accessories.
Today, stores use aggressive merchandising techniques for mens 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.

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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
womens 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
womens sportswear or mens furnishings, directed by divisional merchandising
managers. In the womens 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,
womens 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
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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 retailers 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 departments 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.

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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.
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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.
Buyers 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 customers wants and needs.
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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.

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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 manufacturers line .However they have to show
enough of a line or collection to represent them properly.

The buyers 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.

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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.

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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 manufacturers 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.
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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 buyers
particular category of merchandise.
Buyers visit different market centers for different needs. Many people imagine a
buyers 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.
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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 retailers 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
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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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HIRERARCHY

DIVISSION

EXAMPLES
Apparel

Supermarket

Electronics

-Ladies, Kids, Accessories

Mens

DEPARTMENT

-Trousers, Suits
Shirts

CATEGORY

-Half sleeves
Full sleeve Formals

SUB CATEGORY

-V.Heusan, Polo, Blackberry

Arrow

BRAND

-Cut away collar

Button Down collar

STYLE

OPTIONS

SAIZE
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COLOR

DESIGN

PRICE
Page 21

Attributes in product:
Attributes can be classified into two categories-

B-Customer Specific

A-Product Specific

Category
Sub Category
Color
Texture
Region
Theme
Design Description
Material Used

User
Occasion
Look
Design Style
Price

Product Category:

Different types of product categories are offered under each product group.
Mens wear
Womens wear

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Mens wear:

Formal wear
Casual wear
Suits and Coats
Track pants
Shorts
Denim shirts
Ethnic wear
Innerwear

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Womens wear:

Formal Shirts
T-shirts and Tops
Denim Skirts
Cargoes
Shorts
Denims
Belts
Slips and spaghettis

Kids wear:

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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 Review

Category Balance
Category Strategies
Category Tactics
Category Implementation

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Category Vision:
This refers to the top managements 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 SKUs 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 SKUs 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 SKUs to the category. This assessment helps
improve the categorys 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.

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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=MRPCost
MRP=Cost+ Markup
MRP=Maximum Retail Price
Markup is based on cost and is expressed in percentage terms.
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Problem: What is the markup percentage for a dress that cost is 200 rupees and
retails for 400 rupees?
Markup %= MRPCost/Cost *100
=400200
=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 MRPNew after markdown/old MRP*100
=400-200/400*100
=50%

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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-

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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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Page 30

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
suppliers
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 coordination.
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

Product Quality
Service Quality
On time Delivery
Customer Focus
Customer service
Reputation
AVERAGE

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Supplier A
2
3
4
2
2
2

Supplier B
5
4
1
4
4
4

Supplier C
3
1
3
3
4
3

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)
b)
c)
d)
e)

Cycle Inventory
Safety stock
Speculative Inventory
Seasonal Inventory
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 customers orders.
Safety Level
84.20%
90.30%
94.50%
97.70%
98.90%
99.50%
99.90%

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Of Std.devi
requirement
1.0
1.3
1.6
2.0
2.3
2.6
3.0

Safety Stock
Requirement
176
230
280
350
406
450
530

Average cycle
Stock
500
500
500
500
500
500
500

Total Average
Inventory
676
730
780
880
906
950
1030

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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.

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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:

POSITIONING
FORMAT TYPE
PITCH
TARGET
CUSTOMER

SHOPERS STOP

LIFESTYLE

WESTSIDE

Excellent shopping
experience
Multi brand

Trendy, Vibrant
,Youth Brand
Multi brand

Style & affordability

Exclusive

Shopping
Latest Fashion
Affordable Style
experience
Affluent consumers Affluent consumers Affluent consumers

Determining the key success factors:

The competitors analysis is done with respect to the following key parameters of
5 Ps.

Positioning
Product
Price
Promotion
People

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Positioning
Parameters
How started

Shoppers Stop

Lifestyle

Westside

The Rahejas 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
First campaign idea Your store. Your Started
with
Taglines
emergedShperstop:The Style
Surprisingly

What they
did

Present
positioning

VISHWA VARUN

Ultimate
shopping
experience
Second
idea
Feel
the
experience while you
shop New idea Start
something new
Started
its
loyalty Started its loyalty
program in 1994: First program in Jan
citizen card.
2001: The inner
circle.
First citizen member The inner circle
base is 1100000.
has a customer
Contribution to sales base of 750000.
66%
Contribution to
sales 40%.

Currently operating
more than 24 store

Currently
operating more
than 13 store

affordable price
New idea Keep
your style alive

Started its loyalty

program in may
2001: Club west.
Club west has a
customer base of
50000
in
Hyderabad.
Contribution
to
sales 60%.
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 signages in green color.
Other signages in black white
Signages 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 signages
Only signages 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.
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 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 Mens 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 womens 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.
Scarfs
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 womens slippers than that of
shoppers stop.
Lifestyle has got more than the four times the collection of womens casual shoes
than that of shoppers stop..
Westside has very limited style options especially for mens category.

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Price
Price points of lifestyle and shoppers stop are almost head on head: except
Mens Jacket
Womens slippers
Womens sports shoe
The price point of Westside is prominently low as it comprises only of private
labels.

Mens 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

Womens 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
womens slippers.
Lifestyle has got maximum option available at price point 1399 for
womens casual shoes.
Gap exists in price point of kids 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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Page 54

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Comparison of promotion elements

90
80
70
60
50

84.5

40
30

60.75

62.5

Shpper Stop

Lifestyle

Series1

20
10
0

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Westside

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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 CSAs

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 customers
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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Page 60

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.
60
50

40
30
Series1

50
20
30
10

20

0
Shoppers stop

Lifestyle

Westside

Que 2: which store has more convenient layout planning?

60
50
40
30

Series1

50
20
30
10

20

0
Shoppers Stop

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Lfestyle

Westside

Page 61

Que 3: Which store has easy availability of sizes?

60
50
40
30

Series1

50
20
27

23

10
0

Shopper Stop

Lifestyle

Westside

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

60
50
40
30
50

Series1

20
30
10

20

0
Shopper Stop

VISHWA VARUN

Lifestyle

Westside

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Que 5: Which one is the most sophisticated outlet?

60
50
40
30

Series1

50
20

35

10

15

0
Shopper Stop

Lifestyle

Westside

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

60
50
40
30

50

Series1

20
30
10

20

0
Shopper Stop

VISHWA VARUN

Lifestyle

Westside

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Que 7: Which brands employee give prompt services?

60
50
40
30
50

Series1

20
10

26

24

Shopper Stop

Lifestyle

0
Westside

Que 8: Which brand give great shopping experience?

45
40
35
30
25
20
15

40

Series1

35

25

10
5
0
Shopper Stop

VISHWA VARUN

Lifestyle

Westside

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Que: Factor which determine the purchase of customer.

50
45
40
35
30
25

Series1

45

20
15
10
5

20
10

0
Color

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5
Fabric

8
Price

12
Quality

Style

Brand

Page 65

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.

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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.

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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

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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 womens apparels and accessories.
Today, stores use aggressive merchandising techniques for mens 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--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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