Developing Merchandise Plans

Dr. Gopal Thapa

Tribhuvan University
Merchandising
 Activities involved in acquiring particular goods
and/or services and making them available at the
places, times, and prices and in the quantity that
enable a retailer to reach its goals
Merchandising Philosophy
 Sets the guiding principles for all the merchandise decisions that
a retailer makes
 Should reflect
▪ Target market desires
▪ Retailer’s institutional type
▪ Market-place positioning
▪ Defined value chain
▪ Supplier capabilities
▪ Costs
▪ Competitors
▪ Product trends
Scope of Merchandising
Responsibility
 Full array of merchandising functions
 Buying and selling
 Selection, pricing, display, customer transactions

OR

 Focus on buying function only

Micro-merchandising
 Retailer adjusts shelf-space allocations to respond
to customer and other differences among local
markets
Cross-Merchandising
 Retailers carry complementary goods and services
to encourage shoppers to buy more
Attributes and Functions of Buying
Organizations
Functions Performed
 Merchandising view
 All buying and selling functions
 Assortments

 Advertising pricing

 Point-of-sale displays

 Employee utilization

 Personal selling approaches

Functions Performed (cont.)
 Buying view
 Buyers manage buying functions
 Buying
 Advertising
 Pricing
 In-store personnel manage other tasks
 Assortments
 Point-of-sale displays
 Employee utilization
 Personal selling approaches
Merchandising Versus Store
Management Career Tracks
Devising Merchandise Plans
Forecasts
 These are projections of expected retail sales for
given periods
 Components:
 Overall company projections
 Product category projections

 Item-by-item projections

 Store-by-store projections (if a chain)

Types of Merchandise
 Staple merchandise
 Assortment merchandise
 Fashion merchandise
 Seasonal merchandise
 Fad merchandise
Staple Merchandise
 Regular products carried by a retailer
 Grocery store examples: milk, bread, canned soup
 Basic stock lists specify inventory level, color,
brand, style, category, size, package, etc.
Assortment Merchandise
 Apparel, furniture, auto, and other categories for
which the retailer must carry a variety of products
in order to give customers a proper selection
 Decisions on Assortment
 Product lines, styles, designs, and colors are
projected
 Model stock plan
Fashion and Seasonal Merchandise
 Fashion Merchandise: Products that may have
cyclical sales due to changing tastes and life-styles
 Seasonal Merchandise: Products that sell well over
nonconsecutive time periods
Factors in Planning Merchandise
Innovativeness
Factors in Planning Merchandise
Innovativeness
Factors in Planning Merchandise
Innovativeness
Structured Guidelines for
Pruning Products
 Select items for possible elimination on the basis of
declining sales, prices, and profits, appearance of
substitutes
 Gather and analyze detailed financial and other data about
these items
 Consider nondeletion strategies such as cutting costs,
revising promotion efforts, adjusting prices, and
cooperating with other retailers
 After making a deletion decision, do not overlook timing,
parts and servicing, inventory, and holdover demand
Factors in Planning Merchandise
Quality
Factors in Planning Merchandise
Quality
Factors in Planning Merchandise
Quality
Retail Assortment Strategies
 Width of assortment refers to the number of
distinct goods/service categories (product lines) a
retailer carries
 Depth of assortment refers to the variety in any
one goods/service category (product line) a retailer
carries
 An assortment can range from wide and deep
(department store) to narrow and shallow (box
store
Brands
 Manufacturer (national)
 Private (dealer or store)
 Generic
Timing
 The retailer must decide:
▪ When they are first purchased, displayed and
sold
▪ Peak season, order and delivery time
▪ Routine vs special order, stock turnover, discount
and efficiency of inventory turnover
Allocation
 How much merchandise to place on the sale floor
 How much to place in a stockroom and whether to
use a warehouse
 A chain also apportions products among stores
Category Management
 Category management is a retailing and
purchasing concept in which the range of products
purchased by a business organization or sold by a
retailer is broken down into discrete groups of
similar or related products; these groups are
known as product categories
Category Management
 Merchandising techniques that some firms
including several supermarkets, drugstores,
hardware stores, and general merchandise
retailors, - use to improve productivity
 It is a way to manage retail business that focuses,
on the performance of product category results
rather than individual brands