RETAIL MANAGEMENT

MODULE 3
BY HENNA PUNJABI
 MERCHANDISE
MANGEMENT AND
PRICING
 Merchandise Management
1. Merchandise Management is the analysis,
planning, acquisition, handling and control
of the merchandise investments of a retail
operation.
 Atmospherics
1. It refers to the design of an environment
through visual communications, lighting,
colours, music and scent to stimulate
customers perceptual and emotional
responses and ultimately to affect their
purchase behavior.
 Atmospherics
1. Visual communication
2. Lighting
3. Music
4. Scent
Merchandise Presentation Techniques
1. Display consistent with the stores image
2. Nature of the product
3. Packaging
4. Product’s profit potential
 Specific Presentation Techniques
1. Idea-oriented presentation
2. Style / Item presentation
3. Colour presentation
4. Price lining
5. Vertical merchandising
6. Tonnage merchandising
7. Frontal presentation
 Fixtures
1. Straight rack
2. Rounder
3. Four-way fixture
4. Gondolas
 Types of merchandise
1. Staple / Basic merchandise
2. Fashion merchandise
3. Seasonal merchandise
4. Fad merchandise
5. Style
6. Assortment
7. Variety of merchandise
8. Width of assortment
9. Depth of assortment
 Principles of merchandising
1. Understand the target market
2. Planning
3. Buy what your customers want
4. Build the right assortment
5. Be consistent
6. Offer value
7. Understand needs
8. Share information
9. Accept mistakes
10.Surprise customer
 Merchandise Planning
Merchandise planning is the planning and
control of the merchandise inventory of the
retailer firm, in a manner, which balances
between the expectations of the target
customers and the strategy of the firm.
 Merchandise Planning
1. Developing sales forecast
(a) Reviewing past sales
(b) Analysing changes in economic conditions
(c) Analysing changes in sales potential
(d) Analyse changes in marketing strategies
(e) Creating sales forecast
2. Determining merchandise requirements
3. Merchandise control
4. Assortment planning
5. Range plan
6. Model stock plan
 Merchandise Category
Category management is considered as the
“new science of retailing” for three basic
reasons.
 Emergence of category management
1. Consumer changes
2. Competitive pressures
3. Economic and efficiency considerations
4. Advances in information technology
Components of category management

Information
Technology

Strategy
Assessment and Organisation
Parameters business al capability
process

Collaborative
relationships
Category management business process
Category definition

Category role

Category assessment
Cate
gory
Category scorecard
revie
w Category strategy

Category tactics

Plan implementation
 Step 1 : Category definition
1. Define consumer need
2. What provides a similar solution to the need?
3. What does the consumer see as substitutes?
4. What does the consumer see as inter-related ?
5. Is the information measurable ?
6. What is the group of products that comprise of
the category ?
 Step 2 : Category Role
1. Traffic builders
2. Transaction builders
3. Cash generators
4. Image creators
5. Excitement creators

Suggested roles :
1. Destination category
2. Product category
3. Seasonal category
4. Convenience category
Step 3 : Category Assessment

Sleepers Winners

Questionable Opportunities
 Step 4 : Category Performance
1. Sales
2. Profits
3. Market share
4. Inventory turnover
5. Changes in assortment

Good performance measures are characterised by :

1. A balanced architecture
2. Total system
3. Allow for comparison of performance over time
4. Timely, accurate, understandable measures
5. Related to corporate strategy
 Step 5 : Category strategies
1. Traffic building
2. Transaction building
3. Turf defending
4. Profit generating
5. Cash generating
6. Excitement creating
7. Image enhancing
 Step 6 : Category tactics
1. Optimal category pricing, promotion,
assortment and shelf management
2. Consumer’s needs, minimum coverage
levels
 Step 7 : Category Plan Implementation

1. Plan approval process

2. Assigning responsibilities
3. Scheduling
 Step 8 : Category Review
1. Review of progress
2. Actual achievement
3. Targets set
4. Modify plan if required
 Process of merchandise sourcing
1. Identifying sources of supply
2. Contacting and evaluating the sources of
supply
3. Negotiating with the sources of supply
4. Establishing vendor relations
5. Analysing vendor performance
Step 1 : Identifying sources of supply
1. Domestic sources, central markets, trade
shows or expositions
2. Contract farming
3. Foreign sources
4. Low cost and good quality
 Step 1 : Identifying sources of supply
Costs associated with global sourcing :
1. Country of origin effects
2. Foreign currency fluctuations
3. Tariffs
4. Foreign trade zone
5. Cost of carrying inventory
6. Transportation costs
 Step 2 : Contracting and evaluating
sources of supply
1. Target market
2. Merchandise
3. Prices offered
4. Terms and services offered
5. Vendor’s reputation and reliability
 Step 3 : Negotiating with vendors
1. Trade discounts
2. Chain discounts
3. Quantity discounts
4. Seasonal discounts
5. Cash discounts
Step 4 : Placing the purchase order
1. Name of the 6. Quantity ordered
purchaser 7. Delivery date
2. Name of 8. Terms of payment
manufacturer 9. Terms of delivery
3. Delivery address 10. Authorisation of
4. Invoice address purchase order
5. Price of products
Step 5 : Establishing vendor relations
1. Sharing information with suppliers
2. If the retailer is a small client of supplier,
they may not be interested
3. Information which benefits supplier is in
turn helpful to the retailer
4. A manufacturer has no idea until retailer
asks for new stock
5. Retailers does sales forecast
 Step 6 : Analysing Vendor Performance

1. Gross margin contribution

2. Adherence to company policy
3. Customer acceptance level
4. Merchandise quality
 Sources of merchandise supply
1. Manufacturers
2. Wholesalers
3. Objectives
4. Resident buying offices :
- Independently owned office
- Co-operatively owned office
- Individually owned office
- Merchandise broken or commission office
 Buying Functions
1. Fulfilling the range and assortment
2. Vendor management (evaluation, selection,
partnership)
3. Vendor development
4. Negotiating with vendors (Trade discount,
Quantity discount, display or promotional
discount, payment discount)
 Buying Cycle
Determine
product
requireme
nt
Monitor
response
Select
take
suppliers
corrective
action

Allocate Vendor
the negotiation
product s

Product
Follow up
pricing
 Lifestyle Merchandising
When a retailer provides merchandise or
knowingly adopts a merchandise strategy,
which will serve the needs of a specific target
audience in keeping with the lifestyles they
lead, it is termed as lifestyle merchandising.
It includes furniture, cookware, accessories,
skincare, body care, hair care, etc.
 Lifestyle merchandising
1. Banana Republic : Accessible Luxury
2. Old Navy : Great fashion, great prices
3. Pepper lime : A fresh online shoe shop
 Private labels
“all merchandise sold under a retail store’s
private label. That label can be the store’s own
name or a name created exclusively by that
store.”
Types :
- Store Brand
- Umbrella Brand
- Individual Brand
Need for a Private Label
Create
unique
merchandi
se

Need
Earn for Address
higher gap in
margins private market
label

Create
customer
loyalty
 Retail Pricing
1. Different strategies are followed by different
retailers. The pricing strategy of discount
store is different from pricing strategy of up
market department store.
2. Demand for the product and value
proposition offered (USP)
3. Store policies and image
4. Competition prevailing
5. Economic conditions
 Setting Retail Prices
1. Customer Price sensitivity
2. Competition
3. Cost
4. Legal and ethical pricing issues
 Pricing strategies
1. Demand oriented
2. Market skimming
3. Market penetration
4. Price bundling
5. Leader pricing
6. Multi-unit pricing
7. Everyday low pricing
8. Odd pricing
9. Single pricing
10.Multiple pricing
 Pricing
1. Variable pricing
2. Individualised variable pricing
3. Self-selected variable pricing
4. Clearance markdowns for fashion merchandise
5. Coupons
6. Price Bundling
7. Multiple-unit pricing
8. Variable pricing by market segment
THANK YOU