MANAGING MERCHANDISE

ASSORTMENT
 MERCHANDISE ASSORTMENT

It refers to a collection of varied types of related merchandise that are

intended for the same general use.

A merchandise assortment is usually grouped together in one selling

area of the store.

Assortment plan is a compressive and detailed listing of all the

merchandise that will carry in stock during a given period, classified by
size, type, and price line.

A balance assortment is in which types, quantities, and price lines of

merchandise in inventory closely match the demand of your target
customers.
 DEVELOPING TAILOR MADE
CLASSIFICATION SYSTEM
To evaluate the classification system according to the
department buyer and customer needs we discuss
below

 the purpose of classification,

 explanation for the setup classifications where there is no

existing system.

 Examining how the classifications of a fashion department is

unique.
 PURPOSE OF CLASSIFICATION

Classification is :
 An assortment of units or items of merchandise which are all
reasonably substitutable for each other regardless of who made
the item, the material which it is made, or the part of the store
in which it offered for sale.

Reasons For Subdividing Merchandise Into

Classification
 To precisely define the nature and extent of customer demand
so that merchandise is readily available to satisfy that demand.
 It provides with a means of better planning and control of the
merchandising operation.
 ESTABLISHING CLASSIFICATIONS AND SUB-
CLASSIFICATIONS
Begin the process of setting one up by listing every item at every price line that is
currently in stock and also those which were in stock during the preceding 12
months.

Next sort out the listed items by classification or end use.

After one has established broad classifications on the basis of END USE and non
substitutability, one continues to set up sub classifications.

For merchandise planning and control purposes, each classification and sub
classification is assigned a permanent identification code, usually a number. The
code of classification consists of a fixed range of consecutive numbers. Each sub
classification is assigned a specific range of numbers within the wider range
assigned to the broad classification.

All price lines within departments price range are represented in the assortment
plan. The best selling price lines are appropriately represented with the widest
variety of types, colours, materials and sizes. Duplication of merchandise has
been minimized, if not prevented
“DOES THE SYSTEM REFLECT THE
WAY IN WHICH THE CUSTOMERS
BUY MERCHANDISE?”
 TAILORING THE CLASSIFICATION SYSTEM

If majority of your Customers ask for merchandise by COLOUR , FABRIC,

and SIZE you can put the store brand merchandise together with that of a
number of different DESIGNERS within the same SUB
CLASSIFICTAIONS.

IF
 EXAMPLE: if customers look for blue wool pants in size 10,then you make classification of
all pants together and under it sub classification of all wool pants.
 CONCLUSION: DNKY, CK etc would be in the same sub classification.

HOWEVER
 EXAMPLE: If customers look for Calvin Klein pants in size 10.
 CONCLUSION: All CK pants would be in one SUB classification. And DKNY pants into
another ,and all other pants into another.
APPAREL SOURCING
 Suppliers of Fashion Goods

Suppliers of
Fashion Goods

Suppliers from Suppliers from

Domestic Market Foreign Markets

Local Manufacturers
Buying trips abroad to
Importer wholesaler
market & manufacturers
Exporter Foreign selling agents
Foreign Buying Office
Resident buying Office
Foreign trade fairs
Import trade fairs
 Advantages of Domestic Manufacturers

Delivery
Proven specification
Availability of merchandise in selected quantities
Availability of reorder
Very close control on the merchandise planning and
production
Accommodation of changes due to any reason is easy
Planning and control of stock relatively easy
Permit the stock adjustment to new trends
BUYING FOREIGN MERCHANDISE
 Objectives Of Foreign Buying

Prestige- image store & Uniqueness

Better quality

Lower cost

Specification buying
 Foreign Buying Problems

Variation of quality standards

Deliveries and reorders

Size discrepancy

Monetary problems

Time involved

Other conditions
 Other Problems

Language Barriers

Unethical practices (e.g. Child Labour)

Political unrest
Methods Of Buying Foreign Merchandise

Domestic sources Foreign sources

Domestic importers Liaison Offices

Resident buying Foreign buying

office offices

Foreign selling
Direct Exporters
agents

Import trade fairs

 Domestic Importers/Wholesalers

Stockers of foreign merchandise

Prove to be more useful for smaller stores
Goods can be bought closer to the time of need
Risk involved lies with the importer
Costs higher than direct buying
Offers less exclusivity
No concessions are offered
Very small qty. of merchandise can also be purchased.
Sells through showrooms or directly from warehouse
 Resident Buying Office (RBO)

RBO situated in the same place where the retailers are.

RBO has many retailers as their members.
RBO also offers trend inputs in forms of periodicals and
catalogues to the members.
Goods are sourced keeping the member stores and their target
customers in mind.
The orders can be large or small as they can absorb
Group purchasing plan is also offered which lowers the cost for
the participants.
Commitments must be made far in advance of the selling season
Risk & problems of off shore sourcing are managed by RBO.
 Foreign selling agents

They are a group of foreign manufacturers who may or may not

carry stock in the importing country.

They make periodic trips abroad to be up to date with the foreign

market developments.

Buyer can actually see the merchandise with the styling and
uniqueness.

Orders need not be large as many orders are compiled together

before sending

No guarantee of quality standards, size discrepancies etc.

 Import Trade Fairs

Fairs organized in the importing countries with the goods

from the exporting countries

Some trade fairs feature the fashion merchandise of only

one country, such as Italian Donna Moda.

Although there is an advantage in being able to view so

many lines in one place, because of space limitations,
most manufacturers can only show a small portion of
what they can manufacture.
 LIAISON OFFICE

Store owned foreign buying offices

Located in major fashion centres & in exporting bases of the
world
Advise buyers about new trends
Accompany buyers on their market visits acting as interpreters
and planning market itineraries
Because of their broad & strong base in the local market they get
the best resources according to the need of the buyer
Function as a follow up service to ensure prompt delivery and
quality control
Each liaison office works as a separate profit centre
Types of stores that have such offices are – GAP,NIKE
 Foreign Buying Offices

Generally located in a major city of the foreign buying area and

facilitates indirect exporting
They are independent buying agencies and are also known as
Foreign Commissionaires
They work for many buyers/retailers
They often organize buyer manufacturer meet in their offices and
also take the buyers to visit manufacturer's’ facilities.
They must have very strong vendor base with them.
They do not make purchases for the client unless authorized to do
so
The client pays them fee usually a percentage of the first cost
They then follow up to make sure the delivery is made on time
and the quality is checked
 Direct Exporters

 The manufacturer- exporter undertakes the entire export

process.

 Increases its profit margin by saving on payments to an

intermediary

 Develops a closer relationship with the overseas buyer.

 Cost of establishing another market may overweigh the

monetary benefits of direct exporting

 The exporter may be exposed to more direct risks.

 VENDOR MANAGEMENT
Vendor Partnership:
 A working relationship formed to achieve a mutually beneficial goal
between the retailer and the vendor.

Causes of Conflicts between retailers and vendors:

 Cancellation of merchandise by the retailer.
 Substitution of merchandise by the vendor.
 Merchandise returns and adjustments.
 Delivery and transportation.
 Exclusivity.
 Special orders, reorders and minimum orders.
 Discounts and allowance.
 Unreasonable conduct and dishonesty.
 Techniques of Successful Vendor Negotiations

Act collectively not competitively.

Prepare and gather as much information possible
about the parties.
Know what you want.
Don’t let your ego get in the way.
Learn to make time ally.
If you can’t agree on point one, go to point two.
Be a Creative Risk taker.
Closing the Negotiation.
Develop long term relationships.
 Some matters that are frequently negotiated

Obtaining specific merchandise (for promotions or other specific needs).

Extra markup or markdown money (to help with profitability).

Transportation and delivery charges (to reduce costs).

Cooperative advertising (for media costs or in-store promotions).

Terms of sale (conditions in a purchase agreement between retailer and

vendor that include discounts, delivery and transportations costs).

Dating: A predetermined amount of time during which discounts can be

taken and the invoice is to be paid.