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Store Specific Open to buy for menswear in Westside Pune

Submitted by Prabodh Mishra AP 2006 - 2010 NIFT Kolkata

Company Profile

TRENT a Tata Enterprise started its Retail venture in 1998 with its 1st store in Bangalore. Headed by MD, Mr. Noel Tata, the company crossed 460cr turnover in 2007. By the year end 09- 10, Westside had 41 stores across the country.

Objective

To develop an Open to Buy plan for the menswear department of Westside store in SGS Magnum mall, Pune for the 2nd financial quarter of the year 2010- 11.

What is Open To Buy?


Open To Buy (OTB) is the financial budget for retail merchandise.

Tool designed to assist retailers manage and replenish their most significant asset, their inventory investment.

T H E R E TA I C YC LE I W E S T S I E L N D
Result of the business undertaken. Also an important basis for future planning

Sales

Prepared annually Based on last years performance

Budgets

Projections
Amendments to the budgets,revised monthly. Could be more or less than the budgets on account of changes eg early or delayed store openings

The stock in the warehouse is distributed to the stores by allocators based on stock levels and sales of each store.

Distribution

Requirements
Projected sales & opening stock levels are used to compute required intakes

Orders when GRN either in warehouse or the store results it translation into receipts.

Receipts

Commitments
Commitments are translated into orders once the specific like costs, suppliers, technicalities etc are finalized

Orders

Requirements are guidelines for commitments which are to be prepared by buyers . Basically a plan/wish list of lines for a particular month

Need for Store Specific OTB in Westside Pune

Research Methodology

About The Store


Area 25000 sq. ft Identified as Grade A store

Location of the store


SGS Magnum Mall, Pune Area- 200000 sq. ft. Located in Central Pune

Category Studied
Department

Menswear

Documents studied

Distribution monitor

The Distribution Monitor commonly know as DM is used by merchandisers to know exact quantity needed by each store i.e. Open to Ship Quantity (OTS)

The OTS is based on the base stock levels of each store and 1 week sales for the same. The week sale is then factored based on future week sales (taking into consideration festive week/ sale week or for that matter a low selling week

Contd.
Sales Stock pending report The SSP report is cumulative report of the stock, sales and pending on an item level basis.

It also mentions the stock to date and sales for last 3 months of each store and can be utilized extensively for analysis of merchandise on an item level.

It also shows the First date when an item was received in the warehouse along with the last date of receipt if in case of repeat orders.

Observation
Observation

sheets for 4 quarters :

Jan 2009 to Mar 2009 April 2009 to June2009 July2009 to Sept2009 Oct2009 to Dec 2009

Pune Store Sales 2009(for menswear)

To ta l S a l fo r m e n sw e a r : 3 9 3 4 7 e

Pune Store Sales 2008 (for menswear)

To ta l S a l s fo r M e n sw e a r : 2 7 3 5 4 e

Contribution of the 3rd Quarter in Annual Sales (for menswear)

Avg. Performance of Sub Categories in 3rd Quarter of 2008 & 2009

Contd.

Contd.

Steps followed in developing the OTB

calculate the Rate of Sale (ROS)

Estimating next season sales (Moving Average metho

Calculating the percentage share of subcategories in rd quarter Calculating the estimated sales of sub categories Converting the quantity into monetary value

Contd

Calculating the total subcategory value Finding the total category budget Calculating the total budget of the quarter

Calculate the Open to buy value using the OTB formu

Rate of Sale

ROS Rate of Sale is the rate at which an item is sold per week.

It helps in analyzing the quantity to be

purchased for repeat orders. sale

The formula: Total quantity sold/ weeks on

Steps of Moving Average Method

Contd.

Working

Moving Average Method for Ascot Moving Average Method for Richmond Moving Average Method for Westside Moving Average Method for Westsport Moving Average Method for Youth Wear

Budget for Categories


Ascot - Rs. 239237.00 Richmond Rs. 235299.00 Westside Rs. 733565.00 Westsport Rs. 86500.00 Youth wear Rs. 486490.00 Total Budget = Rs. 1781091 .00

Open To Buy Calculation

OTB = estimated next season sales + Planned markdowns + Planned EOQ value Projected BOQ Value OTB = Rs.1781091 + 15% of Rs.1781091 + Rs.68532 Rs.91820 OTB=Rs. 1781091 + Rs.267163.65 + Rs.68532 Rs.91820 = Rs.20,24,966.70

Reference Mathematics for retailing B. Tepper

Conclusion

The total Open to buy value generated for the menswear department at SGS Magnum mall store is: Rs 20,24,966.70

Existing OTB

The centralized OTB doesnt take into account the sales trends in a particular store or a region. Stock sales deviation is quite substantial. Accuracy of the OTB is less when compared to store specific OTBs

Benefits of store specific Open to buy


Sales trends of a particular store can be taken into account for forecast. Budget will be prepared keeping in mind the customer segment of the store. Stock sales variation can be reduced to a greater extent. Planning & Analysis can be done at micro level rather than macro level. The budget will be more accurate.