MERCHANDISE BUYING

AND HANDLING
Merchandise Buying

part of retail management that

involves retailers finding and
purchasing goods from manufacturers
to sell them on behalf of their
business.
How does merchandise buying
work?
Duties of a merchandise buyer
Inventory Planning
 Inventory planning helps companies buy the right amount
of stock and decide how often to reorder. Inventory
planning helps lower the costs of keeping items in stock
and helps make sure there is enough stock for making and
selling items.
 Inventory planning is an essential part of supply chain
management. Supply chain management ensures that raw
materials, work-in-progress items and finished goods move
efficiently from the source or factory to the consumer.
Essentials of Good Inventory Planning
Objectives of Inventory Planning
Challenges in Inventory
Planning
 Advantages of Inventory Planning
• Reduce or eliminate stockouts.
• Reduce or eliminate overstocks, which drain profit margin.
• Optimize stock so you can easily spot slow-moving items you need
to discount.
• Rotate stock to front displays to clear obsolete or perishable items.
• Increase cash flow through inventory flow. Inventory planning is
crucial for smaller businesses, which rely on fast turnover.
• Increase profits with efficient production or robust sales. Outcalt explains,
“In retail, the only way they make money is turning that inventory: bring it
in, get rid of it, whether online or through bricks and mortar. Inventory is
the money tied up on your balance sheet. And the more money tied up on
the balance sheet, the less cash you have and the more debt you have. It’s
simple: the lower the inventory, the better off you are. The higher the turns,
the stronger the retailer. Selling inventory is the only way to make money.”
• Easily retrieve items from the warehouse or stockroom.
• Mitigate theft and abuse. Uncontrolled raw materials and goods can easily
go missing.
• Eliminate redundancies, or an excess of the same object, and prevent
obsolescence, or items that remain too long in inventory.
MERCHANDISE MANAGEMENT

 Analysis: Correctly identify customers needs and wants

 Planning: Merchandise must be purchased -12 months in advance.
 Acquisition: Merchandise must be bought from distributors from or
manufacturers
 Handling: Assure the merchandise is where it needs to be, and in proper
shape to be sold
 Control: Over large inventory investments to ensure adequate returns on
merchandise.
Major Steps in Merchandising
Management Process
 First – starts with Dollar– Merchandising Planning
 Second – Buyer uses an open-to-buy figure to plan the merchandise
assortment for the upcoming season
 Third – Buyer must then determine the source of the different product
inventories
 Fourth – Buyer negotiates and purchases merchandise
 Fifth – All merchandise should be reviewed on a continual basis to see if any
pricing, promotion, or logistical changes are necessary.
Planogram
 Schematic that illustrates how and where retailers merchandise
should be made in which all basic stock items are reviewed.
 Because inventory is the largest investment retailer make, high-
performance retailers use a model called Gross Margin Return On
Inventory.
 GMROI = (gross margin/net sales) x (net sales/ average inventory
at cost)
Dollar- Merchandise Planning

As inventory is sold, new stock must to

be purchased, displayed and sold once
again
Methods of Planning and Calculating
Inventory Levels
Factors affecting methods of estimating
inventory requirements
Shrinkage
Markdowns
Employee Discounts