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One of the most difficult tasks facing the retail merchandiser is determining what to carry. Careful planning is necessary if the retailer is to carry the right stock in the right quantities. Thus planning is of great importance in merchandising goods to achieve a profit. To a great; extent, the success or failure of the merchandising division is dependent on the degree and quality of the planning that takes place.
Planning Sales
Actual planning begins with sales. Sales are planned on net basis (gross sales customer returns). Retailer must be aware of factors affecting the customers ability and motivation to buy. Shifts in customer demand occur for a vareity of reasons.
Planning Sales
1. Obtain sales from last year for each month of the plan. 2. Determine projected sales volume for each month in the plan. Consider factors competition, review past sales history and current trends. 3. Figure % increase or decrease of planned sales over last years sales.
Planning Sales
% Sales increase or decrease = this year planned sales last year actual sales ------------------------------------------------------- x 100 last year actual sales
Planning Stocks
The buyer determines the amt of stock needed at the beginning of each month(BOM) in order to to meet the planned sales figures. Retailer use a variety of methods to plan stock in order to provide a balanced inventory in relation to estimated sales. 1. The basic stock method 2. Stock sales ratio method
Average Monthly Sales = Planned sales for the season --------------------------------------No of months in the season
a) Average stock for season = sales for the season ----------------------- = 160000/4 = $ 40000 stock turn for the season b) Average monthly sales = sales for season --------------------------- = 160000/6 = $ 26667 no of months in the season
Solution
c) Basic stock = Average stock Average monthly sales= 40000 26667 = 13333 d) BOM stock = sales for the month + basic stock = 20000 + 13333 = $33333
Stock-Sales Ratio
BOM stock = Planned Monthly Sales x Stock-Sales Ratio Stock-Sales Ratio = BOM Stock -----------------------Net sales for the month
Stock-Sales Ratio
Examples Determine the stock-sales ratio when BOM stock at retail is $50000 and retail sales for the month are $35000?
The girls dept had planned sales of $60000 for the month of April. Past records indicate a stocksales ratio of 5.4. What should be planned BOM stock for month of April?
Plan
Actual
JULY JAN
SEASON TOTALS
Actual
JULY JAN
Actual
JULY JAN
15.5
17.5
19
18
15.5
14.5
15
12
19
16
18
20
Actual
21450
17160
27170
22880
25740
28600
143000
15
12
19
16
18
20
Plan 51.15% 22.00% 0.50% 1.60% 41.50% 34.00% 7.50% 1.9 233772 JULY JAN 94250 14.5
Actual
SEASON TOTALS
65000
21450
17160
27170
22880
25740
28600
14300
15 334522
12 347522
19 357272
16 350772
18 334522
20 328022
205263
Plan 51.15% 22.00% 0.50% 1.60% 41.50% 34.00% 7.50% 1.9 233772 JULY JAN 94250 14.5
Actual
347522
357272
350772
334522
328022
342105*
21450
17160
27170
22880
25740
28600
143000
15 334522
12 347522
19 357272
16 350772
18 334522
20 328022 2052632
Plan 51.15% 22.00% 0.50% 1.60% 41.50% 34.00% 7.50% 1.9 233772 JULY JAN 94250 14.5
Actual
347522
357272
350772
334522
328022
342105*
21450
17160
27170
22880
25740
28600
143000
15 334522
12 347522
19 357272
16 350772
18 334522
20 328022 2052632
135200
140660
144170
123630
119990
136933
800583
Planned Purchase at Cost = Gross Margin% = Profit % + Expense % = 7.5 % + 34.0 % = 41.5 % Cost % = (100 % - 41.5%) = 58.5% Planned Purchase at Cost = Planned purchase at retail x (58.5%) Feb = 135200 x 58.5% = 79092 March = 140660 x 58.5% = 82286 April = 144170 x 58.5% = 84339 May = 123630 x 58.5% = 72324 June = 119990 x 58.5% = 70194 July = 136933 x 58.5% = 80106 ------------Total Purchase at Cost = 468341
Plan 51.15% 22.00% 0.50% 1.60% 41.50% 34.00% 7.50% 1.9 233772 JULY JAN 94250 14.5
Actual
347522
357272
350772
334522
328022
342105*
21450
17160
27170
22880
25740
28600
143000
15 334522
12 347522
19 357272
16 350772
18 334522
20 328022 2052632
135200
140660
144170
123630
119990
136933
800583
79092
82286
84339
72324
70194
80106
468341