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Chapter 14. RETAIL MANAGEMENT: A STRATEGIC APPROACH , 10th Edition. Developing Merchandise Plans. BERMAN EVANS. Chapter Objectives. To demonstrate the importance of a sound merchandising philosophy To study various buying organization formats and the processes they use - PowerPoint PPT Presentation
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Chapter 1414Developing Merchandise Plans
RETAIL MANAGEMENT:A STRATEGICAPPROACH,
10th Edition
BERMANBERMAN EVANS EVANS
14-2
Chapter Objectives
To demonstrate the importance of a sound merchandising philosophy
To study various buying organization formats and the processes they use
To outline the considerations in devising merchandise plans: forecasts, innovativeness, assortment, brands, timing, and allocation
To discuss category management and merchandising software
14-3
Merchandising
Activities involved in acquiring particular goods and/or services
and making them available at the places, times, and prices and in
the quantity that enable a retailer to reach its goals
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Merchandising Philosophy
Sets the guiding principles for all the merchandise decisions that a retailer makes
Should reflect * Target market desires* Retailer’s institutional type* Market-place positioning* Defined value chain* Supplier capabilities* Costs* Competitors* Product trends
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Scope of Merchandising Responsibility
Full array of merchandising functions* Buying and selling * Selection, pricing, display, customer
transactionsOR
Focus on buying function only
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Figure 14-1: Nike’s Own Store Merchandising Philosophy
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Micromerchandising
Retailer adjusts shelf-space allocations to respond to customer and other differences among local
markets
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Cross-Merchandising
Retailers carry complementary goods and services to encourage
shoppers to buy more offer warranties
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Functions Performed
Merchandising viewMerchandising view* All buying and selling functions
• Assortments• Advertising pricing• Point-of-sale displays• Employee utilization• Personal selling approaches
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Functions Performed (cont.) Buying viewBuying view
* Buyers manage buying functions• Buying• Advertising• Pricing
* In-store personnel manage other tasks• Assortments• Point-of-sale displays• Employee utilization• Personal selling approaches
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Figure 14-5: Devising Merchandise Plans
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Forecasts
These are projections of expected retail sales for given periods* Components:
• Overall company projections (Estimation)
• Product category projections• Item-by-item projections• Store-by-store projections (if a chain)
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Types of Merchandise
Staple merchandise Assortment merchandise Fashion merchandise Seasonal merchandise Fad merchandise
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Staple Merchandise
Regular products carried by a retailer* Grocery store examples: milk,
bread, canned soup Basic stock lists specify inventory
level, color, brand, style, category, size, package, etc.
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Assortment Merchandise Apparel, furniture, auto, and other
categories for which the retailer must carry a variety of products in order to give customers a proper selection
Decisions on Assortment* Product lines, styles, designs, and
colors are projected
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Fashion and Seasonal Merchandise
Fashion Merchandise: Products that may have cyclical sales due to changing tastes and life-styles
Seasonal Merchandise: Products that sell well over nonconsecutive time periods
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Assessing each Factors in Planning Merchandise Innovativeness
FACTOR RELEVANCE for PLANNING
Target market(s) Evaluate whether the target market is conservative or innovative
Goods/service growth potential
Consider each new offering on the basis of rapidity of initial sales, maximum sales potential per time period, and length of sales life
Fashion trends Understand vertical and horizontal fashion trends, if appropriate
Retailer image Carry goods/services that reinforce the firm’s image
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Table 14-1b: Factors in Planning Merchandise Innovativeness
FACTOR RELEVANCE for PLANNING
Competition Lead or follow competition in the selection of new goods/services
Customer segments Segment customers by dividing merchandise into established-product displays and new-product displays
Responsiveness to consumers
Carry new offerings when requested by the target market
Amount of investment
Consider all possible investments for each new good/service: product costs, new fixtures, and additional personnel
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Table 14-1c: Factors in Planning Merchandise Innovativeness
FACTOR RELEVANCE for PLANNING
Profitability Assess each new offering for potential profits
Risk Be aware of the possible tarnishing of the retailer’s image, investment costs, and opportunity costs
Constrained decision making
Restrict franchisees and chain branches from buying certain items
Declining goods/ services
Delete older goods/services if sales and/or profits are too low
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Figure 14-7: Traditional Product Life Cycle
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Retail Assortment Strategies
Width of assortmentWidth of assortment refers to the number of distinct goods/service categories (product lines) a retailer carries
Depth of assortmentDepth of assortment refers to the variety in any one goods/service category (product line) a retailer carries
An assortment can range from wide and deep (department store) to narrow and
shallow (box store)
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Brands
Private(dealer or store)
Manufacturer(national)
Generic
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Timing & Location
Timing : For new produces the retailer should decide when they are first purchased, displayed and sold the must plan the merchandising flow per during a year
Location: location of products in store and stockroom or warehouse to be used