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Developing Merchandise Plans

International Retail Management

Merchandising

Activities involved in acquiring particular goods/ services and making them available at the

places, times, prices, and in thequantity 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

Breadth, depth, quality of the assortment, store brands vs. national brands, pricing policies

It 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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Micromerchandising

Retailers adjust shelf-space allocations to respond to customer differences and other differences among

local markets.

Micro-Merchandising works by defining local assortments for meeting specifically needs of the local

customers

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Walmart: “Store of Community” Program

Placing merchandise in stores based on community demographics and preferences

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«One size fits all» vs.

Micromerchandising Traditional Product Life Cycle

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Hard discount

market

300-350 m2 area

1000 m2 area and

over

First store was

opened in 2015

Cross-Merchandising

the practice of displaying products from different categories (or store departments) together, in order to get customers interested in additional items at the point of sale

Retailers carry complementary goods and services to encourage shoppers to buy more.

Cross Merchandising helps the customers to know about the various options which would complement their product

Example: Shoe laces, shoe shiners, shoe racks with shoes

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Top Tips about Cross-Merchandising

• Group together products that are related in some way (Correlation -logical connection )

• Create your product display around a central theme.

• The merchandise should be neatly arranged without giving a cluttered look to the store.

• If it’s not performing well, don’t be hesitant to make some changes.(Controling)

• Think like a customer. Ask yourself — does this display make me want to buy the product? If you answered no, it’s probably time to re-think your product display.

• !!! The holidays are a great time to cross-merchandise

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Figure 14-2: Attributes

and Functions

of Buying

Organizations

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Merchandising and Store Functions Performed

Merchandising view All buying and selling functions

Assortments

Advertising pricing

Point-of-sale displays

Employee utilization

Personal selling approaches

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Merchandising and Store Functions Performed (cont.)

Buying 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 14-4a: Merchandising Career Track at

Macy’s

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Figure 14-4b: Store

Management Career Track at

Macy’s

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

• 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

Not chnage much over time

Basic stock lists specify inventory level, color, brand, style, category, size, package, etc.

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Staple Merchandise Example:Milk Section in a Supermarket

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Assortment Merchandise

Apparel, furniture, automotive, 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

– Model stock plan

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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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Fashion and Seasonal Merchandise

• Neon Colors

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Fashion and Seasonal Merchandise

• Ramadan and Holy Feast

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Fashion and Seasonal Merchandise: Tchibo Case

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Factors in Planning Merchandise Innovativeness

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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

Retailer image Carry goods/services that reinforce the

firm’s image

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 investment for each

new good/service: product costs, new

fixtures, and additional personnel

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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

Declining goods/

services

Delete older goods/services if sales and/or

profits are too low

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Traditional Product Life Cycle

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Structured Guidelines for Pruning Products

Select items for possible elimination on the basis of declining sales, prices, profits, and appearance of substitutes

Gather and analyze detailed financial/ miscellaneous data about these items

Consider non-deletion strategies such as cutting costs, revising promotion efforts, adjusting prices, and cooperating with other retailers

After making a deletion decision, do not overlook timing, parts and servicing, inventory, and holdover demand

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Factors in Planning Merchandise Quality

FACTOR RELEVANCE for PLANNING

Target market(s) Match merchandise quality to the wishes of

the desired target market(s)

Competition Sell similar quality or different quality

Retailer’s image Relate merchandise quality directly to the

perception that customers have of retailer

Store location Consider the impact of location on the

retailer’s image and the number of

competitors, which, in turn, relate to quality

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Factors in Planning Merchandise Quality

FACTOR RELEVANCE for PLANNING

Profitability Recognize that high quality goods generally

bring greater profit per unit than lesser-

quality goods

Manufacturer

versus private

brands

Understand that, in the minds of many

consumers, manufacturer brands connote

higher quality than private brands

Customer services

offered

Know that high-quality goods require

personal selling, alterations, delivery, etc.

Personnel Employ skilled, knowledgeable personnel for

high-quality merchandise

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Factors in Planning Merchandise Quality

FACTOR RELEVANCE for PLANNING

Perceived goods/

service benefits

Analyze consumers. Lesser quality goods

attract customers who desire functional

product benefits; High-quality goods attract

customers who desire extended product

benefits

Constrained

decision making

Face reality. Franchises or chain store

managers have limited or no control over

products, so independent retailers that buy

from a few large wholesalers are limited to

the range of quality offered by those

wholesalers

14-36Retail Mgt. 11e (c) 2010 Pearson

Education, Inc. publishing as Prentice Hall

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Width of assortment refers to the number of distinct

goods/service categories (product lines) a retailer

carries.

Depth 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).

Retail Assortment StrategiesWalmart’s Wide and Deep

Assortment

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Decathlon’s Narrow and Deep Assortment

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Brands

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Private Brands

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Private label brands (PLBs), also referred to as “store brands”,

are brands owned by a retailer or wholesaler

Private label growth has been driven by the expansion of large

grocery retailers and propensity of customer preferences to buy

less expensive products

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Private Brands

Generally, private brands are 10-30 % cheaper than leading national brands (NBs)

Premium PLBs are positioned in the same way as successful NBs

“Branded House” (only retailer name used),

“House of Brands” (only separate brand name used)

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Private Brands

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Category Management

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Category management is a merchandising technique used to improve

productivity.

It is a way to manage a retail business that focuses on the performance

of product category results rather than individual brands.

It arranges product groupings into strategic business units to better meet

consumer needs and to achieve sales and profit goals.

Retail managers make merchandising decisions that maximize the total

return on the assets assigned to them.

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Figure 14-13: Applying Category Management

Figure 14-4a: Shelf Logic Software for Category Management Planning

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PLANOGRAM

Schematic drawing of

shelves and fixtures that

helps in making the

optimal use of available

shelf-space in a retail

store

Figure 14-4b: Shelf Logic Software for Category Management Planning

14-48https://www.youtube.com/watch?v=-jNXPGC8wik

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Eye-tracking

• https://www.youtube.com/watch?v=8sfO2AKv8Io

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