merchandise planning.ppt

RETAIL MARKETING UNIT 3 MERCHANDISE PLANNING

MERCHANDISE PLANNING


Concept –

Buying of merchandise & selling it to end consumer


Merchandising can be termed as planning, buying & selling of merchandise .

Challenging function- “ Goods well bought are half sold.”

Merchandising challenge deals with –

Right product

Right Quantity

At right place

At right time

And at right price


Achieving this 5 RIGHTS is key for success

REATAIL MARKETING UNIT 3 MERCHANDISE PLANNING

Merchandise Mgt can be termed as –

Analyse customer

Planning of merchandise to be sold

Acquisition of merchandise

Handling – involves merchandise in its own place

Control on the amt spent on buying merchandise


Factors affecting merchandising function –

merchandising function Merchandise to be carried

Types of stores

Organisation structure

Size of organisation


Merchandiser : - responsible for particular lines of merchandise

Eg- in Deptal store, there may be a merchandiser for

menswear

womenswear

childrenswear


Role & Responsibilities

1)Planning- for merchandise needs , not involved in buying

Estimating consumer demand & impact of changes in retail envt,

Sales forecast - budgets


2) Directing-

Guiding & training buyers

performance


3) Coordinating –

Supervise the work of more than one buyer

Coordinate activities with all buyers


4) controlling-

Not only merchandise performance But also buyer’s performance


The buyer : Role & Responsibilities

Select & order merchandise to be sold

May be responsible for buying for a dept, an entire store,or a chain of stores

Buyer should maintain a balanced inventory


Responsibilities of buyers are –

Developing a merchandising strategy

Planning & selecting merchandise assortment

Vendor selection, development & management

Pricing the merchandise

Inventory mgt – various store formats


RETAIL MARKETING UNIT 3 MERCHANDISEPLANNING

FUNCTION OF BUYING FOR DIFFERENT TYPES OF

ORGANISATIONS


Buying for a single / independent store-

One person – owner & manager

Thorough understanding of buying process

Typically role of buyer is created

Co ordinating purchasing for various products


Writing orders

Handling special orders

Making decisions on merchandise returns

Remerchandising the store

Taking decisions with respect to pricing of product

Planning & coordinating various promotional

activities


Buying for a chain store or a chain of department store -

Operation is larger than independent store

Merchandising in chain store is characterized into-

central buying plans

central merchandising plans

Operates in more than one region

Diverse consumer market


Sales needs to be as close to accurate as possible

Overbuying or underbuying


Buying for non store retailer-

Buying merchandise will vary from that of store retailer

Clear understanding of product consumers buy on net

Uniqueness of product & competitive price




PROCESS OF MERCHANDISE PLANNING


Introduction -


Merchandise planning is defined as Merchandise planning is defined as planning & control of merchandise planning & control of merchandise inventory of the retail firm in a manner inventory of the retail firm in a manner which balances between the expectations which balances between the expectations of the target customer & the strategy of of the target customer & the strategy of the firmthe firm


Sourcing:

BUSINESS

STRATEGY

STORE Format strategy

MerchandisePlanning:RangeAssortmentProductprice

Merchandise

Strategy

Make or buyVendor identifyNegotiationsPlacing the order

Allocation of merchandise to stores

Performance monitoring & evaluation

Store operations & planning

Process of merchandise mgt


PROCESS OF MERCHANDISE PLANNING

Stage 1 - Developing the sales forecast

Stage 2 – Determining the merchandise requirement

Stage 3 – Merchandise control- to open to buy

Stage 4 – Assortment Planning


Stage 1 - Developing the sales forecast

Predicting future sales

Helps in determining inventory needs

How much of each product needs to be purchased ?

Should new product be added to merchandise assortment ?

What price should be charged for the product ?


Process of developing sales forecast –

Review past sales

Analyzing the changes in economic conditions

Sales potential demographic changes


Stage 2 – Determining the merchandise requirement

Planning in merchandise is at two levelscreation of merchandise budget assortment plan

Two methods of developing merchandise plan

Top down planning

Bottom up planning


Top down planning – top mgt works on sales plan & this plan is passed on to merchandising team

Bottom up planning – individual dept managers work on estimated sales projections & then added up to arrive at total sales fig.


Merchandise budget usually comprise of five parts

1 –sales plan , how much of each product needs to be sold

dept –wiseDiv wisestock wise

2- stock support plan , how much stock is needed to achieve sales

3 – planned reductions which may need in case product does not sell


4- planned purchase levels i.e quantity of each product needs to be procured

5 – gross margin = sales – cost of goods sold


LEVEL OF IDENTIFICATION IS STORE ITSELF –

Classification

Within a supermarket

Fresh groceries

Ready to eat snacks

Additives/ pickles

Personal hygiene products

Cooking aids – like ready pastes

Necessities like Dal, sugar, salt,oil

Soft drinks


Merchandise Hierarchy

company Dept Merchandise classification

Merchandise category

Merchandise subcategory

Style price point

SKU


various categories in of product in every Dept.

Eg –ready to eat Dept –biscuits, chips ,wafers, branded snacks like Haldiram’s

Sub Category level –Within chips & wafers – salted wafers, branded wafers, flavored wafers

Style /pack/price- Pack- 100 gmPrice – fixed by retailer


Stage 3 –Merchandise control- the open to buyStage 3 –Merchandise control- the open to buy

It is a tool in the hands of a fully committed small It is a tool in the hands of a fully committed small retailerretailer

In retail Open To Buy is a buzzwordIn retail Open To Buy is a buzzword

Good inventory control is critical to ensuring an Good inventory control is critical to ensuring an adequate level of stock is on hand for the amount of adequate level of stock is on hand for the amount of sales being generatedsales being generated

Having too much inventory ,wrong inventory can Having too much inventory ,wrong inventory can slow cash flow & reduce profits with too many slow cash flow & reduce profits with too many


IF retailer under buys & miss sales opportunities then IF retailer under buys & miss sales opportunities then retailer is not making the potential profitretailer is not making the potential profit

A retailer can be sure to stock the right amount of right A retailer can be sure to stock the right amount of right product at the right time by using OPEN TO BUYproduct at the right time by using OPEN TO BUY

It can be calculated in units or in dollarsIt can be calculated in units or in dollars

OTB is essentially a difference between how much inventory OTB is essentially a difference between how much inventory is needed & how much is actually availableis needed & how much is actually available

This includes –This includes – Inventory on handInventory on hand In transit &In transit & Any outstanding ordersAny outstanding orders


Planned reductions ; it includesPlanned reductions ; it includes

a)a) Planned markdowns –reduction in prices due to bad Planned markdowns –reduction in prices due to bad quality, competitive product, change in trendquality, competitive product, change in trend

b)b)Employee discounts-Employee discounts-

Discounts given to employees for buying companies Discounts given to employees for buying companies productsproducts

c) Shrinkage – c) Shrinkage –

Loss of merchandise due to theft or pilferage Loss of merchandise due to theft or pilferage


Stage 4 – Assortment Planning

Assortment Planning is both extremely important and challenging for retailers.

Assortment –means combination of all products made available in a store. And a set of products offered within a product category

Products share similar product categories

Assortment planning involves determining quantities of each product that should be purchased



Documents

merchandise planning.ppt