Merchandise Strategy

BUYINGBUYINGANDANDMERCHANDISEMERCHANDISEMANAGEMENTMANAGEMENT

- Elkana Timothy Yoe, ST, MM, MT -

OVERVIEWOVERVIEW

Objective:• To understand product life-cycle• To identify customer who are targeted

This session to develop the appropriate retail competencies in relation to buying and merchandising, category management, and merchandise knowledge.

Buying and Merchandise Management (by Elkana Timothy Yoe, ST, MM, MT):

Merchandise Strategy2

• To identify customer who are targeted

OptimumProfit

BASIC PHILOSOPHYBASIC PHILOSOPHY



S T R A T E G Y

ProfitTarget

Delivery _________Delivery ON-TIME

Quality ___________Quality SPECIFIED

Quantity ____________Quantity AS NEEDED

Pricing ________Pricing WORTH



Supplier __________Supplier TRUSTED

Quantity ____________Quantity AS NEEDED

Have the Right ITEM

At the Right TIME

In the Right PLACE

5 RIGHTS IN MERCHANDISING5 RIGHTS IN MERCHANDISING



In the Right PLACE

In the Right QUANTITY

At the Right PRICE

TYPES OF MERCHANDISETYPES OF MERCHANDISE

1. Staple merchandise

2. Assortment merchandise

3. Fashion merchandise

4. Seasonal merchandise



4. Seasonal merchandise

5. Fad merchandise

TYPES OF MERCHANDISE (1)TYPES OF MERCHANDISE (1)STAPLE MERCHANDISE:Regular products/basic items carried by a retailer.

Example:Grocery Store Milk, Bread, etc.Book Store Writing book, pencil, pen, etc.Automotive Oil, Lamp, etc.



Automotive Oil, Lamp, etc.

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

TYPES OF MERCHANDISE (1)TYPES OF MERCHANDISE (1)Inventory Level for Staple Merchandise:



TYPES OF MERCHANDISE (2)TYPES OF MERCHANDISE (2)ASSORTMENT MERCHANDISE:A variety of products which the retailer must carry in order to give customers a proper selection.

Example:Apparel Store Shirt in red color, black color, white color, etc.Bicycle Store Kids bike, BMX, MTB, Road bike, etc.



Bicycle Store Kids bike, BMX, MTB, Road bike, etc.Shoes Store Sport shoes, Formal shoes, Canvas shoes, etc.

Decision on assortment:- product lines, styles, designs, and colors are projected- model stock plan

TYPES OF MERCHANDISE (3)TYPES OF MERCHANDISE (3)FASHION MERCHANDISE:Products that may have cyclical sales due to changing tastes and life-styles.



STAPLE vs FASHIONSTAPLE vs FASHION



Staple Merchandise• Predictable Demand• Relatively Accurate Forecasts• Continuous Replenishment

Fashion Merchandise• Unpredictable Demand• Difficult to Forecast Sales• Merchandise Budget Plan

(Open-to-Buy)

TYPES OF MERCHANDISE (4)TYPES OF MERCHANDISE (4)SEASONAL MERCHANDISE:Products that sell well over non-consecutive time periods.



TYPES OF MERCHANDISE (5)TYPES OF MERCHANDISE (5)FADS MERCHANDISE:Products which are generated by trend of technology, artist, movie, icon, event, etc..



THE PRODUCT LIFE CYCLETHE PRODUCT LIFE CYCLE




Strategy Variable

Introduction Growth Maturity Decline

Target Market

High-income innovators

Middle-income adapters

Mass market Low-income and laggards

Variety One basic Some variety Greater Less



Variety One basic offering

Some variety Greater variety

Less variety

Distribution Intensity

Limited or Extensive

More retailers More retailers

Fewer retailers

Price Penetrating of Skimming

Wide range Lower prices Lower prices

Promotion Informative Persuasive Competitive Limited


STAPLE FASHION SEASONAL FADS

Sales over many seasons

Yes Yes Yes No

Sales of a specific style over many seasons

Yes No Yes No



seasons

Sales vary dramatically from one season to the next season

No Yes Yes No

Illustration(sales against time)

time

sale

s

time

sale

s

timesa

les

time

sale

s

Sales Qty(Unit)

CLASSIC

THE PRODUCT LIFE CYCLE (1)THE PRODUCT LIFE CYCLE (1)



Period

“CLASSIC” PRODUCT LIFE-CYCLE:Product never ‘out-of-date’, there is only a little bit change.

THE PRODUCT LIFE CYCLE (2)THE PRODUCT LIFE CYCLE (2)Sales Qty

(Unit)



FADS

“FADS” PRODUCT LIFE-CYCLE:Product will change in the shortest time (easy come easy go).

Period

THE PRODUCT LIFE CYCLE (3)THE PRODUCT LIFE CYCLE (3)Sales Qty

(Unit)



VacuumPeriod

“RECURRING” PRODUCT LIFE-CYCLE:The product is reintroduced after some periods.

Period

BRAND ALTERNATIVESBRAND ALTERNATIVESManufacturer Brands (National)Designed, produced, and marketed by a vendor and sold by many retailers.

Private Label (Store Brands)Developed by a retailer and only sold in the retailer’s outlets.



Premium

Generic

Comparable to, even superior to, manufacturer’s brand quality with modest price savings.

Target a price-sensitive segment by offering a no-frills product at a discount price.

CATEGORIES OFCATEGORIES OFPRIVATE BRANDSPRIVATE BRANDS



Copycat

Exclusive co-brands

product at a discount price.

Imitate the manufacturer’s brand in appearance and packaging, perceived as lower quality, offered at a lower price.

Developed by a national brand vendor and sold Exclusively by the retailer. Difficult for consumers to compare prices for virtually the same product

RETAILER’SRETAILER’SBRANDING EFFECTSBRANDING EFFECTS



ADVANTAGES

• Help retailers build their image and traffic flow

• Reduces selling/promotional expenses

• More desired by customers

DISADVANTAGES

• Lower margins

• Vulnerable to competitive pressures

• Limit retailer’s flexibility

MANUFACTURER LABELSMANUFACTURER LABELS



• More desired by customers

• Customers patronize retailers selling the branded merchandise

• Large retailers can push some of the financial risk of buying merchandise back onto the vendor

ADVANTAGES

• Unique merchandise not available at competitive outlets

• Exclusivity boosts store loyalty

DISADVANTAGES

• Require significant investments in design, global manufacturing sourcing

• Need to develop expertise in

PRIVATE LABELSPRIVATE LABELS



loyalty

• Difficult for customers to compare price with competitors

• Higher margins

• Need to develop expertise in developing and promoting brand

• Unable to sell excess merchandise

• Typically less desirable for customers

EARLY ADAPTERS

TREND CONSCIOUS

CONSUMER TYPESCONSUMER TYPES



TREND LEADER

TREND FOLLOWER

Documents

Merchandise Strategy