RETAIL BUYING AND MERCHANDISING MANAGEMENT
PRESENTED BY,DEBASHREE BAGG,
PRATIBHA RANI,M.SABITA
Merchandising:
•It Is the art and science of how the products, features, and services are displayed, advertised, and promoted.
•Helps create the experience you want your customers to have.
•Creates selling opportunities.
• 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.
• Full array of merchandising functions– Buying and selling – Selection, pricing, display, customer transactions– Analysis, planning, acquisition, handling, and control of the
merchandise investments of a retail operation.
Harry and David’s Merchandising Philosophy
FUNDAMENTALS OF MERCHANDISING
• Merchandise ManagementProcess by which a retailer offers the correct quantity of the right merchandise in the right place at the right time and meets the company’s financial goals.
• Sense market trends• Analyze sales data• Make appropriate adjustments in
prices and inventory levels.
MERCHANDISE STRATEGIES• There are many types of strategies:
1. Planning
2. Sourcing
3. Arranging and displays
Planning: Methods of Merchandise Planning:• Gross margin Return on Inventory
(GMROI)• Basic Stock Method• Percentage Variation Method• Weeks’ supply Method• Stock to Sales Method
sourcing• Sourcing means finding or seeking out products from different places,
manufacturers and suppliers
• Sourcing influences a) availability of stock b)margins earned by retailers and c)stock- turns achieved
• It improves service,product offer and overall profitability
• – A five step process
1. Identifying the sources of supply
2. Contacting and evaluating the sources of supply
3. Negotiating with the sources of supply
4. Establishing vendor relationships
5. Analysing vendor performance
• Risk Factors in New Supplier Sourcing– Continuity of Supply
– Time and Cost to develop new sources
– Nondisclosure and Intellectual Property
– Political and geographical issues
INTRODUCTION TO BUYING MERCHANDISE
Four step process:
• Identify sources of supply• Contact sources of supply• Evaluate sources of supply• Negotiate with sources of supply
• Buying view– Buyers manage buying functions
• Buying• Advertising• Pricing
– In-store personnel manage other functions• Assortments• Point-of-sale displays• Employee utilization• Personal selling approaches
TYPES OF BUYING
• Centralized: all buying for the chain is completed from one location– Advantage: Quantity Discounts– Disadvantage: Lack of Specialized to Target Mkt.
• Decentralized: buying decisions made at the local store– Advantage: specialized to market’s needs– Disadvantage: loss of discounts• Corporate buying-voluntary chain
co-operative chain• Buying committee• Resident buying offices
ORGANISATION SOURCES OF MERCHANDISE
SUPPLIER SELECTION• You can search for the potential vendors by looking at several information sources:
– Past experiences– Interviewing with the salesperson of the supplier– Catalogs published by the vendors– Trade Directories
• Classifies suppliers according to the products they make• Includes names of company personnel, financial status, and location of
sales offices
Types of Suppliers
• Local vs. National Suppliers• Distributor vs. Direct• Foreign Sources
Factors to Consider when Selecting Suppliers
• Technical, Engineering and Operations
– Quality History
– Quality Systems
– Design Engineering capability
– Sustaining Engineering capability
– Facilities and Equipment
– Output Capacity
• Ability to ramp up and down quickly• Long term potential
– Flexibility and responsiveness
– Track record of cost reductions
– Logistics expertise
Negotiating with vendors
• Two-way communication
designed to reach an
agreement when two parties
have both shared and conflicting
interests.
Negotiation Issues• Price and gross margin
– Margin Guarantees– Slotting Allowances
• Additional markup opportunities• Purchase terms• Terms of purchase • Exclusivity• Advertising allowances• Transportation
Art for effective negotiations• Have at least many negotiators as the vendor• Choose a good place to negotiate• Be Aware of real deadlines• Separate people from problem• Insist on objective Information • Invent options for mutual gain• Let the other party do the talking• Know how far to go• Don’t burn bridges• Don’t assume
BUYING OF STAPLE MERCHANDISE AND FASHION MERCHANDISE
• Two distinct types of merchandise management systems for managing
1. Staple (Basic) Merchandise Categories• Regular products carried by a retailer
– Grocery store staple examples• Milk• Bread• Canned soup
• Basic stock lists specify inventory level, color, brand, style, category, size, package, etc.
• Continuous demand over an extended time period• Predictable Demand• History of Past Sales• Relatively Accurate Forecasts• Limited number of new product introductions• Hosiery, basic casual apparel• Easy to forecast demand• Continuous replenishment
2. Fashion Merchandise CategoriesProducts that may have cyclical sales due to changing tastes and life-styles
• In demand for a relatively short period of time• Unpredictable Demand• Limited Sales History• Difficult to Forecast Sales• Continuous introductions of new products,
making existing products obsolete• Athletic shoes, laptop computers, women’s apparel
Retailers develop fashion forecasts by relying on:• Previous sales data• Personal awareness• Fashion and trend services• Vendors
ETHICAL AND LEGAL ISSUES IN BUYING MERCHANDISE
• Contractual Disputes• Chargebacks• Commercial Bribery• Slotting Allowances• Buybacks• Counterfeit Merchandise• Gray Markets and• Diverted• Merchandise• Exclusive Territories• Exclusive Dealing• Refusal to Deal• Tying Contracts• Purchase Terms and Conditions• Resale Price Maintenance
THANKYOU