CÁC KHÁI NIỆM VỀ MERCHANDISER BẰNG TIẾNG ANH

UNDERSTANDING RETAIL CONSUMER RETAIL MERCHANDISING What is Merchandising Merchandising consists of the activities involved in acquiring particular goods and services and making them available at the p.

RETAIL MERCHANDISING

What is Merchandising

• Merchandising consists of the activities involved in acquiring particular goods and services and making them available at the places, times,

prices and quantities that enable a retailer to reach its goals.

• A merchandising philosophy sets the guiding principles for all the

merchandising decisions the retailer makes.

• Must reflect the target market desires, retailers institution type, the marketplace positioning, the defined value chain, supplier capabilities, cost, competitors and product trends.

• Drives every product decision, from what product lines to carry to shelf space allotted to different products to inventory turnover to pricing

Merchandising Philosophy

Retailer needs to decide:

• Breadth of assortment (narrow or wide)

• Depth of assortment (deep or shallow)

• Quality of assortment (high/med/low)

• Store brands or national brands

• Pricing policies

Merchandise management

• Includes the planning, acquisition, analysis, handling and control of merchandise and investment of the

retail operation

- analysis: needs & wants of the target audience

- Planning: for future sale of merchandise

- acquisition: procurement from distributors and mfgs

- Handling: merchandise available at required store at right time and right condition

- Control: Amount of money spent on buying

• Micro merchandising: Retailer adjusts shelf space allocations to respond to customer and other differences amongst the local markets Data mined through the data base Eg space for cereals for adults.

• Cross merchandise: carries complementary goods and services to encourage shopper to buy more Eg apparel stores and accessories (shirts and scarves, frypans and scrubbers)

ATTRIBUTES AND FUNCTIONS AFFECTING THE BUYING ORGANIZATION

LEVEL OF FORMALITY

Formal

DEGREE OF CENTRALIZATION

Centralized

• Specialized organization: Separate buyers for each section Greater expertise and more

personnel required

retailers and very small retailers

• Outside buying: external source is hired on a fee basis Used

by small or medium sized retailers.

• Resident buying office: touch with key market trends,

provide data and contacts.

• Cooperative buying: Group of retailers come together to

avail of volume discounts

Functions performed

• Merchandising view: oversee all buying and selling functions ,including assortments, advt, pricing, point of sale displays, employee

utilization and personal selling approaches

• Buying view: Merchandise personnel oversee the buying of products, advt and pricing while

in store personnel oversee the assortments, displays, employee utilization and sales

presentation

• Plans proper merchandise assortments,styling,sizes,qty

• Negotiates with and evaluates the vendors

• Oversees in store displays

• Attuned to trends in marketplace, must be able to

bargain with suppliers, travel to the market place

• Prepare detailed business plans

Divisional Merchandise manager Store manager

Merchandising track Store management track

MERCHANDISING PLANNING

Role of Merchandise Manager

• Planning : Policy formulation, forecasting sales for budget period, estimate consumer demand and impact of changes occurring in retail environment

• Directing: Guiding and training of buyers

• Co-ordinating: coordinate buying effort of many buyers and fit into stores image

• Controlling: assessing buyers performance

Types of Merchandise

• Staple: regular products carried Eg milk, eggs, bread

• Assortment: Apparel, furniture

• Fashion : Products which have a cyclical sales due to changing tastes and lifestyles

• Seasonal: change according to seasons Eg AC

• Fad: high sales for a short period of time Eg Harry Potter

Type of stock plans

• Basic stock list: specifies the inventory level, color, brand, style, category, size, pack etc

• Model Stock plan: project no of specific items such as no of red, green and blue sweaters

Items are ordered according to popular size

and colors

• Never out stock plan: enough products so

that they are not out of stock

Planning process

• Done in advance, time to buy merchandise , have it

delivered and send it to stores

• Analysis of consumers needs and wants, consumer buying process, sale of high selling products,interaction with

sales staff ,analysis of external sources of information

• Steps:

1 Developing a sales forecast

2 Determining a merchandise requirements

3 Merchandise Control- The Open to Buy

4 Assortment Planning

Analysis and Developing the Sales forecast

• Forecasting involves what a consumers may do under a

given set of conditions

• Determines the inventory need for the product or category

• Based on targets given by top management

• Typically answer : How much, new products, price?

• Made for a specific time period ie weeks, season short term

or long term

• Aware of the changes in tastes and attitudes of the

consumers, size of target market and changes in spending

patterns

Analysis and Developing the Sales forecast

• Process:

o Reviewing past sales

o Analysing the economic conditions.: direct link

to consumer spending patterns

o Analysing the sales potential: demographic

changes in market and products to be sold

o The marketing strategy of the competitors

o Creating the forecast.: estimate

Determining the Merchandise Requirements

• Planning at Merchandise takes place at two

levels:

- The creation of merchandise budget

- The assortment plan

• Merchandise budget: financial plan as to how much to invest in product inventories in

monetary terms

Merchandise Budget

• Sales plan: how much of each product needs to be sold, dept wise/storewise etc

• Stock Support plan: How much of inventory is

needed to achieve those sales

• Planned reductions: incase of product not selling

• Planned purchase level: Qty of each product that needs to be procured from the market

• Gross margins (diff between cost of goods sold and sales) that each dept contributes to the overall

profitability

Methods of Inventory planning

• The Basic Stock Method

• The Percentage Variation Method

• The Week’s Supply Method

• The Stock / Sales Ratio Method

Basic Stock Method

• Retailer believes that it is necessary to have a given level of

inventory at all times Min amt of inventory that needs to be

maintained for a product ,category or store even during times of low sale

• Basic Stock = Avg.stk for the season – Avg mthly

sales for the season where,

• Average Monthly Sales for the season = Total Planned Sales for the season / No of months in the season

• Avg stock for the season = Total Planned Sales for the

season/Estimated inventory turnover rate for the season.

• BOM(Beginning of month) Stock = Planned Monthly Sales + Basic Stock.

The Percentage Variation Method

• Used when the stock turnover rate is more than 6 times/year

• Basic premise is that inventory levels should reflect the actual sales

• BOM stock = Avg stock for the season x ½

[1+planned sales for the month / Average

Monthly Sales ]

Weeks Supply

• Followed by grocers who follow inventories weekly, and whose sales don’t fluctuate substantially

The

Week’s Supply Method is calculated as under:

No of weeks to be stocked = the number of weeks in the period / Stock turnover rate for the period

Avg weekly sales = Estimated total sales for the period / The no of weeks in the period

BOM Stock = Avg weekly sales x no of weeks to be

stocked

Stock to Sales Ratio Method

• This method is very easy, however requires

the retailer to have a beginning of the month stock/sales ratio This ratio tells the retailer

how much inventory is needed for the month

• Stock to Sales Ratio = Value of Inventory /

Actual sales

• Planned BOM Inventory = Stock – Sales Ratio

x Planned Sales

The Stock Turnover Rate

• An effective measure at which products or merchandise moves in and out of retail store

at a given period

• Stock Turnover Rate = Planned Sales ( for the period) / Planned Average Inventory ( for the period)

Six month merchandise plan

• Done after a inventory plan, merchandise plan

• This plan is prepared for six months

• Merchandise budget should be prepared in advance of selling season

• Easy to understand

• economy is changing, plan for 6 months

• Flexible budgets

The Six Month Merchandise Plan

Six Month Merchandise Budget

Plan Revised Actual

Plan Revised Actual Reductions Last Yr

Plan Revised Actual

EOM Stock Last Yr

Plan Revised Actual Retail

Purchases Last YrPlan

Revised Actual Purchase Cost Last Yr

Plan Revised Actual Initial Mark Up Last Yr

Plan Revised Actual

Gross Margin % Last Yr

Plan Revised Actual

On order EOM Last Yr

Plan Revised Actual

• Depends on the sales for the month & reductions, merchandise buying can be adjusted.

• Maintains relation between stock and sales

• Controlling the money to buy – The Open to Buy

(OTB)

• Limits overbuying & under buying

• Prevents loss of sales due to unavailability of

required stock

• Maintains purchases within the budgeted limits

• Reduces markdowns which may arise due to excess buying

Merchandise Control- Open to Buy

Open to Buy

• OTB is always calculated for the current and future periods

• Open to Buy = Planned EOM Stock –

Projected EOM Stock

• Projected EOM Stock = Average BOM Stock + Actual Additions to Stock + Actual on Order – Planned Monthly Sale – Planned Reductions for the month

Assortment Planning

• Assortment is the selection of merchandise a retailer carries Includes breadth of the product categories

and the variety within each category

• Need to choose quality of the merchandise-

expensive/moderately priced/inexpensive items

• Width of assortment: number of distinct goods and services (product lines) a retailer carries

• Depth of assortment: Refers to variety in any one

goods /service category (product line) a retailer carries

• As a part of assortment planning, retailer chooses a

proper mix of manufacturer, private and generic brands.

• Manufacturer brands are produced and controlled by

mfgs Well known ,presold by advts, represent max quality

to consumers Eg Coke,Sony etc

• Private /dealer/store brands: Names designated by

retailers, more profitable, better controlled ,not sold by competing retailers ,less expensive and may lead to loyalty

• Generic brands: Form of private brands have plain

packages ,secondary shelf locations etc

Factors to consider before planning

Merchandise quality

Target Market Match merchandise quality to wishes of

the desired target market Competition Sell similar quality (as that of competition)

or different quality to appeal to different target market

Retailers image Relate item quality with customer

perception of the retailer Store location Impact of location on image which in turn

impacts competitors and in turn quality Stock Turnover High quality-high prices yield lower

turnover Profitability High quality- high profit, lower quality-

more turnover, more profit Mfg vs private brands Mfg brands may connote better quality

than store brands for consumers

Factors to consider before planning

Merchandise quality

Customer services offered Know that high quality goods require

more personal selling, alterations, delivery etc unlike lesser quality merchandise

Personnel Employ skilled personnel for higher

quality merchandise Perceived goods/service benefits Analyse consumers Lesser quality –

functional benefits High quality- status/services

Constrained decision making Franchisee/chain store managers- no

control over products

RETAIL ASSORTMENT STRATEGIES

Wide & Deep : (many product lines & large

variety in each)

Advantages

Wide & Shallow : (many product lines & limited

variety in each)

Advantages

Narrow &Deep: (few product lines & large

variety in each)

Advantages

Narrow &Shallow: (few product lines & few

variety in each)

Advantages

Least costly

Aimed at convenience customers

High turnover of items

Depth & Breadth of merchandise

STYLES COLOURS SIZES

ZODIAC VAN HEUSEN LOUIS PHILLIPPE ARROW

SHIRTS TROUSERS ACCESSORIES MENSWEAR

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Model Stock Plan

• The model stock plan gives the precise items and quantities that should be on hand for

each merchandise line.A model stock plan

needs to be compiled for each line of

merchandise

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Steps involved …

• Identify the attributes that the customer

would consider in buying the product

• Decide on the levels under each attribute

• Allocate the total money or the units to the

respective item categories

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Creating a model stock plan

• A retailer has allocated Rs 1 lakh to buying

shirts Assuming that the purchase price for

the shirts is Rs.100, he will be able to stock

1,000 shirts

• Create a model stock plan

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• Identify the number of levels under each

attribute

Type of shirt – Dress, Casual, Formal, Sport

Size – Small, Medium, Large, Extra Large

Sleeve Length – Full Sleeves, Short Sleeves

Collar Type – Saville, Button Down

Color – White, Blue, Cream, Grey

Fabric – Cotton, Cotton Blend

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CATEGORY MANAGEMENT

Merchandise Category- A planning unit

• Retail- a business responding to change.

• Faces demanding customer, intense competition and pressure on costs

• This combination of business condition and advances in technology – created an opportunity for new approach- Category management

• A merchandise category is the basic unit of analysis for making

merchandising management decisions

• A merchandise category is an assortment of items that customers may see as substitutes of each other

• Eg A department store- offers all brands, sizes ,colors of girls dresses A mother before purchase decision may consider whole set Lower price of one –increase sale of that type but decrease sale of other type Thus a buyers decision of lowering price and promoting specific SKU may affect sales of other SKU s in that category

Category management

• Category Management can be defined as the distributor / supplier process of managing

categories as strategic business units,

producing enhanced business results by

focusing on delivering consumer value

• Thus, a category is an assortment of items

that the customer sees as reasonable

substitutes of each other

Category Management

• A focus for better understanding the customer needs

as a basis for the retailers and suppliers, strategies,

goals and work processes

• Technology and information- key enabler

• Use this information to tailor the product according to consumer needs

• Offering is aimed at providing customer satisfaction and maximizing returns for the organization

• Sometimes results in reevaluation of business

practices

Core Components of Category Management

Performance Measurement

Trading Partner

Technology

Organisational Capabilities

Strategy and Business Process