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Merchandise Management
 

Merchandise Management

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    Merchandise Management Merchandise Management Presentation Transcript

    • MERCHANDISE MANAGEMENT
    • MERCHANDISE MANAGEMENT
      • Overview
      • Planning and Controlling Merchandise Variety
      • Planning and Controlling Merchandise Assortment/Support
      • Merchandise Mix Strategies
      • Merchandise Budget Management
    • Retail Merchandising is the process of developing , securing , pricing , supporting and communicating the retailer’s merchandise offering. It means offering the right product at the right time at the right price with the right appeal!!
    • Steps In The Retail Merchandising Process
      • Develop the merchandise mix and establish the merchandise budget.
      • Build the logistic system for procuring the merchandise mix.
      • Price the merchandise offering.
      • Organize the customer support service and manage the personal selling effort.
      • Create the retailer’s advertising, sales incentive and publicity programs.
    • Retail merchandising requires management of the merchandise mix including:
      • Planning Merchandise Variety
      • Controlling Merchandise Variety
      • Planning Merchandise Assortment/Support
      • Controlling Merchandise Assortment/Support
      • Merchandise Mix Strategies
      • Developing the merchandise mix allows
      • the retailer to segment the market and
      • appeal to a select group of consumers!!
    • Retail merchandising requires management of the merchandise budget including:
      • Planning And Controlling Retail Sales
      • Planning And Controlling Inventory Levels
      • Planning And Controlling Retail Reductions
      • Planning And Controlling Purchases
      • Planning And Controlling Profit Margins
    • THE COMPONENTS OF THE MERCHANDISE MIX
      • Merchandise Variety
      • (# of product lines)
      • Merchandise Assortment
      • (# of product items)
      • Merchandise Support
      • (#of product units)
    • Planning Merchandise Variety Involves Planning And Controlling Product Lines Retailers use MANY factors to evaluate product lines!!
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The compatibility among product lines.
      • Must Consider:
        • Product substitutes
        • Product complements
        • Unrelated products
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The physical attributes of each product line.
      • Must Consider:
        • Product bulk
        • Product standardization
        • Product service levels
        • Product selling methods
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The product lines’ potential profitability.
      • Must Consider:
        • Direct and indirect contribution to profitability
        • Calculations of gross margin % and $$
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The role branding plays in the success of the product line.
        • Must Consider:
        • How brands can distinguish a retailer from competitors
        • How brands can build store loyalty
        • The advantages and disadvantages of offering different types of brands – no names, vendor brands, store brands (private labels) and licensed merchandise
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The age of each product within the product lifecycle
      • Must Consider:
        • What stage a product is in to judge future sales potential
        • The number of products offered at different stages
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The fashionable nature of each product line.
      • Must Consider:
        • Use of unique designer fashions as part of the store’s strategy
        • The above average risk of fashion merchandise ( But also note: high margin items with above average profitability)
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The market appropriateness of each product line.
      • Must Consider:
        • How well the product matches consumption patterns and buying needs of targeted consumers
        • The relative advantage, affinity, trialability, observability and complexity of new product introductions
        • Market trends– provide products the market wants!!
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The impact of lifestyle on product line acceptance.
      • Must Consider:
        • Targeted customers’ activities, interests, and opinions
        • The match between consumers’ lifestyle and retailer’s image
        • Usefulness of trade shows to identify product lines for targeted consumers’ lifestyles
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The competitive threat facing each product.
      • Must Consider:
        • Competitive conditions under which the product line is available – intensive, selective or exclusive distribution
        • Is the product line available to direct (intra type) competitors or indirect (inter type) competitors, or both
    • FACTORS USED TO EVALUATE PRODUCT LINES
      • The conditions under which each product line will be procurable.
      • Must Consider:
        • Availability and reliability of various suppliers
        • Terms and conditions under which the product will be made available
    • CONTROLLING MERCHANDISE VARIETY
      • Is an art and a science
      • No rules for what should be included in the merchandise mix and what should be excluded
      • Two useful management methods
        • Category Management : each product managed as a business unit at the store level
        • ABC Analysis : each product line is rank ordered based on performance levels
    • PLANNING MERCHANDISE ASSORTMENT AND SUPPORT
      • Must organize the merchandise mix as to the number of different product lines carried
      • Must decide on:
        • Brands
        • Sizes
        • Colors
        • Material
        • Styles
        • Price points
    • PLANNING MERCHANDISE ASSORTMENT AND SUPPORT
      • Goal is to ensure that product choice meets targeted consumer needs
      • Must carefully plan the number of units to have on hand to meet the expected sales for the brand, size, color combinations
      • Must develop merchandise lists
        • Basic Stock List (staple items)
        • Model Stock List (fashion items)
        • Never Out List (key items and best sellers)
    • CONTROLLING MERCHANDISE ASSORTMENT AND SUPPORT
      • Involves monitoring and adjusting the types of product lines that are added and dropped from the merchandise mix
      • Two widely used methods to control assortment and support:
        • Inventory turnover: rate at which the retailer depletes and replenishes stock
        • Open-to-buy:amount of new merchandise a retailer can buy during a specific time period without exceeding planned purchases for the period
    • Merchandise Mix Strategies Different optimal variety and assortment strategies possible!!
      • Narrow Variety/Shallow Assortment
        • Vending machines
        • Newsstands
        • Door-to-door
      • Wide Variety/Shallow Assortment
        • Variety Stores
        • General Stores
        • Discount Stores
      • Narrow Variety/Deep Assortment
        • Specialty Stores
      • Wide Variety/Deep Assortment
        • Full-line Department Stores
    • MERCHANDISE BUDGET MANAGEMENT
      • Financial management tool used to plan and control the total amount (in dollars) of inventory carried in stock at any time
      • Determines how much a retailer should invest in inventory during a specified period
      • Remember: Merchandise Budget controls dollars; Merchandise Mix controls product units
    • MERCHANDISE BUDGET MANAGEMENT
      • We will consider:
        • Calculating monthly sales index to project next year’s sales.
        • Using Basic Stock Model to calculate BOM stock
        • Using Stock/Sales Ratio Method to calculate BOM stock
        • Calculating planned monthly purchases and open-to-buy