<ul><li>The McGraw-Hill Companies, Inc., 1998 </li></ul>SECTION THREE MERCHANDISE MANAGEMENT Irwin/McGraw-Hill Levy/Weitz:...
<ul><li>The McGraw-Hill Companies, Inc., 1998 </li></ul>Chapter 12 Planning Merchandise Assortments Irwin/McGraw-Hill Levy...
TM 12-1 Merchandise Management Issues Planning Merchandise Assortments (Chapter 12) Organize the Buying Process by Categor...
Irwin/McGraw-Hill <ul><li>The McGraw-Hill Companies, Inc., 1998 </li></ul>Click to edit Master title style <ul><li>Click t...
  MILK  WINE Gross Margin $  2,000 $150,000 Sales   150,000   300,000 Average Inventory   1,000   75,000   GMROI =  Gross ...
TM 12-4 GMROI and Inventory Turnover for Selected Departments in Department and Specialty Stores   GMROI   Inventory   Tur...
TM 12-5 The Category Product Life Cycle Total Retail Sales Introduction Growth Maturity Decline Time Introduction Growth M...
TM 12-6 Variations of the Category Life Cycle   Fad   Fashion  Staple   Seasonal Sales over many seasons   No   Yes   Yes ...
TM 12-7 Sales for Levi Jeans at  Trendsetters Department Store SALES ($000) DOLLARS YEAR Fall sales Winter sales Spring & ...
TM 12-8 Relationship between Inventory Investment  and Product Availability Inventory investment Dollars Product Availabil...
TM 12-9 Cycle and Backup Stock Units Available Weeks 150 - 100 - 50 - 0 - 1    2   3   4 Order 96 Cycle Stock Buffer Stock
TM 12-10 Assortment Plan for Girls’ Jeans Styles T R A  D  I  T  I O  N  A  L Price levels  $20   $20   $35   $35     $45 ...
TM 12-11 Size Distribution for Traditional $20 Denim Jeans in Light Blue for a Large Store   SIZE Length 1 2 4 5 6 8 10 12...
TM12-12 Predicting Fads Does it fit with basic lifestyle and value changes? How important is the product’s benefits to the...
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Merchandising

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  • Transcript of "Merchandising"

    1. 1. <ul><li>The McGraw-Hill Companies, Inc., 1998 </li></ul>SECTION THREE MERCHANDISE MANAGEMENT Irwin/McGraw-Hill Levy/Weitz: Retailing Management, 3/e
    2. 2. <ul><li>The McGraw-Hill Companies, Inc., 1998 </li></ul>Chapter 12 Planning Merchandise Assortments Irwin/McGraw-Hill Levy/Weitz: Retailing Management, 3/e
    3. 3. TM 12-1 Merchandise Management Issues Planning Merchandise Assortments (Chapter 12) Organize the Buying Process by Categories Set Merchandise Financial Objectives Develop an Assortment Plan Buying Systems (Chapter 13) Fashion Merchandise Staple Merchandise Buying Systems Buying Systems Allocate Merchandise to Stores Analyze Merchandise Performance
    4. 4. Irwin/McGraw-Hill <ul><li>The McGraw-Hill Companies, Inc., 1998 </li></ul>Click to edit Master title style <ul><li>Click to edit Master text styles </li></ul><ul><ul><li>Second level </li></ul></ul><ul><ul><ul><li>Third level </li></ul></ul></ul><ul><ul><ul><ul><li>Fourth level </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Fifth level </li></ul></ul></ul></ul></ul>08/21/97 * 4 08/21/97 * 4 Irwin/McGraw-Hill <ul><li>The McGraw-Hill Companies, Inc., 1998 </li></ul>08/01/97 * 4 <ul><li>The McGraw-Hill Companies, Inc., 1998 </li></ul>TM 12-2 Standard Merchandise Classification Scheme and Organizational Chart Girls Levi jeans, sz 5, stone washed blue, straight leg Chairman Merchandise-Oriented partner Sr. vice pres merch mgr Women’s ready-to-wear Sr. vice pres merch mgr Men’s, chld’s, intimate apparel Sr. vice pres merch mgr Cosmet, shoes, jewelry, access. Sr. vice pres merch mgr Soft home furn., kitchen Div. merch manager Men’s suits, slacks, dress shirts Div. merch manager Men’s sports-wear, Polo Div. merch manager Young men’s, boys’ apparel Div. merch manager Children’s apparel Div. merch manager Intimate apparel Buyer Preteen accessories Buyer Girls’ Size 7-14 Buyer Girls’ Size 4-6 Buyer Toddlers’ Buyer Infants’ Buyer Little boys’ Sportswear Dresses Swimwear Outerwear Merchandise Group Department Classification Category SKU Irwin/McGraw-Hill Levy/Weitz: Retailing Management, 3/e V.P. Planning Div Dir.. Planning Mgr. Planning Planning Group
    5. 5. MILK WINE Gross Margin $ 2,000 $150,000 Sales 150,000 300,000 Average Inventory 1,000 75,000 GMROI = Gross Margin x Net Sales = Gross Margin Net Sales Average inventory Average Inventory Milk GMROI = $2,000 x $150,000 = $ 2,000 $150,000 1,000 1,000 Caviar GMROI = $150,000 x $300,000 = $300,000 $300,000 75,000 150,000 = 50% X 4 = 200% TM 12-3 Illustration of GMROI
    6. 6. TM 12-4 GMROI and Inventory Turnover for Selected Departments in Department and Specialty Stores GMROI Inventory Turnover Dept. Specialty Dept. Specialty Stores Stores Stores Stores Female apparel 230 350 2.6 3.2 Adult female accessories 180 280 1.9 2.5 Men/boys apparel & access. 160 220 2.0 2.4 Infant/children clothing & access. 210 160 2.6 2.4 Footwear 110 140 1.4 1.7 Home furnishings 120 220 1.7 1.8 Source: Alexandra Moran, ed. MOR 1996 Edition: Merchandising and Operating Results of Retail Stores in 1995 , 71st ed. (New York: John Wiley & Sons), pp. 4-7.
    7. 7. TM 12-5 The Category Product Life Cycle Total Retail Sales Introduction Growth Maturity Decline Time Introduction Growth Maturity Decline Strategy variable Target market High-income Middle-income Mass market Low-income Innovators adapters and laggards Variety One basic Some variety Greater variety Less variety offering Distribution Limited or More retailers More retailers Fewer Intensity extensive retailers Price Penetrating Wide range Lower prices Lower prices or skimming Promotion Informative Persuasive Competitive Limited
    8. 8. TM 12-6 Variations of the Category Life Cycle Fad Fashion Staple Seasonal Sales over many seasons No Yes Yes Yes Sales of a specific style over No No Yes Yes many seasons Sales vary dramatically from No Yes No Yes one season to the next Illustration (Sales against Time) SALES SALES SALES SALES TIME TIME TIME TIME
    9. 9. TM 12-7 Sales for Levi Jeans at Trendsetters Department Store SALES ($000) DOLLARS YEAR Fall sales Winter sales Spring & summer sales Note: The peaks show the fall sales, typically 40 percent of annual sales; the horizontal lines typify 15 percent of annual sales each in spring and summer; and the black dots (the winter sales) are typically 30 percent of annual sales. These data are for illustrative purposes only. They do, however, represent typical growth patterns for a category like jeans.
    10. 10. TM 12-8 Relationship between Inventory Investment and Product Availability Inventory investment Dollars Product Availability (Percent) 600 500 400 300 200 100 0 80 85 90 95 100
    11. 11. TM 12-9 Cycle and Backup Stock Units Available Weeks 150 - 100 - 50 - 0 - 1 2 3 4 Order 96 Cycle Stock Buffer Stock
    12. 12. TM 12-10 Assortment Plan for Girls’ Jeans Styles T R A D I T I O N A L Price levels $20 $20 $35 $35 $45 $45 Fabric Reg denim Stone- Reg denim Stone- Reg denim Stone- composition washed washed washed Colors Light blue Light blue Light blue Light blue Light blue Light blue B O O T C U T Price levels $25 $25 $40 $40 Fabric Reg denim Stone- Reg denim Stone- composition washed washed Colors Light blue Light blue Light blue Light blue Indigo Indigo Indigo Indigo Black Black Black Black
    13. 13. TM 12-11 Size Distribution for Traditional $20 Denim Jeans in Light Blue for a Large Store SIZE Length 1 2 4 5 6 8 10 12 14 Short 2 4 7 6 8 5 7 4 2 % 9 17 30 26 34 21 30 17 9 units Medium 2 4 7 5 8 4 6 3 2 % 9 17 30 21 34 17 26 12 9 units Long 0 2 2 2 3 2 2 1 0 % 0 9 9 9 12 9 9 4 0 units Total 100% 429 units
    14. 14. TM12-12 Predicting Fads Does it fit with basic lifestyle and value changes? How important is the product’s benefits to the consumer? Is the product based on a basic trend or a side effect of that trend? Is the new development supported by deveopments in other area? Which groups of consumers have changed?
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