Merchandising

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Merchandising

  1. 1. Retail Merchandising 1
  2. 2. Objectives  To demonstrate the importance of a sound merchandising philosophy  To outline the considerations in devising merchandise plans: forecasts, innovativeness, assortment, brands, timing, and allocation  To discuss category management • To study various buying organization formats and the processes they use
  3. 3. Retail Merchandising       Definition & the Concept of Retail Merchandising Role & Responsibilities of a Merchandiser Fashion Merchandising Merchandise Characteristics Merchandise Management- Merchandise Mix & Merchandise Budget Basics of Merchandise Accounting
  4. 4. RM - DEFINITION  Retail selling effort that is the principal task of in-store sales personnel through the use of promotions designed by a manufacturer, such as unique displays, giveaways, or discount and premium offers. In this case, merchandising is the act of managing and arranging the merchandise on display in a store so as to promote its sale.
  5. 5. Role & Responsibility of Merchandiser  Planning  Directing  Co-ordinating  Controlling
  6. 6. Merchandising Versus Store Management Career Tracks
  7. 7. Functions of Merchandisers at Shopper’s stop          Inventory-turn Management Achieving Sales & Margins Plans Merchandise Availability Management, as per range plan Merchandising strategy & planning Processing of purchase orders Analysis of Data & Sales Budgeting Profitability Targets & Expense Control Vendor/Supplier relations for both, in-house products as well as for brands.
  8. 8. ARRANGING -MERCHANDISE
  9. 9. Merchandising arrangement             MERCHANDISING ARR ANGMENT……… Why making effective use of your space is so important. How to position your departments and products. How to improve store lighting. The importance of atmosphere and cleanliness in your store. How to create great displays and signage. W HAT W W E ILL ACHIEVE AS A BUSINESS………. The consistently best Display standards against Competition in India A great environment that will attract & satisfy Customers Showcase to best advantage our product offer Dramatically enhance Customer Service
  10. 10. Managing the Merchandise  Developing a sales forecast  Determining the merchandise requirements  Merchandise control  Assortment planning
  11. 11. Developing Sales forecast  Reviewing Past sales  Analyzing the changes in Economic Conditions  Analyzing the changes in the sales potential  Analyzing the changes in the marketing strategies of the retail organization and the competition  Creating the sales forecast
  12. 12. Forecasts  These are projections of expected retail sales for given periods  Components:  Overall company projections  Product category projections  Item-by-item projections  Store-by-store projections (if a chain)
  13. 13. Determining the merchandise requirements  Merchandise Mix  Retail communication Mix
  14. 14. Basics of Merchandise Accounting
  15. 15. Merchandising Accounting  Cash Flow  The Balance sheet  Financial Ratios  Income statements  Gross- Margin-Return on Investment
  16. 16. Cash Flow  Cash In  Cash Out  Negative Cash flow = Cash In < Cash Out  Positive Cash flow = Cash out > Cash In
  17. 17. Cash Flow Curve
  18. 18. The Balance Sheet  The Balance Sheet is a statement of an organization's Assets, Liabilities and Owners’ Equity at a Particular Point in time. Assets Liabilities Owner's Equity
  19. 19. Assets  Assets – Owned by an organization a. Short term (or) Current Assets b. Long term
  20. 20. Liability  Liability: Debts owed by an organization Payment on Short term Ex: Payment to supplier Payment on Long term Ex: Mortgage on Land & Building Investment on Extension, Expansion & renovation 
  21. 21. Owner’s Equity  Owner’s Equity : Difference between asset and Liability. Relationship: Assets = Liabilities + Owner’s Equity 
  22. 22. Income statement
  23. 23. Income statement    Profit performance for a specific period of time Income statement is otherwise called Statement of earnings or Profit & loss statement Income statement: Revenue – Expenses = Net Income Profit = Expenses < Revenue = positive Net Income Loss = Expenses > Revenue = Negative Net Income   
  24. 24. Income statement  Income statement can be computed for an entire organization     contd… Individual Store A Group of Store Department Profit and loss is based on the revenue & expenses directly associated with each unit of business.
  25. 25. Income statement contd…  Components : 5 major components      Revenue Cost of goods sold Gross margin Expenses Net Profit  Relationship among the components  Net revenue – Cost of goods sold - Expenses Gross margin Net Profit
  26. 26. Income statement contd…  Relationship among the components  Net revenue – Cost of goods sold - Expenses Gross margin Net Profit  Net revenue : composed of sales, Leasing or renting property or interest on accounts  Net sales = Gross sales – Customer return  Gross sales are used to determine the customer return rates  Customer return rate = Customer returns x100 Gross sales
  27. 27. Income statement contd…  High customer return rate is often indicates of issue related a. Customer service b. Quality c. Fit of merchandise  High sales attest to the ability of an organization buyer to select assortments of goods that are appealing to the store’s target customers.
  28. 28. Income statement contd…  Cost of goods sold (or) Cost of Merchandise sold (or) cost of sales  Cost of goods sold = Billed cost of Merchandise + work room costs +shipping cost – cash Discount Returns to vendors
  29. 29. Income statement contd…  Shipping cost : Delivery cost for transporting goods from supplier  Workroom costs: activities that prepare merchandise for sale ( steaming & pressing apparel)  Return to vendors : defective or slow selling goods returned to suppliers for credit  Cash discounts : Invoice concessions from suppliers for prompt payment
  30. 30. Income statement contd…  Expenses: Payroll, rent, Utilities, advertising and interest on debt.  Direct Expense: attributable to a specific unit ( store rent )  Indirect Expense: is not attributable to a specific unit. ( news paper advertisement )
  31. 31. Income statement contd…  Gross margin : Difference between sales and cost of goods sold.  Net Income : Gross Margin – Expenses  Income can be increased by Increasing sales    Increasing Gross Margin Decreasing cost of goods sold Any combination of above  Component Percentage : Cost of goods sold = cost of goods X 100 Net sales Gross Margin = Gross Margin X 100 Net Sales Expenses = Expenses X 100 Net Sales
  32. 32. GMROI Particulars Category A Category B Sales 300000 250000 Cost of Goods Sold 180000 100000 Gross Margin 120000 150000 Gross Margin % 40% 60%
  33. 33. GMROI  Gross Margin Return on Investment  Integrates   two performance Gross Margin Turn Over  To create a single measure of performance GMROI = Gross Margin X Net sales Net Sales Average Inventory GMROI = Gross Margin / average Inventory 
  34. 34. Key terms Assets Balance sheet Cash discount Cash Flow Component Percentage Cost of goods sold Current ratio Expenses Factor GMROI Gross sales Income statement Liability Net Income Net Loss Net Sales Return to Vendor Owner’s Equity Time Series Comparison Workroom cost

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