a brief presentation on Retail Merchandising

1. Retail Merchandising

2. It refers to entire process of inventory planning
and management in a retail organization

3.  The Right Product
 The Right Place
 The Right Quantity
 The Right Quality
 The Right Price
 The Right Mix or Assortment
 The Right Time

4. It is a disciplined way of grouping merchandise mix
at different levels (from highest-lowest level
grouping).
 Division
 Department
 Category
 Sub – Category
 Brand
 Style
 Options

5. Advantages:
 Can define in terms of ratio the mix of elements
at each level of hierarchy
 Can analyze & drill down through the rungs of
hierarchy to the problem area (up to SKU level
even)
 Can remove / add elements following security
escalations (both lower and higher level decision
making)

6. SKU:
One complete range from division to option is
SKU
Planogram:
Visual mapping vs. numerical mapping of an
assortment plan to review space utilization.

7. Range planning:
Mix in % terms at every rung of the store’s
merchandise hierarchy
 Strategic Planning
 Category-level margin plan (each level’s contribution in
terms of gross margin is planned, it is where OPEN TO BUY is also
prepared, plus can aid in assessing problem areas)

8. OTB (OPEN TO BUY):
Helps project and control future buying so that flow of
merchandise in the store matches anticipated sales at desired
stock turn rates to give a positive cash flow
OTB is essentially the difference between how much inventory
is needed and how much is actually available. This includes
inventory on hand, in transit and any outstanding orders.
Aids in fixing the ideal amount of stock that should be on hand
at the beginning of any given months and the quantum of new
merchandise to be received during the month

9.  Forward Sales Planning (Sales Forecast)
 Forward Cover
 Stock Required
 Opening Stock
 Intake Requirement
 On Order
 Open To Receive (OTB)
 Closing Stock

10.  Estimate in advance working capital required to be
employed in inventory from month to month
 Ensure right inventory level to support planned sales
 Restraint merchandise commitments so that store
receives right merchandise at right time
 Enable continuous flow of fresh merchandise into the
store month after month
 Establish goals to compare actual performance with so
that required corrective actions can be initiated
 Provide more opportunity for profit

11.  Category Vision
 Category Definition
 Category Role
 Category Assessment
 Category Balance Score Card
 Category Strategies
 Category Tactics
 Category Implementation & Review

12. Markup: % amount (calculated on
cost) added to cost in order to arrive
at MRP.
Markdown: amount reduced from MRP
to arrive at new RP. It is calculated in
% terms.

13. Markups and MarkdownsMarkups and Markdowns
Calculations:
Markup= % of margin calculated on cost added to
arrive at MRP
Markup%= (Difference b/w MRP and Cost / Cost) *
100
Cost = MRP – Margin
Margin = MRP – Cost
MRP = Cost + Markup
Markdown%= (Difference b/w old MRP and new
MRP after markdown / Old MRP) * 100

14. Difference b/w the actual stock
quantity / value and the book value
figure
Can be attained after physical count
Occur due to incorrect paper work,
customer & employee theft