marketing

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PROJECT REPORT ON RETAIL
MERCHANDISING STRATEGY FOR
FASHION MERCHANDISE
A Project Submitted To
University of Mumbai for Partial Completion of the Degree Of
Master in Commerce
Under The Faculty of Commerce
By
SAYALI SHEKHAR VIKHARE
Under the guiding of
Prof.S.S.Khot
Patpanhale Art, Commerce&Science College,
Patpanhale- shingartali Tal-guhagar
Dist-ratnagiri 415724

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Index:
CHAPTER NO.1: INTRODUCTION
Sr no. topic pg
1.1 executive summary ………………………………………………………...8
1.2 introduction…………………….................................................................10
CHAPTER NO.2: RESEARCH METHODOLOGY
2.1 research methodology…………………………………………………….67
2.2 objectives…………………………………………………………………..68
2.3 hypothesis…………………………………................................................69
CHAPTER NO.3: DATA ANALYSIS
3.1 data collection…………………………………………………………….71
3.2 findings…………………………………………………………………….72
CHAPTER NO 4: CONCLUSION AND SUGGESTION
4.1 recommendation………………………………………………………….74
4.2 conclusion………………………………………………………………...76
5.1 BIBLIOGRAPHY……………………………………………77
6.1 GLOSSARY………………………………………...78

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Patpanhale Art, Commerce&Science College,
Patpanhale- shingartali Tal-guhagar
Dist-ratnagiri 415724
Certificate
This is to certify that SAYALI SHEKHAR VIKHARE has work and duly
completed his project work for the degree of master in commerce under the
faculty of commerce in the subject of IV and this project entitled
“Retail merchandising strategy for fashion merchandise”
Under my supervision. I further certify that the entire work has been done by
the learner under my guidance and that no part of it has been submitted
previously for any degree or diploma university.
It is his own work and fact reported by his personal findings and
investigations.
Place:
Date:

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Declaration by learner
I the Undersigned SAYALI SHEKHAR VIKHARE
Here by, declare that work embodied in this project work title”
Retail Merchandising Strategy For Fashion Merchandise”from my own
contribution to the research work carried out under the guidance of prof:
S.S.KhotIs a result of my own research work and has not been previously
submitted to any other university for any other degree/diploma to this or any
other university.
Wherever reference has been made to previous work of the others it has been
clearly indicated as such and included in the bibliography.
I hereby further declare that all information of this document has been
obtained and presented in accordance with the academic rule and ethical
contact
Certified by
Assistant prof: S.S.Khot
Miss SAYALI SHEKHAR VIKHARE

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ACKNOWLEDGMENT
To list who all have helped me is difficult because they are so numerous and
the depth is so enormous.
I would like to acknowledge the following as being idealistic channels and
fresh dimensions in the completion of this project.
I take this opportunity to thank theUniversity of Mumbai for giving me
chance to do this project.
I would like to thank my principal, P.T.SANAYE for providing the
necessary facilities required for completion of this project.
I take this opportunity to thank our coordinator S.S.KHOT for her moral
support and guidance.
I would also like to express my sincere gratitude towards my project guides
.S.KHOT whose guidance and care made the project successful.
I would like to thank my college library for having provided various
reference books and magazines related to my projects.
Lastly, I would like to thank each and every person who directly or
indirectly helped me in the completion of the project especially my parents
and peers who supported me throughout my project.

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CHAPTER NO.I: INTRODUCTION

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1.1 Executive Summary
Research provides a basic understanding of the merchandising concept to
underline the relevance of merchandise planning in a retail organization. To
provide information on merchandise grouping, defining the concept of
merchandise hierarchy. It explains what is meant by merchandise buying and
replenishment planning.
This research also covers the planning and carrying out of buying and selling
activities including the responsibilities of buyers. It follows the flows of
merchandise from arrival in the store to purchase by the customers. Today,
stores use aggressive merchandising techniques for men’s and children
clothing too. Fashion influence has also spread to all other areas of retailing
from cosmetics and home furnishings to cookware.
Every area of merchandising responsibility needs planning and organization
to make it function properly and to ensure successful buying and selling.
Merchandising responsibilities are usually divided between two chains of
command .The buying line has responsibility for merchandise content and
assortment; the store line is the liaison between the merchandise organization
and customers. The buying line works behind the scenes; the store line
interface with customers on a daily basis. The goal is to sell merchandise.

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The merchandise managers and buyers of the buying line must do all the
planning and other activities necessary to bring the right merchandise in to
the store at the right time to satisfy the store customers.

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1.2 Introduction
Merchandising is the term used to signify articles for sale; it derives from the
word merchant, the actual seller or retailer. Fashion merchandising includes
all the planning and activities necessary to supply the fashion wants and
needs of retail customers. In the past fashion merchandising was usually
associated only with women’s apparels and accessories.
Today, stores use aggressive merchandising techniques for men’s and
children clothing too. Fashion influence has also spread to all other areas of
retailing from cosmetics and home furnishings to cookware.
This research covers the planning and carrying out of buying and selling
activities including the responsibilities of buyers. It follows the flows of
merchandise from arrival in the store to purchase by the customers

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Merchandising Organization:
Every area of merchandising responsibility needs planning and organization
to make it function properly and to ensure successful buying and selling.
Merchandising responsibilities are usually divided between two chains of
command .The buying line has responsibility for merchandise content and
assortment; the store line is the liaison between the merchandise organization
and customers. The buying line works behind the scenes; the store line
interface with customers on a daily basis. The goal is to sell merchandise.
Responsibility of the store line:
The main responsibility of the store line are operations, to coordinate
receiving and the movement of goods and people within the store, to train
sales associates, to provide customer services, to control expenses, to
maintain the building, and to maintain the security. Above all store line
executives must work together, with merchandise managers, buyers, sales
associates to produce positive sales results. Everything and everyone
involved in the operation of the store must be organized to achieve this goal.
The director of store lines supervises individual store managers in multiple
unit organizations. Store managers are responsible for merchandising, sales,
employees, and the general success of the store. They in turn, usually
delegate responsilities to group sales managers. Department managers and
their assistants run the department, communicate and distribute information

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about merchandise to and from management and buyers, putout stock, mark
sale merchandise and supervise sales associates. It is also very important for
buyers to have the experience of working with customers in the store line.
Responsibilities of buying line:
The merchandise managers and buyers of the buying line must do all the
planning and other activities necessary to bring the right merchandise in to
the store at the right time to satisfy the store customers.
General Merchandise Managers:
The retail chief executive officer delegate merchandise responsibilities to several general
merchandise managers or corporate merchandise managers. They set merchandising
policies for the entire store and are responsible for sale volume. The general or corporate
merchandising managers are in charge of several divisions. The divisions may be related
such as general merchandise managers for women’s wear and accessories, or the
divisions may be totally unrelated
Divisional Merchandise Managers:
Merchandising responsibility is further segmented into single divisions such
as women’s sportswear or men’s furnishings, directed by divisional
merchandising managers. In the women’s area divisional might be in charge
of missy dresses, missy sportswear, junior dresses. A national retailer with
decentralized buying would have regional merchandising managers instead.

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Buyers:
Each division is composed of departments. These departments may be based
on life style, styling categorizes, price ranges or vendors. According to life
style, women’s dresses might be divided into social occasion and career. If
categorized by price ranges the departments might be divided into designer,
bridge better,contemporary,moderate,and budgeting a large chain, buying
responsibilities may be further subdivided, Accessories are subdivided into
handbags,hosiery,hats,jewellery and so on.
Each department is further segmented into classifications, a related group of
merchandiser. A buyer is responsible for the success of one or more
classifications, one department or several departments. One buyer may buy
just a few bridge or designer collections. Each retailer has its own unique
breakdown of classifications and buyer responsibilities.
Buying Preparations:
Careful planning is done to help merchants buy merchandise efficiently and
successfully

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The Merchandise Plan:
Management determines a fashion merchandising policy, a long range
standard for fashion buying, selling and related activities. Retailers make up a
merchandise
Plan within the framework of the policy, goals and fashion direction set my
management. Actual sales figures and evaluations from the corresponding
season of the previous year, recorded in computer based forecasting and
planning systems, are used as a basis for the new plan.
The merchandising plan is a financial plan for allocating specific amounts of
money to each department or division for the purchase of an appropriate
assortment of fashion merchandise that will meet consumer demand ad sales
goals. Usually management determines financial plans for the company as a
whole, divides the totals and assigns sale goals to general merchandise
managers. These plans are then further subdivided to divisional managers and
buyers who also work on developing their part of the plan.
Merchandise plans are based on a fiscal calendar, are determined four months
to a year before the selling season, and cover a six month or one year period,
the spring season (February through July) and the fall season (August through
January).The plans are developed on computer spreadsheets which show
what needs to be purchased and sold per month to reach sales and profit
goals.

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Merchandise Plan Components:
Receipt Plans: Cost of goods that need to be received to sell in the store.
Sales Plans
Mark-up Plans: Adding on to prices to cover costs, see retail pricing.
Mark-down-Plans: Reducing prices to move goods.
Inventory shortages
End of month stock levels: Goods that are in the store
Weeks of supply: How long it will take to sell out merchandise.
Gross Margin: Profits Promotional Plans
Stock Turn: Figured by sales /Average stock

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Planning Sales Goals
The retailer’s goal is to exceed its own merchandise plan. To make a realistic
estimate of prospective sales, a buyer must consider the following points:
Economic Conditions: Anticipating a recession, buyers tend to buy conservatively,
whereas in a good year, they may buy more in hopes of an increase in business.
Market Trend Analysis Shifts in Population Local Retail Competition
Variations in Consumer Demand
Seasonal Consumer Demand: swimsuits for resort and summer and back to
school, for example.
Weather: Mild winters result in poor cost sales.
Holidays: How holidays will affect buying patterns including the number of
shopping days, especially weekends, between thanks giving and Christmas,
weather Easter is early or late.
Physical alteration or expansion of store.
An individual department’s ability to house and display the merchandise
effectively.
Which marketing activities are needed to support the merchandise?

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Basic stock merchandise in consistent demand throughout the year or during
the same season each year.
The effect of casual dress in the workplace, causal cloths are less expensive
than dress cloths which mean average sales are lower.
Units:
In many cases, the plan also exactly specifies the units, number of garments
and accessories, to be purchased to meet these sales goals. Accessory units
are divided according to the number of handbags, belts, scarves and so on,
that should meet demand. The scarf classification would be further broken
down into the numbers of shapes, prints and solids and desired fabrications.
The merchandise plans may be directed by management or buyers. Unit plans
are recorded into merchandising information system that is used for ordering,
allocation and unit control.
Planning Stock:
The next step in planning is to determine the amount of stock, in terms of
rupees investment, necessary to meet consumer demand and thereby to
support planned sales. Stock must be brought to a peak just before the
expected time of peak selling and enough units must be available to fill the
floors. Stock plans are part of the retailers computer organized financial
systems.
The Buying Plan:
The buying plan is a description of the types, quantities, prices and sizes of
merchandise that a buyer expects to purchase from vendors within a specific
period of time. The totals state exactly how much may be spent on
merchandise in each category in line with sales goals and the financial

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merchandise plan.
The more detailed the buying plan, the less confusing buying decisions will be,
allowing the buyer to concentrate on the fashion aspects of the merchandise
during the seasonal market. The plan must be flexible enough, however, to
allow for revision if conditions change, for example should buyers not find
what they want in the market.
Assortment Planning:
A merchandise assortment is a collection of various styles, quantities and
prices of related merchandise, usually grouped under one classification within
a department. The buyer plans to buy a balanced assortment of merchandise
to meet consumer demand and appeal to a particular group of target
customers.
Open –To-Buy:
Considering stock on hand at the beginning of any month, the buyer has to
calculate the amount of purchases that can be made if stock and sales are to
be kept in balance. The difference between actual stock and planned stock
equals to Open-T-Buy, the value of planned purchases.
Open -To- Buy=Actual Stock-Planned Stock
The open-To-Buy budget is adjusted according to business. When business is
good, stock is low and needs to be replenished. When business is slow,
buying has to be reduced addition; open-To-buy often has to be based on the
amount of space or real Estate that a buyer has available for specific
categories and merchandiser or for particular vendors.

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Buying:
The buyer purchases merchandising accordance with merchandising plan and sales
and profit goals.
Buyer’s role:
A buyers knowledge of merchandise stems from both experience and
education. The ability to evaluate merchandise and judge whether it is
suitable for a customer develops over year of examining all type of
merchandise for quality, styling and price.
It is very important for buyers to have store line experience; they need to be on
the sales floor to learn about customer’s wants and needs. Research:
Market and trend research becomes second nature to the buyer; buyers must
constantly research the following influences.
 Demographics and Psychographics.
 The effect of economic conditions on demand for certain types and
prices of merchandise.
 Global influence on styling and sourcing.
 Market and fashion trends.
 Influence of the media and celebrities on fashion.
 The competitors merchandise offerings.

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The buying process is analytical and creative part. The mechanics involve
knowledge of sales histories and the development of merchandising plan.
Buyer-Planner system:
Some retailers separate buying functions into a buyer planner system. Under
this system buyers are able to focus on shopping the market and merchandise
selection as well as financial control, while planers
Concentrate on distribution.
Planners shape the buy, monitor adherence to the plan, plan distribution to
individual stores, and team up with buyers to maximize their business.
Planners analyze regional differences, designating appropriate merchandise
for particular stores based on sales histories of color preferences, life style
needs, climate variations, and ethnic tastes and so on. They also relocate
merchandise to stores where it is selling best and make sure basic
merchandise is kept I stock. Most stores now have computer based
forecasting and panning systems that include allocation.
Buyers as editor:
Buyer can influence consumers buying to a large degree by their selection of
merchandise, which narrow the choice for the consumer. By determining
what parts of a collection will be sold in store and in what quantity. Buyers
affect the consumer perception of a manufacturer’s line .However they have
to show enough of a line or collection to represent them properly.

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The buyer’s role in Marketing:
Ideas on how to market and sell the merchandise are thought out ahead. The
buyer makes plans for advertising, including direct mail and e-commerce,
visual merchandising, and special events.
Advertising:
Buyers request ads on the basis of their merchandise plans and negotiate with
vendors for co-op money. They must provide complete information about
merchandise –concerning fabric, colors, styling details, price, sizes, to the
advertising copywriter. The garment or accessory itself must be given to the
illustrator, layout artist, and photographer. The buyer helps determine the
proportion and position of the ad and must carefully check ad copy for
accuracy. He or she must then make sure that the merchandise has delivered
and is on the selling floor with appropriate sign copy when ad runs.
Visual Merchandising:
Buyers may also request window and in store displays for particular
merchandise. They must also make sure that a good selection of that
merchandise is on the selling floor for possible customer purchase.

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Buyers as editor:
Buyer can influence consumers buying to a large degree by their selection of
merchandise, which narrow the choice for the consumer. By determining
what parts of a collection will be sold in store and in what quantity. Buyers
affect the consumer perception of a manufacturer’s line .However they have
to show enough of a line or collection to represent them properly.
The buyer’s role in Marketing:
Ideas on how to market and sell the merchandise are thought out ahead. The
buyer makes plans for advertising, including direct mail and e-commerce,
visual merchandising, and special events.
Advertising:
Buyers request ads on the basis of their merchandise plans and negotiate with
vendors for co-op money. They must provide complete information about
merchandise –concerning fabric, colors, styling details, price, sizes, to the
advertising copywriter. The garment or accessory itself must be given to the
illustrator, layout artist, and photographer. The buyer helps determine the
proportion and position of the ad and must carefully check ad copy for
accuracy. He or she must then make sure that the merchandise has delivered
and is on the selling floor with appropriate sign copy when ad runs.

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Visual Merchandising:
Buyers may also request window and in store displays for particular
merchandise. They must also make sure that a good selection of that
merchandise is on the selling floor for possible customer purchase.
Special Events:
Buyers may initiate special events and fashion shows. For example, the buyer
of a designer collection might arrange with the fashion office for a designer to
make a personal appearance to introduce a new collection.
To evaluate marketing strategies, buyers compare sale statistics two weeks
before ad, presentation, events, the day of, and two weeks after. They try to
determine if these strategies were successful in promoting sales.
Target customers:
The buyer tries to select the right styles, color assortment and fabrics at
acceptance prices for their target customer. Buyers need to keep in touch with
their customers “Lifestyle” to buy merchandise to fit their needs.
Micro versus Macro Merchandising:
Because of the large number of market segments, based on age, ethnicity and
lifestyle, there is increasing need for customizing merchandise. Micro
merchandising, identifying and serving one market-niche, is in response to
the recognition of diverse society with diverse tastes and needs. This means
that national retailers must differentiate their tastes and needs. At retailers
with centralized systems, planners use computer based allocation system to

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distribute merchandise appropriately .Micro merchandising is an opportunity
for small retailers and manufacturers because a narrow focus is easier for
them.
Buying and Selling Cycle:
The buying and selling cycle is related to the fashion cycle of consumer
acceptance. Therefore a buyers responsibility involve a complete cycle,
Planning what to buy, searching the market and selecting the right
merchandise, working with advertising, display and special events to promote
merchandise, training sales personnel and making down leftover
merchandise.
Broad Assortment Buying:
Ideally buyers would like to buy broad, but shallow assortment of
merchandise at the beginning of a season to test consumer reaction and then
as certain styles emerges as best sellers, increase stock in depth. By
comparing current sale of a particular style with previous weeks or months
figure, a buyer can determine either sales are rising or declining.
Narrow and Deep Buying:
If a category of a merchandise is very popular or if the buyer feels strongly
about a style, he or she may buy narrow (Just a few style) and deep (Many
merchandise in each size and color)
Short - Cycle Buying:
Buyers use short-cycle buying (Buying close to selling season) to judge
market conditions and trends to respond quickly to the market. Particularly
for junior and contemporary fashion and styles. Also refers to Just in Time
Merchandising, short cycle buying helps in reducing inventory. This is

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completely dependent on the manufacturer’s production cycle and availability
of merchandise.
Panning Promotions:
Buyers have to plan for ahead for promotions, special buys at low prices.
When a particular item is popular, such as cashmere sweaters, for instance, a
buyer might arrange for a volume purchase at a special price and then pass
the savings on to customers. Many retailers would like to cut down on the
practice of constant sales and promotions, but it is difficult because
consumers now expect them.
Planning Markdowns:
Buyers hope to select merchandise with full sell through; they also have to
plan ahead for inevitable markdowns .many stores mark down prices after the
merchandise has been on the selling floor for appropriately eight weeks.
Retailers are speeding inventory turn b Retailers usually charge
manufacturers for markdown allowances to help offset their losses. Some
manufacturers may even suggest to the retailers when it is permissible to
mark down merchandise to make room for new merchandise.
Shopping the Market:
After the buying plan established, fashion buyers shop the market to view the
merchandise available for the coming season. For the retailer the
manufacturer is the supplier, vendor or resource of fashion merchandise.
Buying tips are timed to cover markets that are important for the buyer’s
particular category of merchandise.

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Buyers visit different market centers for different needs. Many people
imagine a buyer’s job to be a glamorous one involving many trips to abroad.
However only designing department buyers and fashion directors of large
stores attend the tours.
Many French and Italian designers now have NY showrooms so that buyers
do not necessarily have to go to Europe.
Line Buying versus Trend Buying:
The buyer shops for new fashion both key resources and new ones. Key
resources or core vendors are those who have maintained a reputation for
dependability and whose merchandise sells through because of appropriate
styling, quality, price and nationality advertised brand name. The practice of
buying from these major resources is called line buying.
Matrix System:
Some retailers are requiring that 80 to 90 % of all merchandise be purchased
from core vendors. The most restrictive is the matrix system, strict centralized
merchandising developed by the many companies.
Buyers are limited to a list of this system cuts out small manufacturers who
cannot supply all the store of large group of retailers.
Y marking down to clear the stock. Trend Buying:
Buying merchandise for its innovative styling is referred to as trend buying.
Trend buying is especially important for leading fashion stores. Because
buyers do not always have limit to seek out new resources, some retailer is
providing vendor days when manufacturers can come to the store to show

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their merchandise. Finding an exciting unique resource can mean an
important merchandising statement for a fashion store.
There is increased focus on fashion, newness and uniqueness so that all stores
should do some trend buying.
Corporate buying:
In the case of major store making a large purchase, buying is often done
management to management by a group of executives including the buyer.
WALMART for example tries to do all of its buying in this manner. In this
case, the buyer is part of buying team.
Retailer –Vendor Alliances:
Manufacturers and retailers try to work together toward mutual success.
Vendor executives, designers, merchandisers and sales representatives
suggest appropriate merchandise for each retailer’s particular customers.
Buyers sand sales representatives continue to work together throughout the
selling season regarding advertising, reorders, markdowns, and sell through
.Buyers also provide vendors with weekly selling reports.
Purchase Orders:
Placing an order for merchandise is considered a contract between the store

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and the vendor. Therefore writing an order commits the store to taking the
merchandise if it meets quality expectations and delivery requirements
.Standard purchase orders specify the date of the order, the name and address
of the resource, the term of sale, shipping instructions, the store address, the
name of the department, the quantity ordered, descriptions, prices of styles
ordered and
Obligations between buyer and seller. Purchase orders are most efficiently
done by internet vendor linked computer system, which can instantly supply
information on what goods are available or are in work and what shipping
dates are expected.
The purchase order information becomes part of the retailers total
merchandise information system, which keeps track of merchandise as it is
ordered, received and finally sold. Deliveries are timed so that sufficient
quantities or merchandise are in the store to meet various peaks in the
customer demand cycle. The vendor is committed to meeting these delivery
dates or the order may be cancelled or a discount required.
Automatic Replenishment:
In an effort to maintain stock of basic merchandise, retailers use automatic
replenishment, made possible by electronic data interchange systems that link
them to vendors. This system sends sales and inventory information directly
to vendors so they can plan production.
To implement automatic replenishment, retailers must be willing to adopt a
continuous open-to-buy position for basic merchandise to let suppliers
replenish without any retail management approval. The use of automatic
replenishment is especially important for hosiery and shoes, to make sure that
all sizes, colors and so forth are in stock. The use of automatic replenishment
is also growing for other merchandise.

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Merchandise Planning
For a retailer the objective of merchandise planning is clear, achieving the
following seven ‘RIGHTS’
 The Right product
 The right place
 The Right quantity
 The Right Quality
 The Right Price
 The Right Assortment
 The Right Time
In order to satisfy every customer needs the retail store must have the right
product in the right place, in the right quantity with the right quality at right
price with the right mix with the right sizes and at the right time. The function
of merchandising is to achieve all the rights so that
sales are high with an ideal level of inventory holding and thus more profits.

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Merchandise Hierarchy:
While planning the merchandise mix, a retail organization has to start with a
clear definition of its merchandise hirerarchy.The merchandise hierarchy is a
disciplined way of grouping the merchandise mix at different levels, starting
from a high level grouping to the lowest level of the stock keeping unit. The
grouping may at times have even more than four –five levels as shown in the
following example
The merchandise hierarchy forms the platform needed to create the store
merchandise mix.

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Category Management
Category management in retailing is defined as the process of managing
categories as strategic business units. This produces enhanced business results
by achieving a robust bottom line for each category.
A category is a merchandise group that addresses similar consumer needs
and wants. Goods in a category are displayed and sold together in a retail
environment so that consumer choices are easier, thus enhancing the
shopping experience.
It is felt category management in retailing is similar to brand management in
manufacturing, as product group become the focal point in terms of
development, merchandising and marketing. The category management
process in retailing involves the following steps:
Category Vision:
This refers to the top management‘s view of what each category out to
achieve in terms of customer satisfaction or value offering and the
differentiation thus achieved for leadership.
Category definition:

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This is made based on customer segmentation and the specific SKU’s that
belong to the category. For example a broad category definition can be ‘soft
drink’ a narrower can be ‘aerated soft drink’ and one of the SKU’s within the
same can be ‘Pepsi 500ml’.
Category Role:
This defines the objective of the category in the entire merchandise mix and
determines its relative importance. Some categories may play a ‘destination’
Role in the product mix-as in the case of the grocery category in a
supermarket-and some an ‘impulse’ role.
Category Assessment:
The category assessment is done to identify gaps if any between the category
vision and the existing contributing SKU’s to the category. This assessment
helps improve the category’s business by identifying opportunity gaps in
sales, stock turns and profits.
Category Balance score Card:
This helps measure the performance of the retail business. It establishes
specific business target for the category while reflecting on its performance.
Category Strategies:
This aim at achieving the customer off take from the shelves, ringing the maximum
number of transactions, earning maximum margin other objectives
Dies mix. Category Tactics:

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Category tactics refer to the tactical requirements to achieve the score card
targets. These tactics are compared with those of the competition to attain the
best advantage and edge and many centre on the areas of assortment, pricing,
space planning, promotions etc.
Category Implementation and Review:
This refers to the store level execution of the category business plan and
strategies and monitoring category performance against the plan to take
action on an ongoing basis.
Successful category management in retailing is a customer driven process. It
enables the retailer to have the right category mix through the preparation and
implementation of an efficient category plan.
Markups and Markdowns in Merchandise Management
Markup is the percentage amount (calculated on cost) added to cost in order
to arrive at the maximum retail price (MRP) for a product. Hence
Markup=Percentage of margin calculated on cost added to arrive atthe MRP.
Cost=MRP--
Margin
Margin=MR
P—Cost

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MRP=Cost+
Markup
MRP=Maxi
mum Retail
Price
Markup is based on cost and is expressed in percentage terms.
Problem: What is the markup percentage for a dress that cost is 200 rupees
and retails for 400 rupees?
Markup %= MRP—Cost/Cost *100
=400—200
=200/200*100
=100%
Sometime the retailer needs to look at the cost of an item and determine what
the item should retail for. It is fixed if the target customer is willing to pay
that price.
Markdown is the amount reduced from the MRP to arrive at the new retail
price. Markdown is calculated as a percentage of MRP.
Problem: What is the markdown percentage for address whose original MRP
is 400 and the new MRP after markdown is 200.
Markdown % = Difference b/w old MRP—New after markdown/old MRP*100
=400-200/400*100
=50%

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Understanding the Retail Value Chain of Merchandise
To propose a competitive retail strategy it is imperative to first understand the
various functions involved in the different channels of fashion merchandise.
A brief outlook is provided below to understand the value chain. Each
function has a range of processes for successful implementation which is
described below-

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Merchandise Budget Plan for Fashion Merchandise
The merchandise budget plan aims to setup specific merchandise objectives
and to plan financial aspects of the merchandise side of the business. It
involves bellow steps.
Planning Data:
Assortment Plan: Historical precedence is the starting point for developing
assortment plan for any season.
Sale Forecast: It is a simple way to adjust past sales to make projections into
the future. Sources of information for sales forecast could be
 Previous sales volumes with real trends are identified.
 Published sources
 Customer information-Through observation, sales people and market
research.
 Observing competition.
 Vendors, Distributors, Channel partners and expert
judgments. Method of forecast is mainly

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A. Time series-Moving average-Average of several months’ sales, as each
new period sale data is added the average the oldest period is removed from
total.
B .Time sales-exponential smoothing-often used for short range forecasting.
New forecast =Old forecast+ f (Actual demand –Old forecast) where f is constant
between 0 and 1 that determine influence actual demand on the new forecast.
Reduction: To have enough merchandise levels apart from sales volume of
inventory may go down due to markdowns, shrinkage and discounts
GMROI: Goal for category is planned based on past performance of same
merchandise.
Inventory Turnover: when inventory turnover is planed gross margin is
ignored as the budget plan is an inventory plan and not a pricing of margin
control plan.
Average stock to sale Ratio: To achieve planned inventory turnover
purchase must be kept in line with sale forecast with the period. The average
BOM stock to sale ratio helps to do this.
Monthly Planned Purchase: Monthly sales Monthly reductions +EOM
Stock+ BOM Stock.
Evaluating the Merchandise Budget Plan
GMROI, Inventory & sale forecast are used for both planning and control as
it is based on top down planning process. After the selling process the buyer
determines how well they actually performed compared to the plan. If actual

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GMROI, turnover and forecast are greater than planned then performance is
better than expected. Question should be answered as to why the actual
performance is above or below planned.
Open to Buy Analysis (OTB):
OTB analysis starts where merchandise budget plan ends. The merchandise
budget provides a plan for purchasing merchandise to be delivered in a
particular month. The OTB keeps track of how much is spent each month and
How much left to spend such OTB acts as a buyer checkbook. The purpose of
OTB is to keep actual spending in line with the planned level of purchase to
avoid over investment and can maintain rate of inventory turnover at planned
lebels.OTB is usually kept at retail price.
Steps in Buying Merchandise:
 Gathering data from customers, suppliers, sales staff,
competitors and internet.
 Selecting and interacting with merchandise sources-agents, manufacturers.
 Evaluating the merchandise-Inspection, sampling.
 Negotiating the purchase terms.
 Concluding purchase
 Receiving and stocking merchandise-storing.GRN, Invoice, Monitoring.

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 Reordering merchandise-Inventory holding vs. ordering costs,
turnover, and cash outlay.
 Re evaluating on regular basis.
A: Procurement and Inventory Management
Sourcing can be defined as the process by which companies acquire raw
materials, parts, components, different product and services from various
suppliers in order to carry out their operations. Such process is called
Procurement. The sourcing process comprises of the bellow mentioned
stages.
 Supplier selection
 Supplier contracts designing
 Product design collaborations
 Procurement of material
 Performance evaluation of suppliers.

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Supplier Scoring and Assessment:
Supplier scoring and assessment means rating the supplier‘s
performance.Tradionaly price was the primary characteristic ,however
suppliers were ignored on other characteristic like lead time,quality,reliability
and design capability and moreover the impact of total cost doing business
with them. With the help of detail received by supplier scoring. Supplier
selection is done to identify appropriate suppliers.
Once suppliers are identified supplier contracts need to be formulated and
negotiated with the suppliers and in turn product design collaboration takes
place. While doing this it is necessary to ensure that these designs are
communicated effectively to all parties involved in the production and
operations.
The next stage is procurement in which suppliers sends the products in
response to the orders paced and delivered on schedule at the lowest
opportunities where buyers are able to decrease overall cost of the product
Benefits of sourcing process are
 Aggregation of orders resulting in economies of scale.
 Reduction in overall cost s and distribution of risks with better co-
ordination.
 Better forecasting and planning due to better supplier relations.
 Help to reduce inventories.
Some of the scoring points while identifying the right supplier using supplier
scoring and assessment are noted bellow.

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 Replenishment lead time
 Scheduled performance
 Supply flexibility
 Delivery frequency
 Supply quality
 Transportation cost
 Pricing
 Coordination of information
 Product design capability
 Exchange rate and taxes
 supplier visibility
Supplier quality
feature
Supplier A Supplier B Supplier C
Product quality 2 5 3
Service quality 3 4 1
On time delivery 4 1 3
Customer focus 2 4 3
Customer service 2 4 4
Reputation 2 4 3
AVERAGE 2.5 3.6 2.8

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Vendor Management
The use of the following sourcing practices makes sourcing easier and
managing vendors efficiently resulting in order costs and increasing the
overall profitability of firm.
Use of multifunctional teams:
Multifunctional groups help develop better strategies for sourcing. It helps
purchases to stress and focus on purchase price. Collaboration between the
purchasing, manufacturing, engineering and planning departments is much
more likely to identify correct costs. This collaboration must be continued up
to the procurement stage to realize the benefits of a good sourcing strategy.
Coordination across regions and business units:
To maximize economics of scale in purchasing and reducing transaction cost,
coordination of purchasing across all levels of firm and supplier is essential.
Evaluation of total cost of ownership:
An effective sourcing strategy should not make price reduction its main
objective. Primarily the factors that influence total cost of ownership should
be identified and use for supplier selection. The performance of the supplier
should be evaluated and its impact on the total cost be quantified. Focusing
on total cost of ownership also allows a buyer to identify opportunities in
designing and planning in better way.
Building long-term relationship with suppliers:
Sourcing itself is essential to both supplier and buyer working together as this
generates more opportunities for savings than two parties working

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independently. Trust should be established between the buyer and supplier in
order to maintain long term relationship.
Inventory Management
Inventory is very large and costly investment that every stage of the supply
chain needs to incur. Every stage works independently to
ma
ke supply chain profitable. Thus it is very important that every stage of
supply chain co-ordinates and together forms the inventory policy. A large
number of firms make use of following two approaches in combination when
managing the inventory in order to meet profitable variability.
Use of common components:
This approach involves manufacturer to design common components that
can be used in multiple products which have a predictably variable demand
that result in overall constant for the components.
Developing Inventory for highly demanded Products:
Products that are highly demanded or that have a high predictable demand it
is important to decide upon which of their products will have highest demand
and therefore build inventory for that product in the off season in the off
season because there are less chances of fluctuation in demand for these
products closer to peak season.

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Need for Holding Inventory:
 Achieve economies of scale.
 Balance demand and supply.
 Specialization.
 Protection from uncertainty and order cycle.
Types of Inventory:
a) Cycle Inventory
b) Safety stock
c) Speculative Inventory
d) Seasonal Inventory
e) Dead Stock
a) Cycle Inventory:
Defined as average inventory that exists in the supply chain either due to
production or purchase of products in lot sizes that are larger than those
demanded by the customers.
safety level Of std .devil
requirement
Safety stock
requirement
Average cycle
stock
Total average
inventory
84.20% 1.0 176 500 676
90.30% 1.3 230 500 730
94.50% 1.6 280 500 780
97.70% 2.0 350 500 880
98.90% 2.3 406 500 906
99.50% 2.6 450 500 950
99.90% 3.0 530 500 1030

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b) Safety Stock
Safety inventory can be defined as inventory carried for the purpose of
satisfying the demand that exceeds the amount forecasted for a given period
of time. Due to the uncertainty in the demand a product shortage may result.
The table bellow shows the summary of alternate service labels, safety stock
levels and also the total average inventory to be maintained. Fill rate
represents the magnitude of a stock out .It represents the percentage of units
demanded that are on hand to fill the customer’s orders.
C) Speculative Inventory:
Stock held for reason other than satisfying current demand .Reasons can be
bulk purchases larger than demand to get bulk discounts of a failure of a
future price increase or future shortage expected.
D) Seasonal Inventory:
Form of speculative demand accumulation of inventory before a season begins.
E) Dead Stock:
Products which have no demand registered over a large period of time.
Products are obsolete and block working capital.
Symptoms of Poor Inventory Level:
 Increase in number of back orders.
 Increase in inventory investment with back orders remaining constant.

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 High customer turnover rate.
 Lack of sufficient space.
 Increase in number of orders being cancelled.
 Deteriorating relationship with intermediaries in stage of supply
chain.
Inventory Holding Cost:
Holding cost is estimated as the sum of the following mentioned costs
.Usually the holding cost is a percentage of the cost of the product.
Cost of Capital:
Weighted average cost of capital on inventory is calculated before taxes are paid.
Spoilage Costs:
Rate at which value of product the firm stores drop following drop in market
value due to quality deterioration usually high on perishable food items.
Handling cost:
Include receiving and storage cost of products.
Occupancy cost:
Show an incremental charge in the space cost due t the change n the cycle
inventory. If a firm is charged on of units stored we call it direct occupancy
costs.
Miscellaneous costs:

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Deal with large number of costs such as costs due to theft, damage, tax and
insurance that may be incurred by the company.
Ordering costs:
Cost associated with placing or receiving an extra order independent of the size
of the order.
Transportation cost:
A fixed transportation cost is often incurred by firms regardless of the size of
the order.
Objective of Inventory control:
 Avoid shortage of material
 Prevent excess material
 Reduce cost.
 Provide proper customer service.
Selective Inventory Control:
Visual Control: Examine inventory visually to determine if
additional inventory required.
Tickler Control: Physically count small portion of inventory each day.
Click sheet control: Record items as it is used on paper for reorder
purposes.
Stub Control: Retain a portion of price ticket when an item is sold.
Point of sale Terminal: Relay information on each item used or sold.

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ABC Analysis: 20% of the items contribute to 80% of total sales.
Decision based on 80-20 rule
A-Important-Moderate Important-Less Important
FSN Analysis: Based on speed of movement of inventory-Fast, S-Slow, and
N-Non moving goods.
Two Bin Systems: Principle of reorder level physically
separates entire stock into two bins. Reorder quantity EOQ.
. Second bin quantity =Minimum STK+Lead
time Consume First bin quantity=Order
quantity-Lead time consumption
HML analysis’-High priced item-Medium priced item-Low priced items
B: Information technology in retail business
IT would help retail in providing the right product at the right place at the
right time with a price tag acceptable to customers. It provides hardware and
software capabilities to cover end to end retail business operations and also
critical in efficiently and effectively carrying out all the core functions which
would include global sourcing ,procurement, merchandising
compliance,logstics,demand forecasting ,product innovation, point of sale
data management, property management,marketing,CRM,Loyality
Management.
 It can leverage sales history and anticipated demand to create
an accurate forecast of customer demand.
 Simulate midterm and long term planning options allocate
resources and make strategic sourcing decisions in a timely
fashion to best meet operational goals.
 Integrate sourcing, purchasing, production, distribution and

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transportation to create a demand plan.
 Create a calculated, time phased replenishment plan based on
customer demand forecast and using automated state of the art
algorithms within the supply chain.
 Institute real time inventory tracking across all channels
 enabling the retailers to manage and monitor stocks and values
and minimize the inventory levels while avoiding out of stock
situations.
 Ensure an efficient warehouse management system, picking
and packing, controlling logistics documents and in bound
monitoring.
 Move from a product push to a customer pull approach and
reap the rewards of reduced operating costs and larger profit
margins.
IT applications: The technology perspective
Applications of IT in retail span a very wide spectrum from store front right
up to business intelligence tools integrated with ERP/SCM and CRM
applications and further to MPLS/VPN.
The front end applications are mainly in the form of point of sale terminals
and barcode readers for faster clearance. There are the SCM tools for
constraints based supply chain planning and forecasting.CRM tools cater to

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trend analysis, customer usage pattern, purchase, promotion management and
lifecycle analysis.
E‐CCommerce covering inventory visibility, onsite merchandising, cross
selling, price compression and multi channel congruity would be the next
phase inretail.
Point of Sale:
POS system capture data about orders at the POS are frequently found in fast
food chains and grocery stores. The POS provide immediate update to sale
and inventory systems and allow firms to monitor sales trends as they happen.
The information available from POS becomes input to the financial
accounting systems which then supply data to marketing information
systems.
Bar code/ UPC:
Bar code or Universal Product Code is used in point of sale systems in
supermarket and retail stores. It is a product identifier and is made up of
series of bars and spaces which represent alphanumeric information
pertaining to product code, price. Barcode helps enhance accuracy in demand
forecast, real time stock management, faster checkout at POS, product
tracking and tracking and reduced labeling and administration costs.
RFID:
Radio frequency identification is a wireless barcode which provides wireless
communication between objects and readers. FID uses embedded microchips
containing information about item, location. It has the ability to identify and
track products and equipment in real time without contact or line of sight. Its
offers reading, waiting, transmitting and storing and updating information. It

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can track inventory and tasks performed by employees in store, customer
profiles, transaction history and levels of stock.
VPN:
Virtual private network is a secure connection between 2 points across
internet, enables private communications to travel securely over public
infrastructure. It saves long distance communication costs.
EDI:
Electronic data interchange is the in charge of business information through
standard interfaces by using computers without requiring re-keying
information. Main benefits are saves time and data transmission is immediate,
reduced manual errors, no paper handling.
Data warehousing and data mining:
Retail organizations are data rich but information poor, hence data
warehousing and data mining provides users with tools to store summarized
information analysis tool involves automated discovery of patterns and
relationship in data warehouse.
C: Comparative Merchandise analysis of national brands

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Determining the Competitors:
SHOPERS STOP LIFESTYLE WETSIDE
POSITIONING EXCELLENT
SHOPING
EXPERIENCE
Trendy ,vibrant
Youth brand
Style &
affordability
FORMAT TYPE MULTI BRAND Multiband Exclusive
PITCH SHOPPING
EXPERIENCE
Latest fashion Affordable style
TARGET
CUSTOMER
AFFLUENT
CONSUMERS
Affluent
consumers
Affluent
consumers
C: Comparative Merchandise analysis of national brands
Determining the Competitors
SHOPERS STOP LIFESTYLE WETSIDE
POSITIONING Excellent
shopping
experience
Trendy,vibrant,youth
brand
Style &
affordability
FORMAL TYPE Multi brand Multi brand Exclusive
PITCH Shopping
experience
Latest fashion Affordable style
TARGET
CUSTOMER
Affluent
consumers
Affluent consumers Affluent
consumers
Determining the key success factors:

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The competitor’s analysis is done with respect to the following key
parameters of 5 P’s.
 Positioning
 Product
 Price
 Promotion
 People
Positioning
Parameters Shoppers stop Lifestyle Westside
How started The Bahia’s had a
Property which
they
Wanted to make
Commercially
viable.
Lifestyle is part of
The landmark
group a Dubai
based retail chain
which made its
way in Indian
through fashion
retailing.
Lake took over
Littlewoods of
UK store which is
now known as
Westside owned
by Trent.
When started 1991 in Mumbai 1999 in Chennai 1998 in bang lore
Taglines First campaign
idea emerged
‘shperstop’.The
ultimate shopping
experience ‘second
idea ‘ Feel the
experience while
you shop ‘new idea
Your store. your
style
Started with
‘surprisingly
affordable price
New idea ‘keeps
your style alive’.

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‘start something
new’.
What they did Started its loyalty
program in
1994.first citizen
card.
First citizen
member base in
1100000
contribution to
sales 66%
Started its loyalty
program in Jan
2001: the inner
circle. The inner
circle has a
customer base of
750000
.contribution to
sales 40%
Started its loyalty
program in may
2001.club west.
Club west as a
customer base of
50000 in
Hyderabad.
Contribution to
sales 60%
Present
positioning
Currently
operating more
than 24store.
Currently
operating more
than 13 store
Currently
operating more
than 29 stores.
Comparison of various Parameters
Shopper stop:
Trial room:
More in no.
Mirrors on 2 sides. Size of mirrors smaller.
Mirrors not aligned from edge to edge due to which the size seems
smaller although it is bigger than that of lifestyle.

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Store ambience:
Well designed, beautiful and air conditioned ambience
Gives a classy royal feeling, round decorative staircase in the centre
of the store.
Aisle Space:
Maximum aisle space for convenient movement of both customer and CSA
(during stock replenishment)
Wall and ceiling textures and colors:
Light base color walls and moderate height ceilings.
Wallpapers as per the merchandise segment.
Signage:
Sale signage’s in green color.
Other signage’s in black white
Signage’s depicting lifestyle:
Trial room:
More than that of Westside but lesser than that of shopper stop.
Mirrors on three sides aligned from edge to edge which makes it look
spacious.
Store ambience:
Well designed beautiful ambience
AC not sufficient as per the footfalls in the store.
Aisle space:

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Sufficient aisle space for convenient movement of both customers and
CSA (during stock replenishment).
Wall and ceilings and colors:
Cream color walls with high ceilings.
Signage:
Less use of signage’s
Only signage’s denoting different sections present
Westside:
Trail room:
Least in no, only 4 in each floor.
Biggest in size but mirror on one side only.
Store ambience:
Well designed interiors, sprawling space and air-conditioned ambiencetyles
and size not Gives an energetic, youthful effect.
Use of electronic media to intensify the effect.
Sofas provided for the comfort of the customer.
Aisle space:
Cluttered arrangement of merchandise and less aisle space.
Arrangement of merchandise in a circular format to give an attractive
display.
Wall and ceiling textures and colors:

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Cream color walls and low ceilings with extensive use of wood works.
Signage:
Proper and effective use of signage denoting sizes, segment etc.
Special offers like BEST BUY highlighted.
For kids swear distinction made clearly by mention of the
relevant age group.
Product
It is noted that in most of the categories the no. of style option available in
lifestyle is 20-25% lesser than that of shoppers stop: except footwear category
– Lifestyle shoe mart collection far exceeds that of shopper stop.
In most of the categories the no of style options available in Westside is
almost half of Lifestyle.
4‐5 Colors are available for most of the styles like for T-shirts, Tops, and Kutras.
Assortment plan for Men’s Wear:
Private label in shoppers stop and lifestyle does not exist for categories like
Suits and Coats
Jackets
Track Pants
Shorts
Denim Shirts
Ethnic wear (lifestyle had both but price point was not distinct)

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Innerwear like vests, underwear, belts etc.
Style option available in formal trousers in shoppers stop, lifestyle and
Westside and almost equal.
Value pack of 3 T-shirts in a set in different colors was being promoted in
both shoppers stop and lifestyle whereas it was not present in Westside.
Innerwear was mostly available in sets.
More of singles counts are used for sport /casual wear shirts across all the
brands. Fast moving sizes 40 & 42 in shirts. 32 &34 in Trousers
Least moving 44 & 46 in shirts and 38& 40 in Trouser.
Assortment plan for women’s wear:
Presence of only private label in lifestyle and shoppers top.
Formal skirts
Casual skirts
Presence of only national brands in shoppers stop and lifestyle in categories
Cargoes
Track pants
Shorts
Denim Skirts
Category SKD in lifestyle and Westside had almost similar
style option. IKAT, Khaki, mangalgiri are popular among kuris
and SKDs.
Style options available in lifestyle and shoppers stop are almost same in
categories.
Formal shirts
T-shirts and Tops

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Denim Skirts
Cargoes
Shorts
Denims
Belts
Slips and spaghettis
Style options available in lifestyle are more than that of shoppers stop for
categories.
Scarf’s
Kutras
Assortment plan for kids wear:
There is a dominance of the blue and pink colors.
Party wear frocks present wear constructed by material poly cotton, poly
viscose and other synthetic blends.
Wider options are available for smaller sizes.
Assortment plan Footwear:
Lifestyle has got a very strong merchandise mix as compared to its
competitors. Hawaii chap pals and Kolhapur shoes are only present in
lifestyle.
Lifestyle has got more than double collection of women’s slippers than that
of shoppers stop.
Lifestyle has got more than the four times the collection of women’s casual
shoe’s than that of shoppers stop...
Westside has very limited style options especially for men’s category.

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PRICE
Price points of lifestyle and shoppers stop are almost head on head: except
Men’s Jacket
Women’s slippers
Women’s sports shoe
The price point of Westside is prominently low as it comprises only of
private labels.
Men’s wear observation:
Maximum options were present in the price point 1199 for both shoppers
stop and lifestyle in formal shirts while it was in price point 699.
Highest price point for suits and jackets present at shoppers stop at 16499
Women’s wear observation:
No distinct price points for private label and national brands in shoppers stop
as well as lifestyle for
Formal shirts
Jackets
Ethnic wear
Scarf
It was observed that there was a vast difference in price points of private
labels and those national brands in shoppers stop and life style for
Suits and coats
Kurt as with yolks (priced at 549) was present in lifestyle and not in
shoppers sop and Westside.

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Kurt as with bet at 399 were present in Westside while not in
shoppers and Lifestyle
Kids wear observation:
Maximum options were present in the price point 399 for both shoppers stop and
lifestyle in tops while Westside it was in price point 299.
Maximum options were present in the price point for both 699 for both
shoppers top and lifestyle in bottoms while in Westside it was in price point
299.
Basic products of lifestyle and shoppers top start at higher price points than
those of Westside.
Footwear wears observation:
. Lifestyle has got maximum options available at price point 799 for women’s
slippers.
Lifestyle has got maximum option available at price point 1399 for women’s
casual shoes Gap exists in price point of kid’s footwear in lifestyle-like girls
shoes are available for 1500 and 1000 and there is no price point between
them

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Comparison of promotion elements
People
Shoppers stop:
CSA Intensity:
Strong knowledge base.
Per 2 brand 3 CSA
Proper training for 3 months at the time
of joining. Good PR and
communication.
Well groomed and emphasis on customer satisfaction.
No direct recruitment for senior CSA .Juniors is promoted as seniors
based on their performance.
9
0

8
0

7
0
84. Series
3 60.7 62.
2
0

1
Shopper Lifestyl Westsid

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Remuneration structure and incentive scheme:
12th
pass 4000 and graduates 6000-8000.
Incentives on sale.
Lifestyle: CSA intensity: Per brand 1 CSA.
CSA capability:
Strong knowledge base
of joining. Good PR and communication
skill.
Recruitment as per their qualification and
experience. Qualification graduate as seniors CSA
and 10+2 as junior CSA. Remuneration structure
and Incentive scheme: Senior CSA 6000-8000
Junior CSA 4000-6000
Incentives on the basis of sale
Westside:
CSA intensity:
Per segment 3-4 CSA’s
CSA capability:

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Basic knowledge of the particular segment.
of joining. Good PR and communication
skills.
Remuneration structure and incentive scheme:
Gross salary 6200 in hand 5664 incentives on the basis of sale.

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CHAPTER NO.II:
RESEARCH
METHODOLOGY

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2.1: Research Methodology
Queue 1: Which one is your favorite brand?
a. Shoppers stop
b. Lifestyle
c. Westside
Queue 2: which store has more convenient layout planning?
Queue 3: Which store has easy availability of sizes?
Queue 4: Which brand exchange and return policies are easy?
Queue 5: Which one is the most sophisticated outlet?
Queue 6: Which brand have latest trend in terms of fashion?
Queue 7: Which brand’s employee give prompt services?
Queue 8: Which brand give great shopping experience?
Queue 9: Factor which determine the purchase of customer

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2.2-Objectives
The objectives of the project work are:
To provide a basic understanding of the merchandising concept.
To underline the relevance of merchandise planning in a retail organization.
To provide information on merchandise grouping, defining the
concept of merchandise hierarchy.
To explain what is meant by merchandise buying and replenishment
planning.
To define category management and focus on its advantages.

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2.3: Hypothesis
During my research I found that Merchandising is a significant function of
retailing. It deals with merchandise planning, presentation and management
in a retail store with the objective of having the right product in the right
place, in the right mix, in the right price at the right time.
The merchandise range and mix in a store has to be planned meticulously and
grouped in a merchandise hierarchy for a better understanding and analysis of
sales and stock.
Merchandise presentation too is important for a retail store. Hence a pangram
depicting the placement of merchandise in the right places and right
quantities requires to be worked out.
Category management with a strategic business unit approach helps manage
merchandise profitably besides enabling a speedy response to customer’s
requirements.
Carefully planning of markdowns and prevention of shrinkage will yield
better margins for a store.
Today market is full of competition, same product offered by various brand,
so need to understand the trends and taste of consumer, for that proper
merchandise and assortment plan is needed. All the finding and
recommendations may be or may not be true; this research is based on data
available as today.

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CHAPTER NO.III:DATA ANALYSIS

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3.1: Data Collection
 Data available on apparel brands website
 Data analysis of various brands.
 Direct interview of company executives.
 Visiting various store and category analysis
I visited to stores of Shoppers stop, Lifestyle, Westside

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3.2: Findings
Why Merchandising is important for retail business.
Crisis of unorganized retail in Inventory control.
The lead time between the order and the delivery of different SKUs
was not too high (about 1-2 days). However, in the case of beverages,
the lead time needs to be brought down.
The outlets used the option of buying on credit and sometimes they
bought the merchandise on cash also. As regards the credit period
available for the retailers, the period varied and mostly one month
credit period was common.
Premium brands do not have much growth. It is the higher priced
merchandise which is contributing to the overall Gross Margin.
Despite being a bottoms centric brand, the Tops market shows some
potential.
Frequent replenishments lead to less cycle inventory.

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CHAPTER NO.IV: CONCLUSION AND
SUGGESTION

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4.1 Recommendations
The new retail store should be positioned in between lifestyle and
shopper stop with emphasis on quality and fashion and latest trends
that provides value for money to the customer giving them a
wonderful shopping experience.
The upcoming store should have loyalty program.
Te outlet should emphasis on brand building as people buy product
not as a brand but as a store product.
Same color story should be used both for nesting table as well as for
wall display.
The nesting table should be stacked low or else it creates an effect of a
hypermarket.
Fast moving sizes should be determined and provisions should be
made for stock replenishment.
There should be sufficient style options across all segments andcategories.
Merchandise should cover a wide range in terms of price points so

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that it caters to different customer segments having different
disposableincome.
Since in different parts of India festivals are important, the store
should promote its merchandise according its demography to Ancash
on the festive mood of the customers.
New offerings should be clubbed and displayed in reasonably size and
place.
An increase in forecast error accuracy decreases both overstocked and
under stocked quantity and increases firm profit.
There are a number of cases of bar code mistakes due to wrong
printing or tagging. Riggers are the performing brand of the store and
Bay Island is a non performing brand for the store.
The store is facing problem of stock out in certain brands and excess
stock in other which needs to be balanced.

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4.2Conclusion
Merchandising is the term used to signify articles for sale; it derives from the
word merchant, the actual seller or retailer. Fashion merchandising includes
all the planning and activities necessary to supply the fashion wants and
needs of retail customers. In the past fashion merchandising was usually
associated only with women’s apparels and accessories.
Today, stores use aggressive merchandising techniques for men’s and
children clothing too. Fashion influence has also spread to all other areas of
retailing from cosmetics and home furnishings to cookware.
Implementation of Retail Intelligence software to address the lacunas
identified in the current buying process. Proposed and implemented Retail
Performs to increase operational efficiency in the Retail Environment.
Monitoring of Key performance Indicators. Tracking planned vis-à-vis Actual
store wise sales data. Comprehensive Rating methodology for front end sales
staff.

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5.1: Bibliography
 Marketing Management By-Philip Kilter.
 Retail Management By-Gibson G.Vegamani
 Data available on website of Apparel Export Promotion Council of India.
 Annual reports of India Brand Equity Foundation.
 Google
 Direct Interview
?

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5.2: Glossary
Action Alley: The sales area of a store located immediately after entering.
Ad Slick: Ad slicks refer to the final, camera-ready advertisement. It gets its
name from the glossy paper on which it is printed.
Anchor Store: A major retail store used to drive business to smaller retailers
that physically surround it. These larger department stores or grocery stores
are generally part of a retail chain and are the prominent business in a
shopping mall.
ANSI: American National Standard Institute
Average Inventory Cost: Average inventory cost is found by adding the
beginning cost of inventory for each month plus the ending cost inventory of
the last month in the period. If calculating for a season, divide by seven. If
calculating for a year, divide by thirteen.
Big Box Stores: Large stand-alone store with varying market niches.
Bill of Lading: A bill of lading is a document used as evidence that a

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transport company or carrier received goods from a shipper.
Black Friday: Black Friday is the day after Thanksgiving- it's the biggest
shopping day of the year.
Brand: A brand is a name, symbol, or other identifying mark for a vendor's
goods or services. It is distinct from other vendors.
Break pack: A carton received in the warehouse with two or more inner
selling units that can be broken down and shipped to the stores.
Break-even Point: The point in business where the sales equal the expenses.
There is no profit and no loss.
Brick and Mortar: Brick-and-mortar store are retail shops with permanent
physical locations.
Business Plan: A detailed document describing the past, present, and future
financial and operational objectives of a company.
Case Pack: Merchandise shipped in full cases. Cartons cannot be broken into
smaller cases.
Cash Discount: A percentage reduction in price for payment within a
specified period of time.
Cash Flow: The movement of money in and out of a business and the
resulting availability of cash.
Category Killer: A large retail chain store that is dominant in its product
category. This type of store generally offers an extensive selection of
merchandise at prices so low that smaller stores cannot compete.

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Chain Store: One of a number of retail stores under the same ownership and
dealing in the same merchandise.
Comp Sales: Comparable-store sales are a measurement of productivity in
revenue used to compare sales of retail stores that have been open for a year
or more. Historical sales data allows retailers to compare this year's sales in
their store to the same period last year.
Contribution Margin: Contribution margin is the difference between total
sales revenue and total variable costs. The term is applied to a product line
and is generally expressed as a percentage.
CO-OP: An advertising allowance offered by a vendor, payable upon proof
of an ad having been run.
Cost of Goods Sold: The price paid for the product, plus any additional costs
necessary to get the merchandise into inventory and ready for sale, including
shipping and handling.
Coupon: A promotional tool in the form of a document that can be redeemed
for a discount when purchasing goods or services. Coupons feature specific
savings amount or other special offer to persuade consumers to purchase
specific goods or services or to purchase from specific retailers.
CRM - Customer Relationship Management: Customer relationship
management (CRM) is a business strategy designed to reduce costs and
increase profitability by strengthening customer loyalty.
Cyber Monday: Cyber Monday is the Monday after Thanksgiving and one
of the busiest shopping days of the year for online retailers. Retailers notice a
spike in sales on this day as many consumers who were too busy to shop over

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the
Thanksgiving weekend, or who did not find what they were looking for, head
to the web on Monday from work or home to find bargains.

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