This document outlines the key steps and considerations in a merchandise planning cycle for a retail company. It discusses factors such as reviewing past performance, creating sales forecasts, developing product and financial plans at the department and store level based on trends and benchmarks, optimizing suppliers and supply chains, allocating stock, and reviewing in-season sales performance. It also provides frequently asked questions about each step in the planning process and how the company approaches various merchandising decisions.

2. MARGIN
SALES &
FORECASTING
OPEN TO BUY
Merchandising
INVENTORY
Process
MANAGEMENT
PERFORMANCE
ANALYSIS
STOCK
ALLOCATION
DISTRIBUTION
LOCATIONS
People
FINANCE
SUPPLY CHAIN
Influences
MANAGEMENT
REPORTING
POS
Systems
SUPPLIERS
MARKETING
MERCHANDISING

3. Key Drivers
Right
Product
Right
Location
Merchandise
Planning
Right
Quantity
Right
People
Right
Time
Right
Processes

4. Right Location
Physical Location
 Size
 Occupancy Costs
 Demographics
 Classification
 Grade
 Sales per m²


5. Right Time
Speed to Market
 Seasonality
 Seasonal Trends
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6. Right Processes
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Sales and Forecasting
Inventory Management
Stock Allocation
Supply Chain
Margin Management
Performance Analysis
Open to Buy
Industry Benchmarks
KPI’s

7. Right People
Level of Experience
 Level of Expertise
 Succession Planning
 Incentive Programs
 Training and Development Programs


8. Right Quantity
Size Matrix
 Colour Assortment
 Fabric Assortment
 No. of Styles
 Quantity per Style
 Sleeve Lengths
 Pant Lengths
 Category Mix
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9. Right Product
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Target Market
Suppliers
International Trends
Value Equation
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Price
Fashion
Quality

10. Common Problems Experienced
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Late to Market
High Stock Holdings
Wrong Product on Racks
Timing of Markdowns
Inadequate Stock Allocation Methodology
Range Planning not identifying Key Trends
Inadequate Margin Management
Lack of detailed Management Reporting
No Lifecycle Management Strategy
No Pre-Season Strategic Plan

11. Merchandise Planning Cycle
START

12. Step 1
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Review Past Season
Company Performance vs. Plan
Category/Dept/Store
Sell Thru by Product Type
Missed Opportunities

13. Step 2
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Initial Budget Proposal for New
Season by Store at Company
level taking into account
Current Trends
New Stores
Refurbishments
Relocations and
Closures
Indicative Market Financial Trends
(CPI, Industry Growth)
Gross Margin Target

14. Step 3
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Commence Merchandising Planning
Process at Department Level for
Sales
Stock (WOS and S/T )
Markdowns
Spend (Open to Buy)
Gross Margin
Average Retail Pricing

15. Step 4
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Grade Stores by Turn Over
Take Department Product (Sales/Stock)
Plans down to Category level
by month
by week
by Graded Store
by Climate Grid
by Store Demographic

16. Step 5
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Review Planned Sales % Contribution
by department, or
by category, or
by Store
vs. Previous Like Season

17. Step 6
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Quantify Product Mix
Number of Styles
Quantity per Style
Sleeve Lengths
Pant Lengths
Top to Bottom Ratio’s
Colour Plan
Fabric Plan
GP Plan
Price Point Plan
Size Matrix

18. Step 7
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Sign-Off Product and Financial Plans

19. Step 8
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Supply Chain Optimisation
Supplier Selection (Fashion/
Quality/Price)
Logistics Planning (Speed to Market)

20. Step 9
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Stock Allocation Process
by Style
by Store (incl new/Refurb)
by performance vs. plan
Delivery to Store

21. Step 10
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Sales/Stock Performance Review
by Store
by week
by month

22. FAQ Relating to Merchandise Planning Cycle
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Step 1
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Do you review previous season?
At what level of your assortment do you analyze?
What is the format you use in this process, i.e. SWOT analysis?
Do you have a standard document?
What do you do with the information?
How quickly do you react to the analysis?
Who drives this process?
Do you have follow up meetings?
To whom is the analysis presented?
How long after the season is the analysis done?
Are there checks and balances in place to ensure results are taken into
next like season buy.

23. FAQ Relating to Merchandise Planning Cycle
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Step 2
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Who does initial sales forecast?
What factors are considered in preparing this forecast?
Who provides input into the process?
Are Operations involved in the process?
Who is accountable for the budget?
How is the budget presented?
Step 3
Do you plan by week/month/season?
 How do you determine benchmarks for:
 WOS
 Stock Turn
 Markdowns
 OTB
 Gross Margin
 Ave. Retail Price
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24. FAQ Relating to Merchandise Planning Cycle
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Step 4
How are stores graded/ranked?
 What factors are considered when grading stores?
 Who provides input into this process?
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Step 5
How much emphasis is placed on % sales contribution?
 At what level is this broken down to?
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Step 6
Who determines the assortment plan?
 How do they go about developing their plan?
 Who drives the plan?
 Who owns the plan?
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25. FAQ Relating to Merchandise Planning Cycle
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Step 7
Who signs off plans?
 Who is accountable and takes ownership of plans?
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Step 8
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What are criteria for selecting suppliers?
Who sets criteria?
Are suppliers given regular feedback on performance?
What happens if there are quality issues?
What happens if there are late deliveries?
What happens if a supplier cannot meet cost price?

26. FAQ Relating to Merchandise Planning Cycle
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Step 9
What criteria are applied to determine quantification to each store?
 How often are criteria reviewed?
 How do you determine what a new store should receive as opening
stock?
 Who controls the allocation process?
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Step 10
Is there a process to review performance?
 What happens to information generated in these reviews?
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