The document discusses the importance of merchandise selection in retail operations. It states that merchandise is the primary means of satisfying customers and must meet target customers' tastes, preferences, and be consistent with store positioning. Merchandise selection impacts all aspects of retail like resource allocation, sales, costs, and the type of customers attracted. Store image depends on the quality, price, and selection of merchandise offered. Effective merchandising requires analyzing customers, planning purchases in advance, acquiring the right products, managing stock, controlling inventory, and optimizing the product mix.

1. Merchandising Significance

2. The goal of merchandising
 Select the right mix of products or services to sell
at the store at the right price and at the right time

3. What is the hallmark of a successful
retail operation?
• Merchandise is the primary means of satisfying
customers
• That meets the tastes and preferences of the
target market
• And is consistent with store positioning

4.  Merchandise selection effects all aspects of retail
operations
 Funds allocation to hold stock
 Amount of space, labor, and equipment required for stock
and display
 Sales and margin generated by the store/website
 Types of customers the store will attract

5. Store image is a function of
 Quality,
 Price,
 And
 Selection

6. • ANALYSIS – identification of customers
and their needs
• PLANNING – as merchandise is
purchased 6-12 months before
• ACQUISITION – bought from
wholesalers/vendors
• HANDLING/STOCK MANAGEMENT –
where is it needed and in proper shape
• CONTROL – of large money inventory to
ensure financial return
• SAID TO BE THE CORE OF RETAIL
IN DETAIL IT MEANS

7. Analogy
• Merchandising decisions in retail is equivalent to
the product line decisions in marketing
• Product decisions involve optimizing the product
mix of the organization whereas merchandising
decisions involve optimizing the merchandise mix
for the retail store

8. Product Line & Product Mix
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Product
Line 1
Product
Line 2
Product
Line 3
Selected
Acme Furniture Co.
Products
TABLES
•Kitchen
•Dining Room
•End
•Coffee
•Outdoor
•Conference
•Computer
CHAIRS
•Dining Room
•Living Room
•Bedroom
•Outdoor
•Desk
LAMPS
•Table
•Ceiling
•Track
•Desk
• Product Mix

9. Merchandise classification
 Variety or Merchandise lines – or e.g. dept store (appliances, shoes,
clothing, perfumes, etc.) or an apparel store (men, women, teens, kids
etc.)
 Assortment– selection of products / brands/ styles/colours etc. under
each business category
 Depth – number of each SKU to be kept. Large stock raises inventory
cost and low stock reduces customer satisfaction


10. 11/08/20
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Merchandise strategy
• Variety + assortment
•
Hypermarket
Carrefour
Big Bazaar
Spencers
Department stores
Department store
Debenhams
Shoppers Stop
Westside
Service outlets
McDonald
KFC
Currency exchange
Specialty stores
Clarks
Pepperfry
Zara
Dunkin Donuts
Nykaa
Low High
assortment-( selection of products in each
Variety
(categories)
High
Low

11. Merchandise
strategy
 The heart of merchandising is
 balancing variety, assortment and
depth
 Example – add a new department
(variety) in the same space – reduce
assortment or depth – leads to
reduced customer satisfaction and
reduced sales

12. Advantages
• Broad Market
• Full Selection of Items
• High Level of Customer
Traffic
• Customer Loyalty
• One-Stop Shopping
• No Disappointed
Customers
Disadvantages
• High Inventory
Investment
• General Image
• Many Items with Low
Turnover
• Some Obsolete
Merchandise
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13. Advantages
• Broad Market
• High Level of Customer
Traffic
• Emphasis on
Convenience
Customers
• Less Costly Than Wide
and Deep
• One-Stop Shopping
Disadvantages
• Low Variety Within
Produce Lines
• Some Disappointed
Customers
• Weak Image
• Many Items with Low
Turnover
• Reduced Customer
Loyalty
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14. Advantages
• Special Image
• Good Customer Choice
in Category(ies)
• Specialized Personnel
• Customer Loyalty
• No Disappointed
Customers
• Less Costly Than Wide
and Deep
Disadvantages
• Too Much Emphasis on
One Category
• No One-Stop Shopping
• More Susceptible to
Trends/Cycles
• Greater Effort Needed
to Enlarge the Size of
the Trading Area
• Little (no) Scrambled
Merchandising
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15. Advantages
• Aimed at Convenience
Customers
• Least Costly
• High Turnover of Items
Disadvantages
• Little Width and Depth
• No One-Stop Shopping
• Some Disappointed
Customers
• Weak Image
• Limited Customer
Loyalty
• Small Trading Area
• Little (no) Scrambled
Merchandising
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16. • Manufacturer (National)
• Private Label (Dealer)
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17. Buying Organization Formats & Processes
• A merchandising plan cannot be properly devised
and implemented unless the buying organization
and its processes are well defined
• Figure on next slide highlights the range of
attributes from which retailers may choose
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18. Level of Formality
Degree of Centralization
Breadth
Source of Personnel
Functions performed
Staffing
Formal
Informal
Centralized
Decentralized
General
Specialized
Internal
External
Resident Buying Office
Cooperative Buying
Buyer
Sales Manager
Merchandising
Buying
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19. Merchandise Heirarchy
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Company
Division
Department
Category
Product Group
Product SubGroup
Product
Sub Category
Non Food Grocery
Health & Beauty
Personal Care Beauty
BabyCare
Hair Care Oral Care
Skin Care
Shampoo Oil & Gels
Conditioner &
Colorants
XXXXXXXX XXXXX
XXXXXXXX
TESCO India
Anti-dandruff Herbal
Regular

20. Standard Merchandise Classification
Scheme and Organizational Chart
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