The document outlines the assortment planning process in retail, emphasizing the importance of sales forecasting, inventory turnover, and product availability in creating an effective assortment plan. It details the dimensions of assortment planning, such as variety and product availability, and discusses branding strategies including manufacturer and private-label brands. Additionally, it covers global sourcing considerations, vendor relationships, and pricing strategies used by retailers.

1. The Assortment Planning Process
Assortment Plan :- describes in general terms what should
be carried in a particular Merchandise category .
A Good Assortment plan requires
-a good forecast for sales ,
-GMROI
-Inventory Turnover
-Mix of subjective & experienced judgment

2. Dimensions of Assortment Planning :-
1. Variety
2. Assortment
3. Product Availability
VARIETY :- is the number of different merchandising categories
within a store or department . Stores with a large variety are said to
have good breadth .
Variety = Breadth
ASSORTMENT :- is the number of SKUs within a category .
Stores with largeassortment are said to have good depth.
Assortment = Depth
PRODUCT AVAILABILITY :- defines the percentage of demand
for a particular SKU that is satisfied . Product availability is also
referred to as the level of support or service level.

3. Determining Variety & Assortment
Following Factors :-
1. Profitability of Merchandise Mix
2. The Corporate Strategy & Positioning toward the Assortment
3. Physical Characteristics of the Store & Layout of the Internet
4. Balance between too much versus too little assortment
5. Complementary Merchandise
Determining Product Availability
The higher the product availability , the higher the amount of backup
Stock necessary .

4. Cycle Stock :- also known as base stock :- inventory that result from the
Replenishment proces & is required to meet demand when the retailer can
predict demand & replenishment times (lead times) perfectly .
Backup Stock :- also known as safety stock or buffer stock , as a cushion
for the Cycle stock so they wont run out before the next order arrives
Units
Available
Weeks
Backup
Stock
Cycle Stock

5. Level of Backup Stock Depends on :-
1. Safety Stock Requirements
2. Product availability the retailer wishes to provide
3. Higher the fluctuations in demand
4. Lead time from the vendor
Lead time :- is the amount of time between recognition that an
order needs to be placed & the point at which the merchandise
arrives in the store &
is ready for sale .
5. Fluctuations in lead time :- uncertainty in lead time
6. Vendor’s product availability

6. Branding Strategies
1. Manufacturer Brands
2. Licensed Brands
3. Private-Label Brands
Manufacturer Brands :- also known as national brands are products
designed , produced and marketed by a vendor .
Licensed Brands :- Special manufacturer brand is a Licensed brand ,
in which the owner of a well-known brand name (licensor) enters a
contract with a licensee to develop , produce and sell the branded
merchandise .
Licensee may be
1. Retailer that contracts to have the manufacturer to produce
the licensed product
2. Third party that contracts to have the merchandise produced &
then sell it to the retailer

7. Private-label Brands
Also called store brands , are products developed by a retailer &
available for sale only from that retailer .
Reasons for relatively small growth in past :-
1. National brands are heavily advertised , creating a strong consumer
franchise .
2. Hard for retailers o gain economies of scale
3. No sophisticated enough to aggressively compete against
manufacturer brands
4. Had a reputation of being inferior to manufacturer brands
5. Requires significant investments to design merchandise
6. Need to create customer awareness , develop favorable image for
their private-label brands .

8. Benefits of Private labels to retailers :-
1. Strong private labels boosts store loyalty
2. Enhance store image if the brands are of high quality & fashionable
3. Successful private-label brands can draw customers to the store .
4. More control over manufacturing , quality control & distribution
of the merchandise .
5. Gross margin opportunities may be greater .
Categories of Private-labels
1. Bargain Branding :- price sensitive segment
2. Premium Branding
3. Copycat Branding :- imitates the manufacturer brand- appearance,
packaging
4. Parallel Branding :- “ invitation to compare”

9. INTERNATIONAL SOURCING DECISIONS
Reason for sourcing globally rather than domestically is to save money .
COST ISSUES WHEN MAKING INTERNATIONAL SOURCING DECISIONS
1. Country-of –origin Effects
2. Foreign Currency Fluctuations
3. Tariffs
4. Free Trade Zones
5. Inventory carrying cost
Cost of carrying inventory =
Average inventory value (at cost) * Opportunity cost of capital
6. Transportation Cost

10. CONNECTING WITH VENDORS
1. Internet exchanges
2. Wholesale Market Centers
3. Trade Shows
4. Buying on their own Turf
5. Resident Buying Offices
Internet Exchanges :- Retail exchanges :- are electronic marketplace
operated by organizations that felicitate the buying & selling of
merchandise using the Internet .
Functions of Exchanges :-
1. Directory
2. Selection
3. Pricing (reverse auction)
4. Collaboration
5. Content

11. NEGOTIATING WITH VENDORS
Guidelines for Planning Negotiations with Vendors :-
PRICING STRATEGIES
1. EDLP :- Every Day Low Pricing :-
Benefits :-
1. Reduced price wars
2. Reduced advertising
3. Reduced stock outs & improved inventory management
2. High/Low Pricing :-
Benefits :-
1. The same merchandise appeals to multiple markets
2. Sales create excitement
3. Sales move merchandise
4. Emphasis is on quality