The document discusses key concepts in retail merchandising including defining merchandising, roles of merchandisers, developing sales forecasts and merchandise requirements, basics of merchandise accounting, and key metrics like gross margin and return on investment. It outlines considerations for devising merchandise plans, category management, and buying organization formats. Key terms covered include assets, liabilities, income statement, cash flow, cost of goods sold, expenses, gross margin, and return on investment.

1. Retail Merchandising 1 Shri rangan

2. Objectives To demonstrate the importance of a sound merchandising philosophy To outline the considerations in devising merchandise plans: forecasts, innovativeness, assortment, brands, timing, and allocation To discuss category management To study various buying organization formats and the processes they use

3. Retail Merchandising Definition & the Concept of Retail Merchandising Role & Responsibilities of a Merchandiser Fashion Merchandising Merchandise Characteristics Merchandise Management- Merchandise Mix & Merchandise Budget Basics of Merchandise Accounting

4. RM - DEFINITION Retail selling effort that is the principal task of in-store sales personnel through the use of promotions designed by a manufacturer, such as unique displays, giveaways, or discount and premium offers. In this case, merchandising is the act of managing and arranging the merchandise on display in a store so as to promote its sale .

5. Role & Responsibility of Merchandiser Planning Directing Co-ordinating Controlling

6. Merchandising Versus Store Management Career Tracks

7. Functions of Merchandisers at Shopper’s stop Inventory-turn Management Achieving Sales & Margins Plans Merchandise Availability Management, as per range plan Merchandising strategy & planning Processing of purchase orders Analysis of Data & Sales Budgeting Profitability Targets & Expense Control Vendor/Supplier relations for both, in-house products as well as for brands.

8. ARRANGING -MERCHANDISE

10. Merchandising arrangement MERCHANDISING ARRANGMENT……… Why making effective use of your space is so important. How to position your departments and products. How to improve store lighting. The importance of atmosphere and cleanliness in your store. How to create great displays and signage. WHAT WE WILL ACHIEVE AS A BUSINESS………. The consistently best Display standards against Competition in India A great environment that will attract & satisfy Customers Showcase to best advantage our product offer Dramatically enhance Customer Service

11. Managing the Merchandise Developing a sales forecast Determining the merchandise requirements Merchandise control Assortment planning

12. Developing Sales forecast Reviewing Past sales Analyzing the changes in Economic Conditions Analyzing the changes in the sales potential Analyzing the changes in the marketing strategies of the retail organization and the competition Creating the sales forecast

13. Forecasts These are projections of expected retail sales for given periods Components: Overall company projections Product category projections Item-by-item projections Store-by-store projections (if a chain)

14. Determining the merchandise requirements Merchandise Mix Retail communication Mix

15. Basics of Merchandise Accounting

16. Merchandising Accounting Cash Flow The Balance sheet Financial Ratios Income statements Gross- Margin-Return on Investment

17. Cash Flow Cash In Cash Out Negative Cash flow = Cash In < Cash Out Positive Cash flow = Cash out > Cash In

18. Cash Flow Curve Oct Nov Dec Jan Feb Mar Cash In Cash out

19. The Balance Sheet The Balance Sheet is a statement of an organization's Assets, Liabilities and Owners’ Equity at a Particular Point in time. Assets Liabilities Owner's Equity

20. Assets Assets – Owned by an organization a. Short term (or) Current Assets b. Long term

21. Liability Liability: Debts owed by an organization Payment on Short term Ex: Payment to supplier Payment on Long term Ex: Mortgage on Land & Building Investment on Extension, Expansion & renovation

22. Owner’s Equity Owner’s Equity : Difference between asset and Liability. Relationship: Assets = Liabilities + Owner’s Equity

23. Income statement

24. Income statement Profit performance for a specific period of time Income statement is otherwise called Statement of earnings or Profit & loss statement Income statement: Revenue – Expenses = Net Income Profit = Expenses < Revenue = positive Net Income Loss = Expenses > Revenue = Negative Net Income

25. Income statement contd… Income statement can be computed for an entire organization Individual Store A Group of Store Department Profit and loss is based on the revenue & expenses directly associated with each unit of business.

26. Income statement contd… Components : 5 major components Revenue Cost of goods sold Gross margin Expenses Net Profit Relationship among the components Net revenue – Cost of goods sold - Expenses Gross margin Net Profit

27. Income statement contd… Relationship among the components Net revenue – Cost of goods sold - Expenses Gross margin Net Profit Net revenue : composed of sales, Leasing or renting property or interest on accounts Net sales = Gross sales – Customer return Gross sales are used to determine the customer return rates Customer return rate = Customer returns x100 Gross sales

28. Income statement contd… High customer return rate is often indicates of issue related a. Customer service b. Quality c. Fit of merchandise High sales attest to the ability of an organization buyer to select assortments of goods that are appealing to the store’s target customers.

29. Income statement contd… Cost of goods sold (or) Cost of Merchandise sold (or) cost of sales Cost of goods sold = Billed cost of Merchandise + work room costs +shipping cost – cash Discount - Returns to vendors

30. Income statement contd… Shipping cost : Delivery cost for transporting goods from supplier Workroom costs: activities that prepare merchandise for sale ( steaming & pressing apparel) Return to vendors : defective or slow selling goods returned to suppliers for credit Cash discounts : Invoice concessions from suppliers for prompt payment

31. Income statement contd… Expenses: Payroll, rent, Utilities, advertising and interest on debt. Direct Expense: attributable to a specific unit ( store rent ) Indirect Expense: is not attributable to a specific unit. ( news paper advertisement )

32. Income statement contd… Gross margin : Difference between sales and cost of goods sold. Net Income : Gross Margin – Expenses Income can be increased by Increasing sales Increasing Gross Margin Decreasing cost of goods sold Any combination of above Component Percentage : Cost of goods sold = cost of goods X 100 Net sales Gross Margin = Gross Margin X 100 Net Sales Expenses = Expenses X 100 Net Sales

33. GMROI Particulars Category A Category B Sales 300000 250000 Cost of Goods Sold 180000 100000 Gross Margin 120000 150000 Gross Margin % 40% 60%

34. GMROI Gross Margin Return on Investment Integrates two performance Gross Margin Turn Over To create a single measure of performance GMROI = Gross Margin X Net sales Net Sales Average Inventory GMROI = Gross Margin / average Inventory

35. GMROI for 3 Merchandise Categories Particulars Gross Margin Avg Inventory GMROI Specialty Food 120000 28000 4.3 Countertop Appliance 80000 40000 2.0 Glassware 200000 130000 1.5

36. Key terms Assets Balance sheet Cash discount Cash Flow Component Percentage Cost of goods sold Current ratio Expenses Factor GMROI Gross sales Income statement Liability Net Income Net Loss Net Sales Return to Vendor Owner’s Equity Time Series Comparison Workroom cost