W2- Apparel Merchandising and Sourcing.ppt

APPAREL MERCHANDIZING AND SOURCING
Retail Merchandising
Dr. Shagufta Riaz
GM-4043
1
Week-2 (19-02-024)

CONTENTS
CONTENTS
 Retail merchandising
 Retail merchandising management
 Factors affecting retail merchandising
 Functions of retail merchandiser
 Export merchandising
 Sourcing
 Global and internal sourcing 2

OUTCOME
OUTCOME
At the end of this week you will be able to
Define retail merchandising and management
Understand the factors affecting retail merchandising and functions of
retail merchandiser
Export merchandising
Differentiate retail and export merchandising
Global and local sourcing
3

RETAIL MERCHANDISING
Retail
Retail
The sale of goods directly to the public in relatively small quantities for use or
consumption rather than for resale.
Merchandising
Merchandising
It is termed as the planning, buying and selling of merchandise
It is termed as the planning, buying and selling of merchandise
It is an integral part of retailing and is also one of he most challenging functions
It is an integral part of retailing and is also one of he most challenging functions
Retailers often say, “goods well bought are half sold”.
Retailers often say, “goods well bought are half sold”.
Merchandise management
Merchandise management
It is termed as the analysis, planning, acquisition, handling and control of
It is termed as the analysis, planning, acquisition, handling and control of
merchandise investment of retail operation.
merchandise investment of retail operation.
4

REQUIREMENTS FOR RETAIL
MERCHANDISING
MERCHANDISING
Analysis
Analysis
Analysis is required because a retailer needs to understand the
Analysis is required because a retailer needs to understand the
needs and wants of his target audience.
needs and wants of his target audience.
Planning
Planning
It is necessary to plan since the merchandise to be sold in future
It is necessary to plan since the merchandise to be sold in future
must be bought in advance.
must be bought in advance.
Acquisition
Acquisition
Merchandise to be sold in retail store, needs to be procured from
Merchandise to be sold in retail store, needs to be procured from
others.
others.
5

Handling
Handling
It is necessary to determine where merchandise is needed and
It is necessary to determine where merchandise is needed and
ensure that the merchandise reaches the required stores at the
ensure that the merchandise reaches the required stores at the
right time and in the right condition.
right time and in the right condition.
Control
Control
As the function of retailing involves spending money for
As the function of retailing involves spending money for
acquiring of products, it is necessary to control the amount of
acquiring of products, it is necessary to control the amount of
money spent on buying and transportation.
money spent on buying and transportation.
6
MERCHANDISING
MERCHANDISING

MANAGEMENT
MANAGEMENT
Process of merchandise management includes:
Process of merchandise management includes:
The development of strategies to ensure that the right
The development of strategies to ensure that the right
product
product
 Is bought at the right price
Is bought at the right price
 Is available at he right place
Is available at he right place
 At the right time
At the right time
 In the right amount
In the right amount
 In order to satisfy the needs of the targeted customer
In order to satisfy the needs of the targeted customer
No one in retail can avoid any contact with merchandising
No one in retail can avoid any contact with merchandising
activities.
activities.
7

MANAGEMENT
MANAGEMENT
Process of merchandise management
Process of merchandise management
includes:
includes:
Merchandising is the day-to-day business of all
Merchandising is the day-to-day business of all
retailers.
retailers.
As inventory is sold, new stocks need to be
As inventory is sold, new stocks need to be
purchased, displayed and sold.
purchased, displayed and sold.
8

FACTORS AFFECTING RETAIL
MERCHANDISING
MERCHANDISING
Merchandising
Function
Merchandise to
be selected
Type of
store
Organization
structure
Size of
organization
9

MERCHANDISING
MERCHANDISING
The size of the retail organization
Function of retailing varies depending on the size of retail
business.
Needs of an independent retailer varies considerably from
those of large chain operation.
In case of a single store the owner or manager assisted by
the sales person may perform the buying function.
As the single store grows in terms of business functional
departmentalization may occur and number of persons
involved in buying process may increase.
In case of a chain store, the buying process may be
centralized or decentralized geographically depending on the
organization
10

MERCHANDISING
MERCHANDISING
THE MERCHANDIZE TO BE CARRIED OUT
It largely determines the responsibilities of the retailer.
The buying for basic merchandise is different from that of fashion
merchandise.
This is primarily because these products are always in demand.
Examples of basics : White shirts in clothing or items like pulses, oil etc.
Fashion products are those that may sell very well in one season or year
and may not be in demand in the next season.
Fads are products which have a smaller life cycle, and when sales are
very high initially, the demand also dies down soon.
Merchandiser handling fashion products will need to spend more time in
the market.
He will also need to be aware of the fashion forecasts.
11

MERCHANDISING
MERCHANDISING
THE ORGANIZATION STRUCTURE
The organization structure that the retail
organization adopts, also affects the merchandising
function
Some organizations may define the role of the buyer
and the role of the merchandiser as separate
functions.
While in smaller organization, one person may carry
out all the duties. 12

MERCHANDISING
MERCHANDISING
THE TYPE OF STORE
The buying for a mail order catalogue or for direct marketing or
for an e-tail venture would be completely different.
Mail order buyer needs to plan well in advance, as the
production of catalogues takes a long time.
In addition the large variety of merchandise needs a fair amount
of market works.
Buyers for an e-tail venture need to have a clear understanding
of the type of product that consumers would buy on the net.
Very often in direct marketing or in e-tail ventures, it is the
uniqueness of the product or the competitive price, which makes
the difference.
13

FUNCTIONS OF MERCHANDISER
 The merchandise manager is responsible for
particular lines of merchandise.
 In a department store there may be separate
merchandise managers for wen’s wear, women’s
wear, children’s wear etc.
 They would be in charge of a group of buyers and
their basic duties could be divided into four areas :
planning, directing, coordinating and controlling.
14

PLANNING
Merchandise managers formulate the policies for
the areas for which they are responsible.
Forecasting the sales for the forthcoming budget
period is required.
This involves the estimating of the consumer
demand and the impact of the changes occurring in
retail.
15

DIRECTING
Guiding and training buyers as and when the need
arises.
Many a times, the buyers have to be guided to take
additional markdowns for products which may not be
doing too well in stores
Commitment and performance on the part of the
buyer is necessary.
16

COORDINATING
Usually, merchandise managers supervise the work
of more than one buyer.
Hence they need to coordinate the buying efforts in
terms of how well it fits in
•With the store’s image
•With the other products being bought by other buyer.
17

CONTROLLING
 Assessing not only the merchandise performance,
but also the buyer’s performance, is a part of the
merchandise manager’s job.
 Buying performance may be evaluated on the basis
of the net sales, mark up percentages maintained,
and markdown percentages.
18

FASHION MERCHANDISER’S ROLE
FASHION MERCHANDISER’S ROLE
19

MERCHANDISING AT EXPORT LEVEL
EXPORT HOUSE
“Export house is a business term used in global
markets to describe a company that develops
products for its country's export market.”
EXPORT MERCHANDISING
 It applies all the principles of product merchandising
but in a country separate from the originating
business's home territory.
20

 Many large companies across the country maintain entire
divisions devoted to finding ways to better enter foreign retail
markets through export merchandising to increase profit and
sustain growth.
 Thanks to the internet, small businesses can get in on the act
as well without the need of establishing an international supply
chain and foreign retail locations.
 The business must also find retail locations to display and sell
the merchandise to be exported and ensure that these
locations provide adequate access for targeted consumers to
purchase the exported product.
21

• Marketing personnel must determine how the company's
proposed product export can find a niche within a foreign
market and how foreign consumers might receive the
product.
• Buyer contact is maintained by the merchandisers. Buyer
contact has to be kept at both pre and post shipment
stages.
• It is because of merchandiser’s link with the buyer that
the merchandiser is synonymous as a buyer’s
representative within the organization, and similarly to
the buyer he represents his own organization. 22

IMPORTANCE OF GLOBAL ECONOMY
Globalization of business due to an increase in digital technology fueled
by the internet has made export merchandising a necessity for
companies looking to expand and keep up with competitors.
Foreign countries can provide an untapped source of revenue for
companies based in the domestic country for existing products and also
as an avenue to launch new products targeted specifically for foreign
markets.
•For example, automakers in the US have utilized export merchandising strategies
for years by marketing smaller, more fuel-efficient vehicles to the European market
while marketing larger sport utility vehicles to domestic consumers. 23

IMPORTANCE OF GLOBAL ECONOMY
Establishing a physical retail presence within a foreign country for export
merchandising purposes is expensive.
It also requires a business to go through multiple legal requirements in
both the exporting and the receiving foreign country.
The internet provides a cheap alternative for a company to conduct export
merchandising while keeping all company operations located in the
domestic country.
Establishing a retail website can allow a small domestic business the
ability to process orders and ship abroad without the need of building a
costly shipping and supply infrastructure. 24

ROLE OF MERCHANDISER IN APPAREL
ROLE OF MERCHANDISER IN APPAREL
EXPORT
EXPORT
 Key link between the factory and the customer.
 Communicate the customer demands
 To ensure and assure quality
 Optimally using capabilities of the export house by
generating enough profitable business.
25

ROLE OF MERCHANDISER IN BOOKING
ROLE OF MERCHANDISER IN BOOKING
AND SELLING OF ORDERS
AND SELLING OF ORDERS
Selling of a product range or “getting the buyer to
buy”.
Buying meetings with the buyer either in the country
of origin of the products, or, on sales trips abroad.
Participation in trade fairs, buyer- seller meets.
Selling is also done through various buying
representations of the buyer within the country.
26

SOURCING
SOURCING
 Sourcing is the stage that comes before any purchases
are made and can be considered a subsection of the
procurement department. Before you can procure
materials from your suppliers, you must first find and
vet those suppliers.
 When you have an effective strategic sourcing process
in place, you’ll find reliable, affordable, and quality
suppliers to supply the goods you need.
 Good work at this stage makes the procurement
process more streamlined and efficient. 27

SOURCING
SOURCING
 It is the process of requesting quotes for new products,
obtaining vendor information and uploading into your
procurement software, determining the lead time,
pricing, minimum order quantities, and so on
 Sourcing is about finding the balance between the
quality of raw materials and the affordability. The less
you can spend on materials, the more profit your
business can earn.
 It’s important to have a backup supplier or two in case
one is not able to meet your needs for any reason,
sourcing departments are always busy 28

SOURCING
SOURCING
 Before sourcing can begin, you must assess your
purchasing needs, map out a plan, conduct market
research, and identify potential suppliers.
 Sourcing could be:
• External or global
• Local or domestic
29

GLOBAL SOURCING
GLOBAL SOURCING
•It is the practice of sourcing from the global market for
goods and services across geopolitical boundaries.
•Strategic sourcing has become an extremely important
element to the growth of any company.
•In order to stay competitive, companies need to
constantly ensure the right level of coordination between
innovation, organizational efficiency, price policy and
procurement.
• Companies are constantly seeking to find the next low
cost procurement option in order to gain an advantage
over its competitors. 30

GLOBAL SOURCING
GLOBAL SOURCING
WHY GLOBAL SOURCING?
•To sustain our way of life
•Innovation can provide the solution to issues arising from
global trading.
•Global sourcing promotes peace
WHY NOT TO SOURCE GLOBALLY?
•Supply chain risk
•Transport costs
•Loss of agility
31

LOCAL OR DOMESTIC SOURCING
•Local sourcing typically denotes the sourcing, purchasing
or procurement of goods, ingredients and other
consumable products from within a specific radius
(distance) from where they will be used or sourced, or
from a given geographical area.
•The growing reality is that procurement professionals
would prefer to source locally. It's a strategy that has
contributed to many manufacturers' business continuity
during the COVID-19 pandemic when other business'
supply chains were disrupted 32

•More flexibility
•Greater control
•Reduced supply chain cost
•Good for community
•Ability to launch product faster
•More revenue due to tight and fast chain supply
•Helps the environment
33

PROCUREMENT
PROCUREMENT
•Procurement is the full process of sourcing and then
using suppliers to gather all the materials you need
for your products, services, and indirect costs.
•It involves placing orders with each supplier,
receiving the goods, and paying for them.
•It is an end-to-end process that covers everything
from planning purchases to negotiating pricing,
making the purchases, to handling inventory control
and storage. 34

PROCUREMENT
PROCUREMENT
•Procurement starts overall supply chain because
once the materials you need for manufacturing are in
place, you can begin making the products you sell to
others.
•Without a solid procurement strategy in place,
there’s always a chance that operations will have to
halt.
•If you can’t get access to the materials you need to
make a product, then you must stop production until
a suitable alternative is developed.
35

PROCUREMENT VS SOURCING
PROCUREMENT VS SOURCING
•Where procurement is concerned with the logistics of
acquiring materials, sourcing focuses on finding the best
and least-expensive suppliers for those goods.
•Since the profits of a business can rely heavily on
finding the best possible sources.
36

W2- Apparel Merchandising and Sourcing.ppt

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