Merchandise Pklan
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Transcript of Merchandise Pklan
Merchandise Planning
By:: Debabrata Dash
In 1993, 48 underperforming GAP stores were converted into GAPWarehouse stores and were renamed as Old Navy. Today Old NavyIs a $ 7 billion brand !!In the heart of this success lies a retail strategy that combines : :
value pricingtimely stylingan updated imageand sizing to fit Americans’ growing waistlines
Merchandise Plan
Developing and implementing a merchandise plan is a
Key phase in a RETAIL STRATEGY.
Merchandising consists of the activities involved in
Acquiring , particular goods and / or services and making
Them available at the prices , times , and places and in
The quantity that enables a retailer to reach his goals.
Merchandising is a critical function since this brings to market
The products that will excite and please target consumers.
Rarely is there a situation , as with retail merchandising ,
Where so few individuals drive so many decisions and
Outcomes. A small fraction of the employee population controls
As much as 70% -- 80% of a firm’s destiny !!
Retailers may be called on to place multibillion dollar bets !!!
A Merchandising Philosophy sets the guiding principles forAll the merchandising decisions.
Merchandising Philosophy is an highly intricate concept thatDrives every product decisions that a retailer makes.• Scope of Responsibilities
– Merchandising Function• Buy• Sell
– Buying FunctionBuy
An individual firm has to decide which format suits it.
Merchandising Philosophy
• Smooth Chain of Command• Buyers’ Expertise is used in selling• Responsibility and Authority Clear• Buyer Involved with Display• Reduced Costs (buyer-seller combined)• Buyer Closer to Consumers
• Similar Skills Not Needed for Each Task
• Higher Morale of store personnel• Selling Not Secondary• Specialists in sales sell• Merchandisers Not Always Good
Supervisors since their priorities are diffused
To capitalize on merchandising opportunities , more retailersAre now turning to : : :
• Micromerchandising : Retailers adjusting shelf-space Wal-Mart adapts space reflecting local demography
• Cross-Merchandising : Retailers carry complimentary goods and services. It can lose effectiveness , if carried too far , and become scrambled merchandising.
Principles Of Merchandising• Understand the Target Market• Build the Merchandise Plan, one store at a time• Buy what your customers want, not you• Build the Right Assortment• Be consistent• Offer value• Understand the needs of the vendor on win-win• Share information• Accept that mistakes happen• Seek to surprise the customer
•
Buying Organizations : Formats And Processes
A retail merchandise plan can not be properly drawn
Unless the buying organization and its processes are
Well defined.
The next slide illustrates the range of organization attributes
From which a retailer may choose.
Level of Formality
Degree of Centralization
Breadth
Source of Personnel
Philosophy
Staffing
Formal
Informal
Centralized
Decentralized
General
Specialized
InternalExternalResident Buying OfficeCooperative Buying
BuyerSales ManagerMerchandising Buyer
Merchandising
Buying
Level Of Formality
Formal Buying Organization : Merchandising (buying) is aDistinct task --- acquiring merchandise and making it availableFor sale are under this organization’s control. Mostly employedBy large retailers.
Informal Buying Organization : Merchandising (buying) is not aDistinct task.
Both structures are found in great numbers.
Degree Of Centralization
In a Centralized Buying Organization , all buying decisionsEmanate from one office.
In a Decentralized Buying Organization , purchase decisionsAre made locally or regionally.
Centralized Buying Organization
Advantages : : Integration of effortsStrict controlsConsistent ImageProximity to Top ManagementStaff SupportVolume discounts
Disadvantages : : InflexibilityTime delaysPoor adaptability to local conditionsExcessive Uniformity
Decentralized Buying Organization
Advantages : : Adaptability to local conditionsQuick Order ProcessingImproved Morale of store personnel
Disadvantages : : Disjointed PlanningInconsistent Image & PositioningLimited ControlLoss of volume discounts
Buying Organizational Breadth
A choice has to be made between a general buyingOrganization and a specialized one.
General buying organization : one or group of people buyAll the merchandise for the firm.
Specialized buying organization : Each buyer is responsibleFor a specific category.
Personnel Resources
The Inside buying organization : staffed by retailer’s ownPersonnel. Mostly used by large retailers or very smallretailers such as bakeries and stationary stores.Zellers , a Canadian firm with more than 350 full – line Discount department stores nationwide , and Ross StoresAre examples of large retailers employing inside buyingOrganization.
The Outside buying organization : A company or personnelExternal to the retailer are hired , usually on a fee basis. TwoLeading companies that render this service to retailers areThe Doneger Group and Frederick Atkins.
Resident buying office / Cooperative buying
Functions Performed
When a retailer adopts ”merchandising” view , its merchandisePersonnel oversee all buying and selling functions.
When a retailer adopts a “buying” view , its merchandisePersonnel oversee buying of products , advertising and pricing ,And in – store personnel oversee assortments , displays andSales presentations.
Staffing
The last buying organization decision focuses on staffing : :What positions must be filled ?What qualifications should be required ?
Firms with “merchandising” view must appoint expert buyersCoupled with good selling skills.
And firms with a “buying” view are interested in hiring bothExpert Buyers and expert sales managers.
MerchandisePlan
Innovativeness
Brands
Timing
Forecasts
Allocation
Assortments
• Staple Merchandise : Relatively stable sales : A basic• stock list , example milk, bread etc• Assortment Merchandise : variety needed , example cars,• apparel etc
– Product Lines etc.– Model Stock Plan
• Fashion Merchandise : Cyclical sales example : bow ties,• bell-bottom pants etc• Seasonal Merchandise
• Fad Merchandise
• Target Market(s)• Goods/Service Growth Potential• Fashion Trends and Theories• Retailer’s Image• Competition• Customer Segments• Responsiveness to Consumers• Investment Costs• Profitability• Risk• Constrained Decision Making• Declining Goods/Services
Introduction Maturity DeclineGrowth
Total Retail S
ales
Time
Life Cycle Stage
StrategyVariable DeclineMaturityGrowthIntroduction
Target Market
Good or Service
Distribution Intensity
Price
Promotion
Supplier Structure
High-IncomeInnovators
Middle-IncomeAdopters
Mass Market Low-Incomeand Laggards
One BasicOffering
Some Variety GreaterVariety
Less Variety
Limited orExtensive
MoreRetailers
MoreRetailers
FewerRetailers
Penetration orSkimming
Wide Range Lower Prices Lower Prices
Informative Persuasive Competitive Limited
Monopoly-Oligopoly
Oligopoly-Competition
Competition Oligopoly
• Vertical : First accepted by upmarket
• Horizontal : Accepted by a broad spectrum
of classes
An ASSORTMENT is the selection of merchandise
A retailer carries.
• Product Quality : High/medium or low ?
• Width : Goods/service categories
• Depth : Variety within category
Retailer’s Image
Target Market(s)
Personnel
Customer Services Offered
Store Location
Stock Turnover
Manufacturer versus PrivateBrands
Competition
Perceived Goods/ServiceBenefits
Profitability
Constrained Decision Making
• Impact on Sales and Profit• Space Requirements• Inventory Turnover• Cannibalization
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
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
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
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
• Manufacturer (National)
• Private Label (Dealer)
TIMING and ALLOCATION
Timing and allocation are two last components to be
Considered in merchandise planning.
• Arrange The Way Customers Would• Configuration Function of Time, Space, and Product
Utilitization• See to Drive Multiple Item Purchases• Management is Fluid, Dynamic, Proprietary Set of
Decisions• Create Unique Consumer Value• Based on Overall Trading-Area Scenarios• Management an Exclusionary Process• Data from Pre-Customer Interface Analysis of Trading-
Area Needs• Supplier and Retailer have Different Goals• Management Strategy of Differentiation
Unit Sales
Few Many
High
High Potential (sleepers) --
Promote more, better position,more facings, display more,sample, back with store coupons
Underachievers (dogs) --
Raise prices, lower position,cut promotions, consider delisting.
Traffic Builders --
Review prices, lower position,expand space, mix with sleepers,display.
Winners --
Promote more, better position,more facings, display more
Low
DirectProductProfitability
• General Merchandise Planning Software • Forecasting Software• Innovativeness Software• Assortment Software• Allocation Software• Category Management Software
CONCLUSION
In developing merchandising plans the concept of merchan-
Dising philosophy is very significant. The factors to be
Considered in drawing a merchandise plan are forecasts ,
Innovativeness , assortment , brands , timing and allocation.
Category management is an emerging trend in the field of
Merchandising management. Increasingly the role of IT is
Growing and various softwares are available that play a
Critical role in merchandise planning.
Prof. T. K. Chatterjee