MERCHANDISING NOUN OR VERB? MERCHANDISNG Introduction : How Does Merchandise Get In Your Store? What...
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Transcript of MERCHANDISING NOUN OR VERB? MERCHANDISNG Introduction : How Does Merchandise Get In Your Store? What...
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MERCHANDISING
NOUN OR VERB?
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MERCHANDISNG
Introduction:How Does Merchandise
Get In Your Store?What Questions Should I
Ask Myself When Ordering?
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OBJECTIVE
•Be able to define merchandising
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MERCHANDISING
•Merchandising is being able to:
– get the right merchandise (color, size, style,quality,etc.)– at the right time– at the right price– at the right place– in the right amount
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MERCHANDISNG•Where does it
come from?•Who ordered
the merch-andise?
•Does it sell?• Is it good
quality stuff?
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MERCHANDISNG•How many
should we stock?
•What sizes should we have?
•What does the competition have?
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MERCHANDISNG•Is it a fad or
a trend?•What kind of
price are people willing to pay?
•Etc. etc. etc.
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THE JEANS ACTIVITY• With two partners,
spend $10,000 to stock a jean store. – Have 5 brands– Cost is $20 each– Identify sizes to be
carried– Identify the # of
jeans to be stocked in each size
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THE JEANS ACTIVITY
• With a partner, spend $10,000 on stocking a jean store. (Cont.)– Calculate the total
dollars spent per style/brand
– Present your plan to the class & turn in to me
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OBJECTIVE
•Be able to outline the buying process used by most marketing businesses
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The Buying Process (OVERVIEW)
•Prepare a merchandise plan (Monthly plan of buys for year)
•Choose the assortment (color, type, size, variety, etc.)
•Find the best supplier (quality vs. price)
• Negotiate the order
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OBJECTIVE
•Be able to describe the factors that effect a business’ merchandise assortment
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Merchandise Assortment Considerations
• Image• Brand Policy• Pricing
Policy• Merch. Plan• Customers• “Experts”
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How do Buyers Know What to Buy?
•Marketing Research
•Customer Contact
•Want Slips
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OBJECTIVE
•Be able to define & complete a purchase order
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Purchase Orders
•A business form used to tell a vendor that you want to buy merchandise
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Purchase Orders•P.O. TERMS:
–To–Date–Shipping Date–Via–FOB
•(Shipping Point vs. Destination)
–Terms
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Purchase Orders•P.O. TERMS:
–Order #–Items #–Description–Quantity–Unit Cost–Total Cost–Total Order
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OBJECTIVE
•Be able to calculate Purchase order terms
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Why do vendors offer terms?
•For Paying Cash•For Paying Early•For Buying in Volume•For Buying Regularly•For Buying Out of Season
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Sample Terms
2/10 NET 30–The 2 is the amount of discount available
–The 10 is the number of days available to get the discount
–The 30 is the total number of days available to pay the bill
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Sample Terms
2/10 NET 30–EOM–ROG–Advance Dating
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Sample Problems
Assume a $1,000 purchase dated on 4/1/01 w/ the following terms Due Date
Discount = ________1.) 5/10 Net 30 _____2.) 5/10 Net 30 EOM _____3.) 5/10 Net 30 6/1/01 _____
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Sample Problems
Assume a $1,000 purchase dated on 4/1/01 w/ the following terms Due Date
Discount = ________1.) 5/10 Net 30 5/ 1/012.) 5/10 Net 30 EOM 5/30/013.) 5/10 Net 30 6/1/01 6/30/01
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ACTIVITY
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OBJECTIVE
•Be able to complete an invoice
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INVOICE TERMS•Pieces•Weight•Invoice #•Backordered
(B/O)•Unit Cost•Shipping Cost•Tax
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ACTIVITY
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OBJECTIVE
•Be able to define & complete the following forms:–Bill of Lading–Waybill–Freight Bill–Delivery Receipt–Packing Slip
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Physical Distribution Forms
•Bill of Lading–Also called a shipping order. –Used to request that a transport company come pick up & deliver merchandise.
–Serves as a contract–Consignor vs. Consignee
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Physical Distribution Forms
•Waybill–Used to keep track of merchandise as it moves through the “Channel of Distribution” (ex. Fed Ex Ad)
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Physical Distribution Forms
•Freight Bill–An invoice (bill) for the shipping charge
–Tells who should be paying for the shipping charge
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Physical Distribution Forms
•Delivery Receipt
–Form used to verify that merchandise has arrived
–Signed by the buyer
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Physical Distribution Forms
•Packing Slip–Used to compare merchandise delivered w/ what was supposed to be in the carton
–Condition, number of items, correctness of order
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ACTIVITY
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.MERCHANDISNG
Retail Pricing
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OBJECTIVE
•Be able to Define “Retail Pricing”
–Assigning a Dollar Value to Goods & Services
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The Importance of Proper Pricing
•Attracts Customers•Determines Sales•Determines Profit•Keeps Up With the
Competition
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OBJECTIVE
•Be able to Define the Terms Associated with Retail Pricing:
Retail Price: The amount that customers pay for a product or service
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OBJECTIVE
•Be able to Define the Terms Associated with Retail Pricing:
Cost: The amount that a business pays to
purchase products to resell
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OBJECTIVE
•Be able to Define the Terms Associated with Retail Pricing:
Markup: The additional amount that a
business adds to cost to cover its expenses ANDAND make a profit
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OBJECTIVE
•Be able to Define the Terms Associated with Retail Pricing:
Markdown: A Reduction in
the amount of Retail Price
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FORMULA
RP$ = C$ + M$
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FORMULA
RP% = C% + M%
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FORMULA (Variations)
C$ = RP$ - M$
M$ = RP$ - C$
C% = RP% - M%
M% = RP% - C%
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ILLUSTRATION
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But What do Business People Generally Know?
• Retail Price = 100 %
• Cost of Goods (C$)• Markup % (M%)• The Formulas
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PROBLEM: You’ve Got Apples & Oranges
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Set - UpRP$ =
RP% = 100%
C$ =
C% =
M$ =
M% =
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EXAMPLEWhat can you
Calculate?RP$ =
RP% = 100%
C$ = $6.00$6.00
C% =
M$ =
M% = 40%40%
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EXAMPLE
RP$ =
RP% = 100%
C$ = $6.00
C% = 60%60%
M$ =
M% = 40%
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EXAMPLE
RP$ = C$ / C%
X = $6.00 / 60%
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EXAMPLE
RP$ = $10.00$10.00
RP% = 100%
C$ = $6.00
C% = 60%
M$ =
M% = 40%
RP$ = $6.00 / 60%
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EXAMPLE
RP$ = $10.00$10.00
RP% = 100%
C$ = $6.00
C% = 60%
M$ =
M% = 40%
M$ = RP$ - C$
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EXAMPLE
RP$ = $10.00$10.00
RP% = 100%
C$ = $6.00
C% = 60%
M$ = $4.00
M% = 40%
M$ = RP$ - C$
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DO SAMPLE PROBLEMS #S 7, 9, 10
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OBJECTIVE
Be Able to Calculate Markdowns
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MARKDOWNS
MD$ = RP$ x MD%MD$ = $10.00 x 40%
MD$ = $4.00New RP$ = Old RP$ - MD$
RP$ = $6.00
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DO SAMPLE PROBLEM # 12
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OBJECTIVE
•Be Able to Calculate a Store’s Markup Policy
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Markup Policy
Consider a store that has business expenses of $125,000 (Heat, Electric, Salaries, etc.) and spends $200,000 on merchandise. The owner wants to take home a modest $50,000 income. – How much merchandise must
he/she sell this year? Per month?
– What must be the store’s markup policy?
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Set - Up: What Do You Know?
RP$ =
RP% = 100%
C$ = $200,000
C% =
M$ =
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
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Set - Up: What Do You Know?
RP$ =
RP% = 100%
C$ = $200,000
C% =
M$ = $125,000 +
$50,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
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Set - Up: What Do You Know?
RP$ =
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
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What is the Business’ Sales Goal?
RP$ =
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
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What is the Business’ Sales Goal for the Year?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
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What is the Business’ Sales Goal for the Month?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
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What is the Business’ Sales Goal for the Month?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
$375,000 / 12 =
$31,250
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What is the Business’ Markup Policy?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
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OBJECTIVE
M% = M$ / RP$
M% = $175,000 /$375,000
M% = 46.67%
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What is the Business’ Markup Policy?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% = 46.67%
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
![Page 72: MERCHANDISING NOUN OR VERB? MERCHANDISNG Introduction : How Does Merchandise Get In Your Store? What Questions Should I Ask Myself When Ordering?](https://reader036.fdocuments.in/reader036/viewer/2022062407/56649e615503460f94b5d293/html5/thumbnails/72.jpg)
MARKUP POLICY
EVERY ITEM BOUGHT FOR THE STORE MUST BE
MARKED UP 46.67% IF THE STORE IS TO PAY FOR ITS
MERCHANDISE, ALL OF ITS EXPENSES, & MAKE THE
DESIRED PROFIT!!!
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.MERCHANDISNG
Stock Turnover
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OBJECTIVE
Be able to define stock turnover
and its importance
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Stock Turnover
The number of times the average inventory of a
product is sold and reordered in a given
period of time
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The Importance of Stock Turnover
Stock Turnover is the most often quoted
business ratio
&
is an indication of a business’ profitability.
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The Importance of Stock Turnover
• The Retail Price of each product sold represents the company’s cost of goods, total expenses, & desired net profit.
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The Importance of Stock Turnover
• If you multiply the number of items sold by the $ value of profit it represents, you can calculate how much profit a company has earned
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The Importance of Stock Turnover
• Therefore, the faster you sell your product, the more profit your company can make. Plus, every additional product sold results in more profit for the business
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The Importance of Stock Turnover
• Obviously, however, if you are selling out your merchandise to fast, the expense of ordering & shipping merchandise will eat into your net profit, so you can’t order to little merchandise
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The Importance of Stock Turnover
• Calculating a business’ stock turnover ratio, therefore, is an art as well as a science
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Stock Turnover (ST) Ratio
S T = Sales / Average
Inventory
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Stock Turnover (ST) Ratio
Sales:The total amountof merchandise sold during a specific period of
time
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Stock Turnover (ST) Ratio
Average Inventory:
The approximate amount of merchandise in the store at any given point in time
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Average Inventory
Average Inventory =
BOM Inv. + Inv.2 + Inv.3 + Inv. 4 + . . .
Divided By
# of Inventories Taken
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Stock Turnover (ST) Ratio “Story Time”
A small business has sales of $400,000 in a year. They took inventory 12 times. The average inventory was $50,000. What was their stock turnover ration?
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Stock Turnover (ST) Ratio
S T = Sales / Average Inventory
X = $400K / $50K
X = __?__
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Stock Turnover (ST) Ratio
S T = Sales / Average Inventory
X = $400K / $50K
X = __8__
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Stock Turnover (ST) Ratio “Story Time”
A small business has sales of $400,000 in a year. They want a stock turnover of 10 because a 10 ST ratio will make them the profit they want and need. What should their average inventory be?
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Stock Turnover (ST) Ratio
S T = Sales / Average Inventory
10 = $400K /__?__
X = __?__
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Stock Turnover (ST) Ratio
S T = Sales / Average Inventory
10 = $400K /__?__
X = __$40,000__
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The Importance of Stock Turnover
Stock Turnover is an important indication of
a business’ profitability.
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OBJECTIVE
Be able to describe methods to increase a
product’s stock turnover ratio
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The Importance of Stock Turnover
Increasing Stock Turnover:
•Increases profits
•Uses your capital efficiently
•Decreases your expenses
•Results in fewer markdowns
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Increasing Stock Turnover
•Better Buying: Get merchandise that people want
•Better Pricing: Charge what people are willing to spend
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Increasing Stock Turnover
•Better Stock Control: Get rid of the “slackers”
•Proper Stock Care: Make it look good
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Increasing Stock Turnover
•Better Promotion: Sell the product better
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Sample Quiz
Complete the sample quiz on pricing, markup goals, and stock turnover
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OBJECTIVE
Be able to define terms and describe
procedures for the proper stocking of
merchandise
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Stocking Terms
• Face• Salvage• Floats• Rotation• Code Dated• Mass Stacking• Signage
• Broken Down• Blocking• Back Stock• End-cap• Vertical vs
Horizontal• “Damaged”
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Stocking Terms
• Face - Bringing merchandise forward
• Salvage - Material used in stock- ing that can be used again
• Floats - Carts used to haul merchadise around the store
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Stocking Terms
• Rotation - “F I F O” Bringing old merchandise to the front
• Code Dated - Expiration dates• Mass Stacking - Using one
product to form large display
• Signage - Informational signs
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Stocking Terms
•Broken Down - to collapse boxes for ease of storage
•Blocking - Creating space on a
shelf for products•Back Stock - Merchandise that
doesn’t fit on a shelf and must go back to storage
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Stocking Terms
•End-cap - A display built at the end of an aisle
•Vertical vs. Horizontal - How products are placed on shelves
•“Damaged” - Merchandise that can be fixed and sold
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Stocking Procedures
•Customer Service
•Safety•Efficiency•Appearance•Increased
Sales
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Stocking Procedures
•Customer Service:–Customers come first. Help whenever possible
–Wear your uniform–Take customers to product vs. pointing in general direction
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Stocking Procedures
• Safety:–Keep aisles clear–Don’t overstock shelves or floats–Be able to see when pushing floats
–Remove out of date merchandise
–Lift properly!!!!
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Stocking Procedures
• Efficiency:–Stock using two hands–Use teamwork–Use your product knowledge!!!–Properly stocked merchandise uses less space allowing more profitable products to be stocked and sold
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Stocking Procedures
• Appearance:–Shelves should always look full and orderly
–Keep shelves neat & clean–Repair damaged fixtures and products
–Keep yourself looking neat & clean
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Stocking Procedures
• Increased Sales:–Signage is critical. It is the salesperson!!!
–Rotate products on the endcaps–Place your most profitable merchandise at eye level
–Being neat, clean, & orderly helps to sell also!!!
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On the Job safety
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Film:“Stocker Interactive
Program”
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OBJECTIVE
Be able to define terms and describe
procedures for the proper inventory of
merchandise
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Inventory Control Terms
•Unit Control•Dollar Control
•Basic Stock List•Model Stock
Plan
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Inventory Control Systems
•Book Inventory
(Perpetual)
•Physical Inventory
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Inventory Control
•Book Inventory–A paper record–Subtract Sales–Add purchases–Doesn’t allow for Shrinkage–Information is collected by POS systems or paper records
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Inventory Control
•Physical Inventory–Simply counting the products–Tedious & costly–Accurate
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OBJECTIVE
Be able to calculate the amount of profit earned
per square foot of selling space allocated
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Profit Calculation Terms
•Gross Profit•Net Profit
– Item–Stock Turn–Month–Year–Per Sq. Foot
•Floor Plan•Square Feet of
Selling Space
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Profit Calculation Terms
• Store Owners are faced w/ a limited amount of space
• He/She wants as much profit as possible (Mgrs. Job may depend on it!) from that space
• Products take up space!!!
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Profit Calculation Terms
• Products that make profit stay
• Products that do not make profit leave
• Most profitable products get the best space
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Profit Calculation Formula
Profit Per Square Foot of = Selling Space
Total __Net Profit__ Square Ft. of Selling Space
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Profit Calculation Formula
SAMPLE PROBLEMS