Merchandise Management

Goods well bought are half sold

Merchandise management
It refers to the analysis, planning, acquisition, handling and control of the merchandise investments of a retail operation. It is the process of merchandising and key driver of retailing success.

Merchandising
Activities involved in acquiring particular goods and/or services and making them available at the places, times, and prices and in the quantity that enable a retailer to reach its goals.

Merchandising decisions should reflect:

Target market desires Retailers institutional type Market-place positioning Defined value chain Supplier capabilities Costs Competitors Product trends

Process of Merchandise planning

Developing the sales forecast Determining the Merchandising requirements (Assortment planning) Deciding on the Merchandise control i.e. Merchandise level

Deciding on the Merchandise allocation within a store or/and among various stores in the retail-chain.

Considerations in Devising Merchandise Plans

Forecasts
Forecasts 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)

Types of Merchandise
Staple merchandise Assortment merchandise Fashion merchandise Seasonal merchandise Fad merchandise

Staple Merchandise
Regular products carried by a retailer
Grocery store examples: milk, bread, canned soup

Basic stock lists specify inventory level, color, brand, style, category, size, package, etc.

Assortment Merchandise
Apparel, furniture, auto, and other categories for which the retailer must carry a variety of products in order to give customers a proper selection Decisions on Assortment
Product lines, styles, designs, and colors are projected Model stock plan

Fashion and Seasonal Merchandise

Fashion Merchandise: Products that may have cyclical sales due to changing tastes and life-styles Seasonal Merchandise: Products that sell well over nonconsecutive time periods

Factors to Bear in Mind When Planning Merchandise Innovativeness

FACTOR Target market(s) RELEVANCE for PLANNING Evaluate whether the target market is conservative or innovative Consider each new offering on the basis of rapidity of initial sales, maximum sales potential per time period, and length of sales life

Goods/ service growth potential

Fashion trends

Understand vertical and horizontal fashion trends, if appropriate Carry goods/ services that reinforce the firms image

Retailer image

-Contd.

Factors to Bear in Mind When Planning Merchandise Innovativeness

RELEVANCE for PLANNING Lead or follow competition in the selection of new goods/services

FACTOR Competition

Customer segments Segment customers by dividing merchandise into established-product displays and new-product displays Responsiveness to consumers Amount of investment Carry new offerings when requested by the target market Consider all possible investment for each new good/service: product costs, new fixtures, and additional personnel

-Contd.

Factors to Bear in Mind When Planning Merchandise Innovativeness

RELEVANCE for PLANNING Assess each new offering for potential profits Be aware of the possible tarnishing of the retailers image, investment costs, and opportunity costs Restrict franchisees and chain branches from buying certain items

FACTOR Profitability Risk

Constrained decision making

Declining goods/ Delete older goods/services if sales services and/or profits are too low

Factors to Consider When Planning Merchandise Quality

FACTOR Target market(s) RELEVANCE for PLANNING Match merchandise quality to the wishes of the desired target market(s) Sell similar quality or different quality

Competition Retailers image

Relate merchandise quality directly to the perception that customers have of retailer Consider the impact of location on the retailers image and the number of competitors, which, in turn, relate to quality

Store location

-Contd.

Factors to Consider When Planning Merchandise Quality

RELEVANCE for PLANNING

FACTOR

Profitability

Recognize that high quality goods generally bring greater profit per unit than lesserquality goods; turnover may cause total profits to be greater for the latter
Understand that, for many, manufacturer brands connote higher quality than private brands

Manufacturer versus private brands

Customer services Know that high-quality goods require offered personal selling, alterations, delivery, and so on

Personnel

Employ skilled, knowledgeable personnel for high-quality merchandise

-Contd.

Factors to Consider When Planning Merchandise Quality

RELEVANCE for PLANNING

FACTOR

Perceived goods/ service benefits

Analyze consumers. Lesser quality goods attract customers who desire functional product benefits; High-quality goods attract customers who desire extended product benefits

Constrained decision making

Face reality. Franchises or chain store managers have limited or no control over products; Independent retailers that buy from a few large wholesalers are limited to the range of quality offered by those wholesalers

Retail Assortment Strategies

Sephora: A Very Deep Assortment of Cosmetics

Brands

Manufacturer (national) Private (dealer or store)

Generic

Costcos Approach to Private Brands

Daffys Distinctive Branding Strategy

Applying Category Management

Shelf Logic: Software for Category Management Planning

Shelf Logic: Software for Category Management Planning