Title: Developing Merchandise Plans
1Chapter 14
- Developing Merchandise Plans
RETAIL MANAGEMENT A STRATEGIC APPROACH, 10th
Edition
BERMAN EVANS
2Chapter Objectives
- To demonstrate the importance of a sound
merchandising philosophy - To study various buying organization formats and
the processes they use - To outline the considerations in devising
merchandise plans forecasts, innovativeness,
assortment, brands, timing, and allocation - To discuss category management and merchandising
software
3Merchandising
- 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
4Merchandising Philosophy
- Sets the guiding principles for all the
merchandise decisions that a retailer makes - Should reflect
- Target market desires
- Retailers institutional type
- Market-place positioning
- Defined value chain
- Supplier capabilities
- Costs
- Competitors
- Product trends
5Scope of Merchandising Responsibility
- Full array of merchandising functions
- Buying and selling
- Selection, pricing, display, customer
transactions - OR
- Focus on buying function only
6Figure 14-1 Nikes Own Store Merchandising
Philosophy
7Micromerchandising
- Retailer adjusts shelf-space allocations to
respond to customer and other differences among
local markets
8Cross-Merchandising
- Retailers carry complementary goods and services
to encourage shoppers to buy more offer warranties
9Functions Performed
- Merchandising view
- All buying and selling functions
- Assortments
- Advertising pricing
- Point-of-sale displays
- Employee utilization
- Personal selling approaches
10Functions Performed (cont.)
- Buying view
- Buyers manage buying functions
- Buying
- Advertising
- Pricing
- In-store personnel manage other tasks
- Assortments
- Point-of-sale displays
- Employee utilization
- Personal selling approaches
11Figure 14-5 Devising Merchandise Plans
12Forecasts
- These are projections of expected retail sales
for given periods - Components
- Overall company projections (Estimation)
- Product category projections
- Item-by-item projections
- Store-by-store projections (if a chain)
13Types of Merchandise
- Staple merchandise
- Assortment merchandise
- Fashion merchandise
- Seasonal merchandise
- Fad merchandise
14Staple 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.
15Assortment 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
16Fashion 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
17Assessing each Factors in Planning Merchandise
Innovativeness
FACTOR RELEVANCE for PLANNING
Target market(s) Evaluate whether the target market is conservative or innovative
Goods/service growth potential Consider each new offering on the basis of rapidity of initial sales, maximum sales potential per time period, and length of sales life
Fashion trends Understand vertical and horizontal fashion trends, if appropriate
Retailer image Carry goods/services that reinforce the firms image
18Table 14-1b Factors in Planning Merchandise
Innovativeness
FACTOR RELEVANCE for PLANNING
Competition Lead or follow competition in the selection of new goods/services
Customer segments Segment customers by dividing merchandise into established-product displays and new-product displays
Responsiveness to consumers Carry new offerings when requested by the target market
Amount of investment Consider all possible investments for each new good/service product costs, new fixtures, and additional personnel
19Table 14-1c Factors in Planning Merchandise
Innovativeness
FACTOR RELEVANCE for PLANNING
Profitability Assess each new offering for potential profits
Risk Be aware of the possible tarnishing of the retailers image, investment costs, and opportunity costs
Constrained decision making Restrict franchisees and chain branches from buying certain items
Declining goods/ services Delete older goods/services if sales and/or profits are too low
20Figure 14-7 Traditional Product Life Cycle
21Retail Assortment Strategies
Width of assortment refers to the number of
distinct goods/service categories (product lines)
a retailer carries Depth of assortment refers to
the variety in any one goods/service category
(product line) a retailer carries An assortment
can range from wide and deep (department store)
to narrow and shallow (box store)
22Brands
Manufacturer (national)
Private (dealer or store)
Generic
23Timing Location
- Timing For new produces the retailer should
decide when they are first purchased, displayed
and sold the must plan the merchandising flow per
during a year - Location location of products in store and
stockroom or warehouse to be used