Developing Merchandise Plans

Dr. Gopal Thapa

Tribhuvan University

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 Philosophy

Sets the guiding principles for all the merchandise decisions that

a retailer makes

Should reflect

▪ Target market desires

▪ Retailer’s institutional type

▪ Market-place positioning

▪ Defined value chain

▪ Supplier capabilities

▪ Costs

▪ Competitors

▪ Product trends

Scope of Merchandising

Responsibility

Full array of merchandising functions

Buying and selling

Selection, pricing, display, customer transactions

OR

Focus on buying function only

Micro-merchandising

Retailer adjusts shelf-space allocations to respond

to customer and other differences among local

markets

Cross-Merchandising

Retailers carry complementary goods and services

to encourage shoppers to buy more

Attributes and Functions of Buying

Organizations

Functions Performed

Merchandising view

All buying and selling functions

Assortments

Advertising pricing

Point-of-sale displays

Employee utilization

Personal selling approaches

Functions 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

Merchandising Versus Store

Management Career Tracks

Devising Merchandise Plans

Forecasts

These 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 in Planning Merchandise

Innovativeness

Factors in Planning Merchandise

Innovativeness

Factors in Planning Merchandise

Innovativeness

Structured Guidelines for

Pruning Products Select items for possible elimination on the basis of

declining sales, prices, and profits, appearance of

substitutes

Gather and analyze detailed financial and other data about

these items

Consider nondeletion strategies such as cutting costs,

revising promotion efforts, adjusting prices, and

cooperating with other retailers

After making a deletion decision, do not overlook timing,

parts and servicing, inventory, and holdover demand

Factors in Planning Merchandise

Quality

Factors in Planning Merchandise

Quality

Factors in Planning Merchandise

Quality

Retail 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

Brands

Manufacturer (national)

Private (dealer or store)

Generic

Timing

The retailer must decide:

▪ When they are first purchased, displayed and

sold

▪ Peak season, order and delivery time

▪ Routine vs special order, stock turnover, discount

and efficiency of inventory turnover

Allocation

How much merchandise to place on the sale floor

How much to place in a stockroom and whether to

use a warehouse

A chain also apportions products among stores

Category Management

Category management is a retailing and

purchasing concept in which the range of products

purchased by a business organization or sold by a

retailer is broken down into discrete groups of

similar or related products; these groups are

known as product categories

Category Management

Merchandising techniques that some firms

including several supermarkets, drugstores,

hardware stores, and general merchandise

retailors, - use to improve productivity

It is a way to manage retail business that focuses,

on the performance of product category results

rather than individual brands