Merchandising Plan

Merchandising

Activities involved in acquiring particular goods and 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

Decisions Should reflect

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

Thus merchandising philosophy includes every product decision from

what produce lines – carry to the shelf space allotted

to them inventory turnover – pricing

Costco’s Individualistic Merchandising Philosophy They have selection of 4000 items which when you go

to Target or Wal-Mart you’ll get 1,00,000

They say they may select only two toaster or two peanut butter to sell

But they would be of best values we can find at the time

Those items selectively chosen would be 3000 items

Rest 1000 are such that constantly changes

One week shoppers see Levis relaxed jeans and the next time they come will not find those items instead will find Tommy Hilfiger

It creates an attitude that if you see it you better buy it.

Merchandise Personnel's Scope of responsibilities must be stated Full array of merchandising functions

Buying and selling goods Service: Like Selection, pricing, display, customer

transactions

OR

Focus on buying function only leaving rest works for others

Normally retailers go for full array

Functions Performed

Merchandising viewMerchandising view

All buying and selling functions

Assortments Advertising pricing Point-of-sale displays Employee utilization Personal selling approaches

Functions Performed (cont.)

Buying viewBuying view

Buyers manage buying functions Buying Advertising Pricing

In-store personnel manage other tasks Assortment Point-of-sale displays Employee utilization Personal selling approaches

Nike’s Own Store Merchandising Philosophy

Harry & David’s Merchandising Philosophy

Keeps everything from fruits to nutsConcentrates more on Packing100 % Guarantee If not satisfied replacement or money back which ever you prefer.

Micromerchandising (to capitalize on opportunities)

Retailer adjusts shelf-space allocations to respond to

customer and other requirements of local

markets

Conti… Wal-Mart, Carrefour do follow

micromerchandising

As this approach puts the correct products in correct stores for our customers

So that we carry products that appeal customers or else we’ll carry “Dead inventory”

Cross-Merchandising (to capitalize on opportunities)

Retailers carry complementary goods and services to encourage shoppers to buy more.

(Selling electronic items along with right fitting furniture's)

Attributes and

Functions of

Buying Organizati

ons

Or

Decisions that the retailer needs to

take before

merchandise

planning

One product purchase

Degree of Centralization

Many chains combine the formats by organizing a centralized buying along with giving store manager chance to put inputs

Like Zara’s

In a bright & vast white room, 200 designers and product mangers are deciding on what to create

They regularly gather suggestions from more than 500 stores managers worldwide

Not for just specific orders but --- ideas related to cuts, fabrics, or even for a new line for apparels

After weighing the managers ideas, the team decides finally what to make.

Designers draw up the latest ideas on the computers and then pass them through Zara’s intranet to nearby factories

Within days cutting, dyeing, stitching and pressing begins.

In just three weeks the clothes will hang up in the stores

Zara isn’t just a bit faster than its rival Gap.

But is infact 12 times faster in this entire process

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 Specific 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: used to project specific

items such as number of green, red, blue

Fashion and Seasonal Merchandise

Fashion Merchandise: Products that may have changing sales due to changing tastes and life-styles (forecasting is difficult)

Seasonal Merchandise: Products that sell well over nonconsecutive time periods (forecasting is straight forward)

Fad Merchandise

High sales are generated for a short time

Often toys and games are fads

Like Harry Porters toy fly off each time when related movie or news is released

For such products Never-out list (keeping huge quantity to meet anticipated demand and later stock smaller quantity to be a best seller)

Innovativeness

An innovative retailer has great opportunity-----Distinctiveness by being first in the market

And also a great risk possibly misreading customers and stuck up in large inventories.

But success of innovative merchandise depends upon certain factors like

Target market:

Evaluate whether the target market is conservative or innovative

Retailer image:

Carry goods/services that reinforce the firm’s image (in past could satisfy)

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

And thereby find out the Number of customer acceptance for new ones

R&D at Wendy’sWendy’s R&D Department is dedicated

to continually improve products by refining cooking, serving procedures

and ingredients

Need to even go for a fashion check Check if fashion is

Vertical trend Horizontal trend

Retail Assortment Strategies

Width of assortmentWidth of assortment refers to the number of distinct goods/service categories a retailer carries

Depth of assortmentDepth of assortment refers to the variety in any one goods/service category a retailer carries

An assortment can range from wide and deep (department store) to narrow and shallow (box store)

Sephora’s (USA) Very Deep Assortment of Cosmetics

Offers 365 shades of lipsticks150 shades of nail polish150 shades of cosmetic pencils

Do’s for planning their assortment If variety is increased will overall sales go up

Will overall profits increase

How much space is required for each product category

How much space is available

Will carrying 10 varieties yield greater sales or profits than stocking 4 varieties

Investment cost that occurs with large varieties should also be taken care of.

As selling space is limited, it should be allotted to those goods generating the most customer traffic and sales.

Thus can even go for selection of some modern ways of distinction strategies for Assortment

Scrambled Merchandising: Retailer adds unrelated items To generate more revenue and lift up profits Like Florists keeping umbrella

Complementary Merchandising: Retailers sell basic product and related offerings

through cross-merchandising Like Stereos and CDs

Substitute Merchandising: Keeping all competing brand options so a s to shift

sales from one brand to other And causing no difference to retailers overall sales

Brands

Private(dealer or store)

Manufacturer(national)

Generic

(Local ProductsHaving secondary shelf allocationLeast promotionLow pricedOnly 1 % sales contribution)

Wal-Mart’s New Approach to Private Brands

Daffy’s Distinctive Branding Strategy

This is an off-price chain that caters to brand conscious shoppers who look for deals.

Daffy’s provide new meaning to the word bargain

For its online shoppers it has put up as follows

It says for everyone else we offer wide range of accessories, clothes etc

But you don’t have to hunt for a good deal We already pay people to do that for you i.e. our buyers load racks every week with new

merchandise from all over the world. You’ll get finest designer collections at savings up to

80 % off the regular retail price

Category Management Is a merchandising technique used to improve

productivity

It is even a way to manage a retail business that focus on the performance of product Category results than an individual brand

CM is a process of managing all SKU’s

It involves simultaneous management of

Price Shelf-space Merchandising Strategy Promotional efforts And all other elements of retail mix.

PRIL’s Category Management.

Applying Category

Management

Shelf Logic Software for Category Management Planning

Shelf Logic Software for Category Management Planning