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Presentation

ON

Merchandising Management:

Purchasing System

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Goals For Presentation

Merchandise Management Meaning

Purchasing System Meaning

Merchandise Budget Plan :

Meaning

Steps Of Budget Plan

Methods

Monthly Sales Percent Distribution To Season

Monthly Sales

Monthly Reductions Percent Distribution To Season

Monthly Reductions

Summary

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MERCHANDISE MANAGEMENT

It is the process of

developing,

securing, pricing,

supporting and

communicating the retailers merchandise offering

It means offering the right product at the right time

at the right price with the right appeal!!

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PURCHASING SYSTEM

A method used by businesses to buy products and/orservices.

A purchasing system manages the entire acquisition

process, from requisition, to purchase order, to productreceipt, to payment.

Purchasing systems are a key component of effectiveinventory management in that they monitor existingstock and help companies determine what to buy, how

much to buy and when to buy it. A popular purchasing system is based on economic

order quantity models

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MERCHANDISE BUDGET PLAN

Plan for the financial aspects of a merchandise

category

Specifies how much money can be spent each

month to achieve the sales, margin, inventory

turnover, and GMROI objectives.

Not a complete buying plan--doesnt indicate

what specific SKUs to buy or in what quantities

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STEPS IN DEVELOPING A BUDGET PLAN

Set margin andinventory turn goals

Seasonal sales forecastfor category

Breakdown sales forecastby month

Plan reductions markdowns, inventory loss

Determine stock needed tosupport forecasted sales

Determine open to buyfor each month

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SIX MONTH MERCHANDISE PLANFOR MENS CASUAL SLACKS

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METHODS OF BUDGET PLAN

Monthly Sales Percent Distribution to Season(Line1)

Sales % Distribution to Season

6 mo. data April May June July Aug Sept100.00% 21.00% 12.00% 12.00% 19.00% 21.00% 15.00%

The percentage distribution of sales by month is

based on Historical data

Special promotion plans

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MONTHLY SALES PERCENT DISTRIBUTION TOSEASON

Retail sales are very seasonal. The Christmas

season often accounts for more than 40% of a

retailers annual sales.

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MONTHLY SALES (LINE 2)

Sales % Distribution

1. Month 6 mo. data April May June July AugSept 100% 21% 12% 12% 19% 15%

2. Mo. Sales $130,000 $27,300 $15,600 $15,600 $24,700 $19,500

Monthly sales =

The forecasted total season for the six-month period x monthly

sales %

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MONTHLY REDUCTIONS PERCENTDISTRIBUTION (LINE 3)

3. Reduction % Distribution to Season

6 mo. data April May June July Aug Sept100.00% 40.00% 14.00% 16.00% 12.00% 10.00% 8.00%

To have enough merchandise every month tosupport the monthly sales forecast, buyers need toconsider factors that reduce the inventory level inaddition to sales made to customers.

Markdowns Shrinkage Discounts to Employees

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SHRINKAGE

Inventory loss caused by shoplifting, employeetheft, merchandise being misplaced ordamaged and poor bookkeeping.

Retailers measure shrinkage by taking thedifference between

1. The inventory recorded value based onmerchandise bought and received

2. The physical inventory actually in stores anddistribution centers

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MONTHLY REDUCTIONS (LINE 4)

Reduction % Distribution

3. Month % 6 mo. data April May June July Aug Sept100.00% 40.00% 14.00% 16.00% 12.00% 10.00% 8.00%

4. Monthly

Reductions $16,500 $6,600 $2,310 $2,640 $1,980 $1,650 $1,320

Monthly Reductions =

Total reductions x Monthly reduction %

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SUMMARY

Merchandise Management is extremely

important aspect of Retail Operations Manyconsider it the MOST important)

Good merchandise management does notguarantee success but bad merchandisemanagement almost certainly will result infailure.

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Presented byChitraMani

KhyatiNikita