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Developing Merchandise Plans

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Chapter Objecti ves
To demonst rat e t he import ance of a sound
merchandising philosophy
To st udy various buying organizat ion format s
and t he processes t hey use
To out line t he considerat ions in devising
merchandise plans: f orecast s,
innovat iveness, assort ment , brands, t iming,
and allocat ion
To discuss cat egory management and
merchandising sof t ware
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Merchandi si ng
Or igin:
12501300; Middle English marchandise <
Old French. See merchant, -ice
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Merchandi si ng
Activities involved in:
acquiring particular goods /services
makeavailable at the:
* places,
* times,
* prices
* quantity
that enable a r etai l er to reach its goals.
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Si mpl e Expressi on of Merchandi si ng
If you take good care in the buying of the
product, it doesnt come back.
If you take good care of your customer, they
do come back
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Merchandi si ng Phil osophy
Sets th e gui di ng pri nci pl es for al l the mer chandi se
deci si ons th at a r et ai l er makes
Shoul d refl ec t
* Target mar ket desi r es
* Ret ai l er s i nsti tuti onal type
* Mar ket-pl ac e posi ti oni ng
* Defi n ed val u e chai n
* Suppl i er cap abi l i ti es
* Cost s
* Comp eti tor s
* Product t rends
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Scope of Responsi bi li ty
Full array of merchandising functions
* Buying and selling
* Selection, pricing, display, customer
transactions
Focus on buying function only
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Mer chandising Philos ophy
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Mi cromerchandi si ng
Retailer adjusts shelf-space
allocations to respond to customer
and other differences among local
markets
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Cross-merchandi si ng
Retailers carry complementary
goods and services to encourage
shoppers to buy more
Grill tools near meat shelf
Coffee maker near Coffee
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Buying Or ganization
Formats & Process
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The At t ribut es & Funct ions of Buying Organizat ions
Men/Women/Ki ds
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At Wal -Mar t: Devel oping an Insi de Buying
Or ganization
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Functi ons Performed
Merchandising view
* All buying and selling functions
Assortments
Advertising pricing
Point-of-sale displays
Employee utilization
Personal selling approaches
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Functi ons Performed
Buying view
* Buyers manage bu ying f unct ions
Buying
Advertising
Pricing
* In-st ore personnel manage ot her f unct ions
Assort ment s
Point -of-sale displays
Employee ut ilizat ion
Personal selling approaches
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Merchandising
Versus St ore
Management
Career Tracks
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Devising Merchandi sing
Plan
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Consi derati ons i n Dev isi ng
Merchandi se Pl ans
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Forecasts
Forecast s are proj ect ions of expect ed ret ail
sales f or given periods
* Component s:
Overall company proj ect ions
Product cat egory proj ect ions
It em-by-it em proj ect ions
St ore-by-st ore proj ect ions (if a chain)
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Types of Merchandi se
Staple merchandise
Assortment merchandise
Fashion merchandise
Seasonal merchandise
Fad merchandise
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Staple Merchandise
Regular products carried by a retailer
* Grocery store staple examples
Milk
Bread
Canned soup
Basic stock lists specify inventory level,
color, brand, style, category, size, package,
etc.
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Assortment Merchandi se
Apparel, furniture, auto, and other products
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
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Fashion and Seasonal
Mer chandise
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
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R&D at Wendys
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Structured Guidel i nes for
Pruning Products
Select it ems f or possible eliminat ion on t he
basis of declining sales, prices, and prof it s,
appearance of subst it ut es
Gat her and analyze det ail ed financial and ot her
dat a about t hese it ems
Consider nondelet ion st rat egies such as
cut t ing cost s, revising promot ion ef fort s,
adj ust ing prices, and cooperat ing wit h ot her
ret ailers
Af t er making a delet ion decision, do not
overlook t iming, parts and servicing, invent ory,
and holdover demand
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Retail
Assor tment
Str ategi es
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Bata: A Very Deep Assortment of
footwear
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Brands
Private
(dealer or storebrand)
Manufacturer
(national)
Generic
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Cost cos Appr oach to Pr ivate
Br ands
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Daff ys Dist inct ive Br anding
St r ategy (of f -pr ice chain)
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Category Management
is a retailing concept in which the range of products sold
bya retailer is broken down into discrete groups of similar
or related products;
these groups are known as product categories (examples
of grocerycategories might be: tinned fish, washing
detergent, toothpastes).
it is a systematic, disciplined approach to managing a
product categoryas a strategic business unit.
each categoryis run as a "mini business" (business unit)
in its own right, with its own set of turnover and/or
profitabilitytargets and strategies.
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Appl yi ng
Categor y
Management
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Merchandi si ng Software
General Merchandise Planning
Software
Forecasting Software
Innovativeness Software
Assortment Software
Allocation Software
Category Management Software
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Figure 14.4a Shel f Logic: Software for
Category Management Pl anni ng
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Figure 14.4b Shel f Logic: Software for
Category Management Pl anni ng