Retail Merchandising 1

Shri rangan
Objectives
To demonstrate the importance of a sound merchandising
philosophy
To outline the considerations in devising merchandise
plans: forecasts, innovativeness, assortment, brands,
timing, and allocation
To discuss category management
To study various buying organization formats and the
processes they use

Retail Merchandising
Definition & the Concept of Retail
Merchandising
Role & Responsibilities of a Merchandiser
Fashion Merchandising
Merchandise Characteristics
Merchandise Management- Merchandise Mix &
Merchandise Budget
Basics of Merchandise Accounting

RM - DEFINITION


Retail selling effort that is the principal task of in-store sales personnel through the
use of promotions designed by a manufacturer, such as unique displays, giveaways,
or discount and premium offers. In this case, merchandising is the act of managing
and arranging the merchandise on display in a store so as to promote its sale.

Role & Responsibility of Merchandiser
Planning
Directing
Co-ordinating
Controlling
Merchandising
Versus Store
Management Career
Tracks
Functions of Merchandisers at Shoppers stop
Inventory-turn Management
Achieving Sales & Margins
Plans Merchandise
Availability Management, as per range plan
Merchandising strategy & planning
Processing of purchase orders
Analysis of Data & Sales Budgeting
Profitability Targets & Expense Control
Vendor/Supplier relations for both, in-house products as well as for
brands.
ARRANGING -MERCHANDISE
Merchandising arrangement
MERCHANDISING ARRANGMENT

Why making effective use of your space is so important.
How to position your departments and products.
How to improve store lighting.
The importance of atmosphere and cleanliness in your store.
How to create great displays and signage.


WHAT WE WILL ACHIEVE AS A BUSINESS.

The consistently best Display standards against Competition in India
A great environment that will attract & satisfy Customers
Showcase to best advantage our product offer
Dramatically enhance Customer Service


Managing the Merchandise
Developing a sales forecast
Determining the merchandise requirements
Merchandise control
Assortment planning


Developing Sales forecast
Reviewing Past sales
Analyzing the changes in Economic Conditions
Analyzing the changes in the sales potential
Analyzing the changes in the marketing strategies
of the retail organization and the competition
Creating the sales forecast
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)

Determining the merchandise requirements

Merchandise Mix
Retail communication Mix



Basics of Merchandise Accounting
Merchandising Accounting
Cash Flow
The Balance sheet
Financial Ratios
Income statements
Gross- Margin-Return on Investment
Cash Flow
Cash In
Cash Out
Negative Cash flow = Cash In < Cash Out
Positive Cash flow = Cash out > Cash In


Cash Flow Curve
The Balance Sheet
The Balance Sheet is a statement of an
organization's Assets, Liabilities and Owners
Equity at a Particular Point in time.
Assets
Liabilities
Owner's Equity
Assets
Assets Owned by an organization
a. Short term (or) Current Assets
b. Long term
Liability
Liability: Debts owed by an organization
Payment on Short term
Ex: Payment to supplier
Payment on Long term
Ex: Mortgage on Land &
Building
Investment on Extension,
Expansion & renovation

Owners Equity
Owners Equity : Difference between asset and
Liability.
Relationship:
Assets = Liabilities + Owners Equity

Income statement

Income statement
Profit performance for a specific period of time
Income statement is otherwise called Statement of earnings or Profit
& loss statement
Income statement:
Revenue Expenses = Net Income
Profit = Expenses < Revenue = positive Net Income
Loss = Expenses > Revenue = Negative Net Income


Income statement contd
Income statement can be computed for an entire organization
Individual Store
A Group of Store
Department

Profit and loss is based on the revenue & expenses directly associated
with each unit of business.



Income statement contd
Components : 5 major components
Revenue
Cost of goods sold
Gross margin
Expenses
Net Profit

Relationship among the components
Net revenue Cost of goods sold - Expenses
Gross margin Net Profit


Income statement contd
Relationship among the components
Net revenue Cost of goods sold - Expenses
Gross margin Net Profit
Net revenue : composed of sales, Leasing or renting property or
interest on accounts
Net sales = Gross sales Customer return
Gross sales are used to determine the customer return rates
Customer return rate = Customer returns x100
Gross sales
Income statement contd
High customer return rate is often indicates of issue related
a. Customer service
b. Quality
c. Fit of merchandise
High sales attest to the ability of an organization buyer to
select assortments of goods that are appealing to the stores
target customers.

Income statement contd
Cost of goods sold (or) Cost of Merchandise sold (or)
cost of sales
Cost of goods sold = Billed cost of Merchandise +
work room costs +shipping cost cash Discount -
Returns to vendors
Income statement contd
Shipping cost : Delivery cost for transporting goods
from supplier
Workroom costs: activities that prepare
merchandise for sale ( steaming & pressing apparel)
Return to vendors : defective or slow selling goods
returned to suppliers for credit
Cash discounts : Invoice concessions from suppliers
for prompt payment
Income statement contd
Expenses: Payroll, rent, Utilities, advertising and
interest on debt.
Direct Expense: attributable to a specific unit (
store rent )
Indirect Expense: is not attributable to a specific
unit. ( news paper advertisement )

Income statement contd

Gross margin : Difference between sales and cost of goods sold.
Net Income : Gross Margin Expenses
Income can be increased by Increasing sales
Increasing Gross Margin
Decreasing cost of goods sold
Any combination of above
Component Percentage :
Cost of goods sold = cost of goods X 100
Net sales
Gross Margin = Gross Margin X 100
Net Sales
Expenses = Expenses X 100
Net Sales



GMROI
Particulars Category A Category B
Sales 300000 250000
Cost of Goods Sold 180000 100000
Gross Margin 120000 150000
Gross Margin % 40% 60%
GMROI
Gross Margin Return on Investment
Integrates two performance
Gross Margin
Turn Over
To create a single measure of performance
GMROI = Gross Margin X Net sales
Net Sales Average Inventory
GMROI = Gross Margin / average Inventory


Key terms
Assets
Balance sheet
Cash discount
Cash Flow
Component Percentage
Cost of goods sold
Current ratio
Expenses
Factor
GMROI
Gross sales


Income statement
Liability
Net Income
Net Loss
Net Sales
Return to Vendor
Owners Equity
Time Series Comparison
Workroom cost