PRODUCT AND MERCHANDISE

MANAGEMENT
 Role of product management in
retailing
• ‘Products can tangible like visible goods or
intangible like beauty parlors gyms ,banks etc’
• Identification of products to be retailed is the core
point of the retail business
• Varied cost implications, demand patterns and
competitive factors play a major role for different
product categories
• Critical for successful customer satisfaction
• Changes in product profile to provide innovative
offerings (ethnic wear added to a casual wear
outlet)
 Product management vs
merchandise management
• Product management deals with issues and set of
decisions related to the selection and removal of
products from the retailers’ portfolio
• Merchandise management relates to the selection
of the right quantity of the product and ensures its
availability at the right place and time ( Pantaloon
offers fashion and leather accessories, cosmetics,
perfumes, jewellery for women and formals, smart
casuals, denims, men's accessories for men)
 Product selection process
• Review of product performance related to :
• - type of products
• - life cycle of the products,
• - trends in the product category
• - its strategic fit with the retailer’s business
• Product range review assists retailers to make decisions on :
• - deletion of a product
• - increase in variety and range
• - identification of new suppliers
• - additions to product features
• - review and revision of promotional campaigns
• Effective product management is also known as brand
management
 Brand management
• Key issues in retail branding:The world’s 10 strongest brands
• - brand management of the
retail outlet
• - deciding whether or not to
opt for the strategy of self
own branding
• - mutli-pronged strategy
• a strong retail brand and
private label strategy is an
effective tool to differentiate
stores and the shopping
experience
Elements of a store brand
Own branding

• Own branding: retailer sells products under the

retail organization’s house brand name
• 2 types of own branding:
• - integrated own branding: retailer also
manufactures the branded retail products
(Raymond, Sony)
• - independent contracting: retailer procures the
products from other suppliers although sold under
the label of the retail house
 Own branding contd

• Four significant factors of own branding/private labels:

• - private label sales have showed an increase in terms of
both value and volume across countries
• - labels enhance store profitability by increasing
pressure on branded manufacturers
• - lables can be used to increase margins or offer
products at lower prices
• - better control over price, delivery, and quality, ensures
a strong brand identity for a retailer
• - effective private label programme to include all
elements of the value proposition—price, quality, and
product differentiation
 Merchandise management
Merchandise
management:
process by which a
retailer attempts to offer
the right quantity of the
right product at the right
place and time while
meeting the retail firm’s
financial goals
•
Dimensions of merchandise mix
 Merchandise budget
A financial plan that indicates how much to invest in
product inventories
Merchandise unit plan
• Target market analysis
• Need to incorporate demographic, shopping
behaviour and psychographic data (DLF City
Centre Shopping Mall in Gurgaon has evolved its
merchandise mix around female ethnic and formal
wear in garments, footwear, etc.,
• Influential consumer characteristics
 Merchandise unit plan contd

• Competition Analysis
• - evaluation of the competitive retail stores in the
trade area
• used to arrive at a market
• positioning that identifies the retail store position
vis-à-vis competition and defines its target customers
• - determined by competitive factors (number, types,
and positioning of the anchor store and non-anchor
stores, size and nature of the market area of retailer)
Influential competitive factors
 Model stock plan
• Identify the attributes considered by the customer in
purchasing the product
• Focuses on features or attributes and availability in
terms of sizes and brands (Pantaloon focuses on men’s
and women’s wear, varied sizes and brands)
• Identify number of levels under each attribute
• List levels available in respective product category on
offer to target segment in view of preferences and
similar offerings of competitors
• Allocate total rupees or units to respective product
categories
• An acid test for a retailer planning for the optimal
merchandise mix (includes ordering cost,
transportation, and stocking cost)
Constraining factors
 Types of suppliers

• Manufacturers &
primary producers
• Wholesalers
• Agents
• Other retailers
• Government & semi-
government sources
 Category management
• Category management: process of managing a retail
business with the objective of maximizing the sales
and profits of a category rather than the
performance of individual brands or models
• Advantages:
• - increased sales
• - reduced inventory management
• - improved route and warehouse management
•
 Merchandise management
planning
• Specialty retailers
• Grocery and food retailing
 - fixed cycle replenishment
 - continuous replenishment
• Merchandise Performance Evaluation
• ABC Analysis
• Sell-though analysis