Merchandise Planning

RETAIL MARKETING UNIT 3 MERCHANDISE PLANNING
MERCHANDISE PLANNING
Concept –
Buying of merchandise & selling it to end consumer

Merchandising can be termed as planning, buying & selling

of merchandise .
Challenging function- “ Goods well bought are half sold.”
Merchandising challenge deals with –

Right product
Right Quantity
At right place
At right time
And at right price
Achieving this 5 RIGHTS is key for success

REATAIL MARKETING UNIT 3 MERCHANDISE PLANNING
Merchandise Mgt can be termed as –
Analyse customer
Planning of merchandise to be sold
Acquisition of merchandise
Handling – involves merchandise in its own place
Control on the amt spent on buying merchandise

Factors affecting merchandising function –
Size of organisation
Organisa Merchandise to be
merchandising function
tion carried
structure
Types of stores
Merchandiser : - responsible for particular lines of

merchandise
Eg- in Deptal store, there may be a merchandiser for

menswear
womenswear
childrenswear
Role & Responsibilities
1) Planning-
for merchandise needs , not involved in buying
Estimating consumer demand & impact of changes in

retail envt,
Sales forecast - budgets

2) Directing-
Guiding & training buyers
performance
3) Coordinating –
Supervise the work of more than one buyer
Coordinate activities with all buyers

4) controlling-
Not only merchandise performance But also buyer’s

performance
The buyer : Role & Responsibilities
Select & order merchandise to be sold
May be responsible for buying for a dept, an entire

store,or a chain of stores
Buyer should maintain a balanced inventory

Responsibilities of buyers are –
Developing a merchandising strategy
Planning & selecting merchandise assortment
Vendor selection, development & management
Pricing the merchandise
Inventory mgt – various store formats

RETAIL MARKETING UNIT 3 MERCHANDISEPLANNING
FUNCTION OF BUYING FOR DIFFERENT TYPES OF
ORGANISATIONS
Buying for a single / independent store-
One person – owner & manager
Thorough understanding of buying process
Typically role of buyer is created
Co ordinating purchasing for various products

Writing orders
Handling special orders
Making decisions on merchandise returns
Remerchandising the store
Taking decisions with respect to pricing of product
Planning & coordinating various promotional activities

Buying for a chain store or a chain of department store -
Operation is larger than independent store
Merchandising in chain store is characterized into-

central buying plans
central merchandising plans
Operates in more than one region
Diverse consumer market

Sales needs to be as close to accurate as possible
Overbuying or underbuying
Buying for non store retailer-
Buying merchandise will vary from that of store retailer
Clear understanding of product consumers buy on net
Uniqueness of product & competitive price

PROCESS OF MERCHANDISE PLANNING

Introduction -
 Merchandise planning is defined as planning

& control of merchandise inventory of the
retail firm in a manner which balances
between the expectations of the target
customer & the strategy of the firm
Process of merchandise mgt
STORE Format strategy

B
U
S S
I T
N Sourcing:
R Merchandise Make or buy Allocation
E A Merchandise Performance
Planning: Vendor identify of merchandise monitoring &
S T Strategy Range Negotiations to stores
S evaluation
E Assortment Placing the
G Product order
Y price
Store operations & planning

PROCESS OF MERCHANDISE PLANNING
Stage 1 - Developing the sales forecast
Stage 2 – Determining the merchandise requirement
Stage 3 – Merchandise control- to open to buy
Stage 4 – Assortment Planning

Stage 1 - Developing the sales forecast
Predicting future sales
Helps in determining inventory needs
How much of each product needs to be purchased ?
Should new product be added to merchandise assortment ?
What price should be charged for the product ?

Process of developing sales forecast –
Review past sales
Analyzing the changes in economic conditions
Sales potential
demographic changes
Stage 2 – Determining the merchandise requirement
Planning in merchandise is at two levels

creation of merchandise budget
assortment plan
Two methods of developing merchandise plan
Top down planning Bottom up planning

Top down planning – top mgt works on sales plan & this
plan is passed on to merchandising team
Bottom up planning – individual dept managers work on

estimated sales projections & then added up to arrive
at total sales fig.
Merchandise budget usually comprise of five parts
1 –sales plan , how much of each product needs to be

sold
dept –wise
Div wise
stock wise
2- stock support plan , how much stock is needed to

achieve sales
3 – planned reductions which may need in case product

does not sell
4- planned purchase levels i.e quantity of each product

needs to be procured
5 – gross margin = sales – cost of goods sold

LEVEL OF IDENTIFICATION IS STORE ITSELF –
Classification
Within a supermarket
Fresh groceries
Ready to eat snacks
Additives/ pickles
Personal hygiene products
Cooking aids – like ready pastes
Necessities like Dal, sugar, salt,oil
Soft drinks
Merchandise Hierarchy
company Dept Merchandise Merchandise Mercha

classification category ndise Style SKU
sub price
category point
various categories in of product in every Dept.
Eg –ready to eat Dept –biscuits, chips ,wafers, branded

snacks like Haldiram’s
Sub Category level –

Within chips & wafers – salted wafers, branded wafers,
flavored wafers
Style /pack/price-
Pack- 100 gm
Price – fixed by retailer
 Stage 3 –Merchandise control- the open to buy
 It is a tool in the hands of a fully committed small

retailer
 In retail Open To Buy is a buzzword
 Good inventory control is critical to ensuring an adequate

level of stock is on hand for the amount of sales being
generated
 Having too much inventory ,wrong inventory can slow

cash flow & reduce profits with too many
 IF retailer under buys & miss sales opportunities then retailer is

not making the potential profit
 A retailer can be sure to stock the right amount of right product at

the right time by using OPEN TO BUY
 It can be calculated in units or in dollars
 OTB is essentially a difference between how much inventory is

needed & how much is actually available
 This includes –
 Inventory on hand
 In transit &
 Any outstanding orders
 Planned reductions ; it includes
a) Planned markdowns –reduction in prices due to bad

quality, competitive product, change in trend
b) Employee discounts-
Discounts given to employees for buying companies products
c) Shrinkage –
Loss of merchandise due to theft or pilferage
Stage 4 – Assortment Planning

Assortment Planning is both extremely important and
challenging for retailers.
Assortment –means combination of all products made
available in a store. And a set of products offered within a
product category
Products share similar product categories
Assortment planning involves determining quantities of each
product that should be purchased

Merchandise Planning

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RETAIL MARKETING UNIT 3 MERCHANDISE PLANNING

Buying of merchandise & selling it to end consumer

Merchandising can be termed as planning, buying & selling

Challenging function- “ Goods well bought are half sold.”

Merchandising challenge deals with –

Achieving this 5 RIGHTS is key for success

Merchandise Mgt can be termed as –

Planning of merchandise to be sold

Handling – involves merchandise in its own place

Control on the amt spent on buying merchandise

Factors affecting merchandising function –

Merchandiser : - responsible for particular lines of

Eg- in Deptal store, there may be a merchandiser for

Role & Responsibilities

for merchandise needs , not involved in buying

Estimating consumer demand & impact of changes in

Sales forecast - budgets

Guiding & training buyers

Supervise the work of more than one buyer

Coordinate activities with all buyers

Not only merchandise performance But also buyer’s

The buyer : Role & Responsibilities

Select & order merchandise to be sold

May be responsible for buying for a dept, an entire

Buyer should maintain a balanced inventory

Responsibilities of buyers are –

Developing a merchandising strategy

Planning & selecting merchandise assortment

Vendor selection, development & management

Pricing the merchandise

Inventory mgt – various store formats

FUNCTION OF BUYING FOR DIFFERENT TYPES OF

Buying for a single / independent store-

One person – owner & manager

Thorough understanding of buying process

Typically role of buyer is created

Co ordinating purchasing for various products

Handling special orders

Making decisions on merchandise returns

Remerchandising the store

Taking decisions with respect to pricing of product

Planning & coordinating various promotional activities

Buying for a chain store or a chain of department store -

Operation is larger than independent store

Merchandising in chain store is characterized into-

Operates in more than one region

Diverse consumer market

Sales needs to be as close to accurate as possible

Buying for non store retailer-

Buying merchandise will vary from that of store retailer

Clear understanding of product consumers buy on net

Uniqueness of product & competitive price

PROCESS OF MERCHANDISE PLANNING

 Merchandise planning is defined as planning

STORE Format strategy

Store operations & planning

PROCESS OF MERCHANDISE PLANNING

Stage 1 - Developing the sales forecast

Stage 2 – Determining the merchandise requirement

Stage 3 – Merchandise control- to open to buy

Stage 4 – Assortment Planning

Stage 1 - Developing the sales forecast

Predicting future sales