Lesson 8: Merchandising

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Lesson 8 Merchandising
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Objectives

• Give examples of the four main categories of
  merchandise
• Explain the importance of stock lists and
  inventory control on merchandising
• Describe how sales are affected by the strategic
  placement of merchandise throughout a store
  including the store entry, checkout lanes, and
  back of the store
• Analyze the financial impact of rearranging
  products

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1. What is Merchandising?

• The coordination of buying merchandise that
  customers want in the proper quantities and then
  selling that merchandise at a price that
  customers are willing pay
• Also includes the skillful arrangement of where
  items are placed within a store

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Types of Merchandise

• Staples
• Fashion
• Seasonal
• Convenience

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Staple Merchandise

• The basics in your store
• Stocked year round
• Large portion of store sales
• What customers need on an ongoing basis and sell
  well year after year
• Ie bread and eggs in a grocery store
• Ie socks and shoes in a department store

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Fashion Merchandise

• Items that are stocked for several years and have
  solid sales over that time period
• Eventually, fashion merchandise changes and
  customers will switch to buying different styles
• Ie skinny jeans, Wii, Tickle Me Elmo
• Does NOT have to be clothing!

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Seasonal Merchandise

• Items that sell well during particular times of
  the year that are stocked only for that selling
  period
• Receive markdowns after selling season is over
• Ie

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Convenience Merchandise

• Items customers buy without thinking very much
  about the purchase
• Or, items purchased solely for the convenience of
  it being there
• Can be purchased often or even daily
• Ie

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Stock Lists

• Tools that retailers use to help them keep a
  close eye on the inventory they stock
• Assist retailers with the task of maintaining
  correct quantities of merchandise
• Itemized and detailed listings of the merchandise
  a store or department should have for sale
• Basic stock list
• Model stock list
• Never-out stock list

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8. Basic Stock Lists

• Keeps track of the staple merchandise that the
  store should always keep in inventory (have a
  regular customer demand)
• Notes a min. quantity that should always be in
  inventory and the number of items to be reordered
  when needed
• Studied daily

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Model Stock List

• Used to keep track of fashion merchandise
• The list changes more often than basic stock list
  items, therefore is less detailed
• Monitoring this will give valuable info about
  best pricing, styles, and colors of products

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Never-out Stock List

• Used for all four types of merchandise
• Keeps track of best-selling merchandise
• Monitored frequently to ensure that popular items
  are always available in sufficient quantities
• The list changes frequently (new items are added
  and less popular ones are removed)

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Merchandising and Sales

• General rule of thumb Plan for a ten percent
  increase over last years sales for the same time
  period
• Must consider current business circumstances when
  planning and act accordingly
• There must be enough merchandise for customers to
  choose from
• There shouldnt be TOO much merchandise, it could
  overwhelm the customer

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Merchandising for Profit

• Strategic placement of merchandise within the
  selling space is a big factor in generating sales
• Staple merchandise usually has a permanent
  location and does NOT need to be in high traffic
  areas

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Store Entrance

• Has the greatest customer exposure
• Has the best chance of producing a large amount
  of sales

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Impulse Purchases

• Small items that are purchased with little or no
  thought on behalf of the customer
• Placed near entrance area, checkout area, and
  heaviest customer traffic areas
• Ie magazines, candy bars, gum

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Related Merchandise

• Items that are related to each other and that
  usually sell together
• If a customer buys one, they will likely buy the
  other
• Should be located near one another
• Ie razors and shaving cream, peanut butter and
  jelly

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Key Math Concepts

• Planned Sales Increase
• Last Years Sales X Planned Increase
• New Estimated Sales
• Last Years Sales Answer from above
• Total Price Per Item Ordered
• Quantity Ordered X Price Per Unit