Developing Merchandise Plans

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Chapter 14

• Developing Merchandise Plans

RETAIL MANAGEMENT A STRATEGIC APPROACH, 10th
Edition
BERMAN EVANS
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Chapter Objectives

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

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Merchandising

• Activities involved in acquiring particular goods
  and/or services and making them available at the
  places, times, and prices and in the quantity
  that enable a retailer to reach its goals

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Merchandising Philosophy

• Sets the guiding principles for all the
  merchandise decisions that a retailer makes
• Should reflect
• Target market desires
• Retailers institutional type
• Market-place positioning
• Defined value chain
• Supplier capabilities
• Costs
• Competitors
• Product trends

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Scope of Merchandising Responsibility

• Full array of merchandising functions
• Buying and selling
• Selection, pricing, display, customer
  transactions
• OR
• Focus on buying function only

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Figure 14-1 Nikes Own Store Merchandising
Philosophy
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Micromerchandising

• Retailer adjusts shelf-space allocations to
  respond to customer and other differences among
  local markets

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Cross-Merchandising

• Retailers carry complementary goods and services
  to encourage shoppers to buy more offer warranties

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Functions Performed

• Merchandising view
• All buying and selling functions
• Assortments
• Advertising pricing
• Point-of-sale displays
• Employee utilization
• Personal selling approaches

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Functions Performed (cont.)

• Buying view
• Buyers manage buying functions
• Buying
• Advertising
• Pricing
• In-store personnel manage other tasks
• Assortments
• Point-of-sale displays
• Employee utilization
• Personal selling approaches

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Figure 14-5 Devising Merchandise Plans
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Forecasts

• These are projections of expected retail sales
  for given periods
• Components
• Overall company projections (Estimation)
• Product category projections
• Item-by-item projections
• Store-by-store projections (if a chain)

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Types of Merchandise

• Staple merchandise
• Assortment merchandise
• Fashion merchandise
• Seasonal merchandise
• Fad merchandise

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Staple Merchandise

• Regular products carried by a retailer
• Grocery store examples milk, bread, canned soup
• Basic stock lists specify inventory level, color,
  brand, style, category, size, package, etc.

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Assortment Merchandise

• Apparel, furniture, auto, and other categories
  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

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Fashion and Seasonal Merchandise

• 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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Assessing each Factors in Planning Merchandise
Innovativeness
FACTOR RELEVANCE for PLANNING
Target market(s) Evaluate whether the target market is conservative or innovative
Goods/service growth potential Consider each new offering on the basis of rapidity of initial sales, maximum sales potential per time period, and length of sales life
Fashion trends Understand vertical and horizontal fashion trends, if appropriate
Retailer image Carry goods/services that reinforce the firms image
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Table 14-1b Factors in Planning Merchandise
Innovativeness
FACTOR RELEVANCE for PLANNING
Competition Lead or follow competition in the selection of new goods/services
Customer segments Segment customers by dividing merchandise into established-product displays and new-product displays
Responsiveness to consumers Carry new offerings when requested by the target market
Amount of investment Consider all possible investments for each new good/service product costs, new fixtures, and additional personnel
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Table 14-1c Factors in Planning Merchandise
Innovativeness
FACTOR RELEVANCE for PLANNING
Profitability Assess each new offering for potential profits
Risk Be aware of the possible tarnishing of the retailers image, investment costs, and opportunity costs
Constrained decision making Restrict franchisees and chain branches from buying certain items
Declining goods/ services Delete older goods/services if sales and/or profits are too low
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Figure 14-7 Traditional Product Life Cycle
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Retail Assortment Strategies
Width of assortment refers to the number of
distinct goods/service categories (product lines)
a retailer carries Depth of assortment refers to
the variety in any one goods/service category
(product line) a retailer carries An assortment
can range from wide and deep (department store)
to narrow and shallow (box store)
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Brands
Manufacturer (national)
Private (dealer or store)
Generic
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Timing Location

• Timing For new produces the retailer should
  decide when they are first purchased, displayed
  and sold the must plan the merchandising flow per
  during a year
• Location location of products in store and
  stockroom or warehouse to be used