A Brief Plan On Merchandise

Management For Reliance Trends

Retail Shop
Merchandising In Retail
Organization
§ Merchandising is a specialized
management function within the
fashion industry. It is the business that
moves the world fashion from
designers showroom to retail sales
floor and into the hands of consumers.


§ It is the internal planning that takes

place within a retail organization in
order ensure adequate amount of
merchandise are on hand to be sold at
prices that the consumers are willing
to pay to ensure a profitable
Merchandising - involves 6 rights

§ Right Merchandise
§ Right Merchandise : Retailers must fill their
shelves with the merchandise that customers
wants.
§ Right Place : The location of merchandise is of
prime importance since it decides the
accessibility.
§ Right Time : Most of the merchandise is seasonal
in nature and must be in hand when needed.
§ Right quantity : A profitable balance between
volume of sales and amount of inventory is the
desired goal.
§ Right Price: Merchandiser must come up with a
price that is high enough to give the store
profits and yet low enough to meet the
competition and customer expectations.
§ Right Promotion: Right balance between the
ALWAYS KNOW - WHAT IS IN – TO
REMAIN IN THE COMPETITON
§ The constant in fashion is change
§ Changes in fashion are gradual and
evolutionary rather than
revolutionary.
§ Fashion is cyclical
§ Customers make fashion
§ Acceptance level of fashion vary
§ Fashion depends on place and reflects
lifestyle
§
INTERPRETING
CONSUMER
DEMAND
Elements of Customer
Demand
q
qT A R G E T M A R K E T
q
q
q
qB U Y I N G M O T I V A T I O N S
§
Identifying Target Market
Demographic Segmentation

 Mainly grouped on the basis of :-

§ Population
§ Age
§ Income
§ Sex
§ Occupation
§ Education

Geographic Segmentation

Mainly grouped on the basis of :-



§ Cities
§ States
§ Regions
 Climate plays an important role

Psychographic
Segmentation
Grouped on the basis of the


lifestyle -
 Social activities
 Interests
 leisure pursuits
 needs and wants


 People having similar lifestyles can

make up a target market group.

Behavioral Segmentation

Grouped on the basis of opinion on



specific products or services -

§
§ Rating of usage of products &
services.


 Help in improving the service/product

and make it different from others
 DETERMINING WHY
CUSTOMERS BUY
 BUYING MOTIVATIONS

R A T IO N A L E M O T IO N A L
M O T IV A T IO N S M O T IV A T IO N S

•D u ra b ility •Im ita tio n

•D e p e n d a b ility •E m u la tio n

•C o m fo rt •Pre stig e

•E co n o m y o f •Prid e o f
O p e ra tio n A p p e a ra n ce

•Price •D istin ctive n e ss

THE BUYER’S JOB

§ Planning
§
§ Buying
§
§ Selling
§
 Planning - Inventory Management
W ha t o rg a n i z a t i o n e xp e c t s? ??
To p M a n a g e m e n t : Higher inventory -turn
o ve r, Lo w e r o p e ra tin g co st, E xce lle n t
cu sto m e r se rvice .

S a le s & M a rke tin g D e p a rtm e n t: Quick

d e live ry , N o sto ck o u t, V a rie tie s &
V o lu m e s, Fre q u e n t a n d sm a lld e live rie s.

Fin a n ce D e p a rtm e n t: Lower inventory

le ve ls, Lo w o p e ra tio n co st, H ig h e r
in ve n to ry tu rn o ve r, Lo w e r co st o f d e live ry.
Planning - Inventory Management
 Major goals of planning in retail
merchandising are:
 1. to maintain an inventory enough meet
the anticipated customer demand.
 2. to time the delivery of purchase so that
merchandise is available for sale for
customer demand.
 3. to keep purchases in line with the
store’s ability to pay for them.
 4. to have funds available for the
purchase of new goods when needed.

Possible Plans to achieve it…

 Based on 2 factors we can plan purchases,

-How much the store expects to sell?
 -How much inventory is needed to achieve that sales
goal?
§
§ We should adopt ABC tecnique
§
§ Preparation of 6 months buying plan with
knowledge of fashion trends, market conditions,
economic factors, other records of the past
seasons.
§
§ The main thrust is to improve forecasting and
follow up orders, to reduce product stock outs
and obsolescence costs.
Possible Plans to achieve it…contd..

§
§ The buyer must plan stocks so that
the store image is reflected in the
merchandise.
§
§ Flexibility is the most important
factor to be kept in mind.


§ Includes provision for constant

adjustment to actual results.
PERIOD OF PLAN
§ The month from September onwards marks the
start of festival season in most of the states
across the country, starting with Onam and
Ganesha Festival running up to Christmas in
December. This is one part of year which
many companies look forward to with a lot of
interest.
§ Actually not just interest for many of these
companies their overall sales growth is 
dependant of their performance in these
crucial months.
§ This is also a wedding season in india.
§ India is called the county of festivals, so
otherwise also we have festivals coming
through out the year, we have to leverage
Procedures for Preparing the plan
§
§ The store’s accounting department supplies the buyer
with a planning form several months in advance of
the start of the actual buying season(if new company,
research is necessary to maximize profits)


§ On it are figures of the same department’s

merchandising operations during the same season
last year.
§
§
§ These goals are established by the store
management, not by the departmental buyers
 Contd..

Procedures for Preparing the plan
contd..

§


§ The buyers then using the planning form and his

knowledge of market conditions, trends, and demand
cycles, prepare figures on anticipated sales, stocks,
markdowns, and purchases for his department for the
upcoming season.
§
§
§
§ After approval is got from the departmental heads,
departmental plans are combined into a master plan
for the whole store.
§
Buying

§ Buying should be centralized for all the

stores.
§
§ Adequately stocking the department’s
price lines and securing the best
possible mark ups on all purchases.


§ Supervising the physical inventory or

stock counts to verify the accuracy of
stock records.


§ Establishing and maintaining effective

buying relationships with vendors.
Buying Pattern
CENTRAL BUYING

§ The centralization of all buying

activities from a central
headquarters with the authority and
responsibility for the selection and
purchase of merchandise limited to
buyers of particular merchandise
categories
The central merchandise
plan
§ Central buying assumes complete
authority for buying the assortment
of goods, pricing, warehousing and
distribution to the many stores.

The central merchandise
plan
ADVANTAGES-


§ It provides a steady flow of

merchandise provides for
specialists in each merchandise
category.
§
§ Goods are inspected before
delivery.
§
§
Selling
§ Communication and promotional
activities.


§ Determining the selling features of

the merchandise for promotion
purposes and the timing of these
promotions.
§
§ Innovations in terms of merchandise
mix to leverage occasion led buying
and offers of greater values in the
form of combos and product
differentiation to cope with down
Planning Sales


 1 . PLANNING SALES:
§
§ The buyer makes a realistic estimate of
prospective sales during the upcoming
season.
§ Reviews past sales figures, examine
external internal factors that may effect
sales, study general fashion trends that
may influence the department’s sales.
§ These estimated plans are then broken
down into sales goals for each of the
months.
Thank You
Planning Sales
 2. PLANNING STOCK
§ To estimate the amount of stock that will be needed to
support the planned monthly sales .


§ In order to support planned sales, a Beginning of Month

(BOM) has to be estimated.


§ Considerations influencing the planning of BOM stocks :



 There must be adequate opening assortment on

hand in sufficient quantity to meet anticipated
consumer demand until stock replacements for
goods sold can be secured.

 The planning must be such that the desired
seasonal stock turnover may be realized ,
markdowns minimized, and a steady flow of
new, interesting merchandise assured
throughout the month.
Planning Sales
q In planning monthly stock goals stocks should be
bought to a peak just prior to the time when
sales are expected to reach their peak


q By peaking stocks before consumer demand

reaches its crest the buyer will be able to present
maximum assortments in needed styles,
materials and colors when the public is in the
mood to buy.


q Similarly BOM stock plans should be reduced as a

selling season approaches its close or demand
decreases.


q MARKDOWNS can be used as tool of reducing

inventory as the season ends.
Stock sales relationship
§
§
§

§ Stock-sales relationships
§
§ Stores are guided by two stock-sales relationships:
§
§ 1. Monthly stock sales ratio
§
§ The monthly stock-sales ratio uses the no. of
months that would be required to dispose of a BOM
inventory at the planned rate of sales for the month. It also
directly relates stock requirements to the planned sales.
§ Stock-sales ratio = BOM stock / Planned
Sales for month
§
§
Stock sales relationship

2. Rate of stock turnover

§
§ Refers to the no. of times that an average stock of
merchandise has been turned into sales in any
given period .
§
§ Stock turnover = net sales / average inventory
§
§
(In general the rate of stock turnover is higher in


women’s apparel than in men’s clothing or home

furnishings. It is also higher in departments
featuring lower price ranges than in those featuring
higher price ranges
 3. PLANNING MARKDOWNS
§
q
q Markdowns are usually planned as a percentage of each
season’s planned sales.

q They may then be allotted to individual months, according to
the buyer’s estimates of when and to what extent the
monthly markdowns are going to be needed to sell the
goods.

q The chief factors to be considered in establishing seasonal
markdown goals are:
 the past experience of the store or
department
 comparative figures of similar stores
 amount of the old stock on hand at the
beginning of a new season