19.4.2016 1 Developing Merchandise Plans International Retail Management Merchandising Activities involved in acquiring particular goods/ services and making them available at the places, times, prices, and in the quantity that enable a retailer to reach its goals. 14-2 Merchandising Philosophy Sets the guiding principles for all the merchandise decisions that a retailer makes Breadth, depth, quality of the assortment, store brands vs. national brands, pricing policies It should reflect – Target market desires – Retailer’s institutional type – Market-place positioning – Defined value chain – Supplier capabilities – Costs – Competitors – Product trends 14-3 14-4 14-5 Micromerchandising Retailers adjust shelf-space allocations to respond to customer differences and other differences among local markets. Micro-Merchandising works by defining local assortments for meeting specifically needs of the local customers 14-6
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19.4.2016
1
Developing Merchandise Plans
International Retail Management
Merchandising
Activities involved in acquiring particular goods/ services and making them available at the
places, times, prices, and in thequantity that enable a retailer to
reach its goals.
14-2
Merchandising Philosophy
Sets the guiding principles for all the merchandise decisions that a retailer makes
Breadth, depth, quality of the assortment, store brands vs. national brands, pricing policies
It should reflect – Target market desires– Retailer’s institutional type– Market-place positioning– Defined value chain– Supplier capabilities– Costs– Competitors– Product trends
14-3 14-4
14-5
Micromerchandising
Retailers adjust shelf-space allocations to respond to customer differences and other differences among
local markets.
Micro-Merchandising works by defining local assortments for meeting specifically needs of the local
customers
14-6
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Walmart: “Store of Community” Program
Placing merchandise in stores based on community demographics and preferences
14-7
«One size fits all» vs.
Micromerchandising Traditional Product Life Cycle
14-8
Hard discount
market
300-350 m2 area
1000 m2 area and
over
First store was
opened in 2015
Cross-Merchandising
the practice of displaying products from different categories (or store departments) together, in order to get customers interested in additional items at the point of sale
Retailers carry complementary goods and services to encourage shoppers to buy more.
Cross Merchandising helps the customers to know about the various options which would complement their product
Example: Shoe laces, shoe shiners, shoe racks with shoes
14-9 14-10
Cro
ss-M
erch
and
isin
g
Top Tips about Cross-Merchandising
• Group together products that are related in some way (Correlation -logical connection )
• Create your product display around a central theme.
• The merchandise should be neatly arranged without giving a cluttered look to the store.
• If it’s not performing well, don’t be hesitant to make some changes.(Controling)
• Think like a customer. Ask yourself — does this display make me want to buy the product? If you answered no, it’s probably time to re-think your product display.
• !!! The holidays are a great time to cross-merchandise
14-11 14-12
Figure 14-2: Attributes
and Functions
of Buying
Organizations
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Merchandising and Store Functions Performed
Merchandising view All buying and selling functions
Assortments
Advertising pricing
Point-of-sale displays
Employee utilization
Personal selling approaches
14-13
Merchandising and Store 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
14-14
14-15
Figure 14-4a: Merchandising Career Track at
Macy’s
14-16
Figure 14-4b: Store
Management Career Track at
Macy’s
Figure 14-5: Devising Merchandise Plans
14-17
Forecasts
These are projections of expected retail sales for given periods– Components:
• Overall company projections
• Product category projections
• Item-by-item projections
• Store-by-store projections (if a chain)
14-18
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Types of Merchandise
Staple merchandise
Assortment merchandise
Fashion merchandise
Seasonal merchandise
Fad merchandise
14-19
Staple Merchandise
Regular products carried by a retailer– Grocery store examples: milk, bread, canned soup
Staple Merchandise Example:Milk Section in a Supermarket
14-21 14-22
Assortment Merchandise
Apparel, furniture, automotive, 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
– Model stock plan
14-23 14-24
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5
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
14-25
Fashion and Seasonal Merchandise
• Neon Colors
14-26
Fashion and Seasonal Merchandise
• Ramadan and Holy Feast
14-27
Fashion and Seasonal Merchandise: Tchibo Case
14-28
Factors in Planning Merchandise Innovativeness
14-29
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
Retailer image Carry goods/services that reinforce the
firm’s image
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 investment for each
new good/service: product costs, new
fixtures, and additional personnel
14-30
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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
retailer’s image, investment costs, and
opportunity costs
Declining goods/
services
Delete older goods/services if sales and/or
profits are too low
14-31
Traditional Product Life Cycle
14-32
Structured Guidelines for Pruning Products
Select items for possible elimination on the basis of declining sales, prices, profits, and appearance of substitutes
Gather and analyze detailed financial/ miscellaneous data about these items
Consider non-deletion strategies such as cutting costs, revising promotion efforts, adjusting prices, and cooperating with other retailers
After making a deletion decision, do not overlook timing, parts and servicing, inventory, and holdover demand
14-33
Factors in Planning Merchandise Quality
FACTOR RELEVANCE for PLANNING
Target market(s) Match merchandise quality to the wishes of
the desired target market(s)
Competition Sell similar quality or different quality
Retailer’s image Relate merchandise quality directly to the
perception that customers have of retailer
Store location Consider the impact of location on the
retailer’s image and the number of
competitors, which, in turn, relate to quality
14-34
Factors in Planning Merchandise Quality
FACTOR RELEVANCE for PLANNING
Profitability Recognize that high quality goods generally
bring greater profit per unit than lesser-
quality goods
Manufacturer
versus private
brands
Understand that, in the minds of many
consumers, manufacturer brands connote
higher quality than private brands
Customer services
offered
Know that high-quality goods require
personal selling, alterations, delivery, etc.
Personnel Employ skilled, knowledgeable personnel for
high-quality merchandise
14-35
Factors in Planning Merchandise Quality
FACTOR RELEVANCE for PLANNING
Perceived goods/
service benefits
Analyze consumers. Lesser quality goods
attract customers who desire functional
product benefits; High-quality goods attract
customers who desire extended product
benefits
Constrained
decision making
Face reality. Franchises or chain store
managers have limited or no control over
products, so independent retailers that buy
from a few large wholesalers are limited to
the range of quality offered by those
wholesalers
14-36Retail Mgt. 11e (c) 2010 Pearson
Education, Inc. publishing as Prentice Hall
19.4.2016
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14-37
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).
Retail Assortment StrategiesWalmart’s Wide and Deep
Assortment
14-38
Decathlon’s Narrow and Deep Assortment
14-39
Brands
14-40
Private Brands
14-41
Private label brands (PLBs), also referred to as “store brands”,
are brands owned by a retailer or wholesaler
Private label growth has been driven by the expansion of large
grocery retailers and propensity of customer preferences to buy
less expensive products
14-42
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Private Brands
Generally, private brands are 10-30 % cheaper than leading national brands (NBs)
Premium PLBs are positioned in the same way as successful NBs
“Branded House” (only retailer name used),
“House of Brands” (only separate brand name used)
14-43
Private Brands
14-44
Category Management
14-45
Category management is a merchandising technique used to improve
productivity.
It is a way to manage a retail business that focuses on the performance
of product category results rather than individual brands.
It arranges product groupings into strategic business units to better meet
consumer needs and to achieve sales and profit goals.
Retail managers make merchandising decisions that maximize the total
return on the assets assigned to them.
14-46
Figure 14-13: Applying Category Management
Figure 14-4a: Shelf Logic Software for Category Management Planning
14-47
PLANOGRAM
Schematic drawing of
shelves and fixtures that
helps in making the
optimal use of available
shelf-space in a retail
store
Figure 14-4b: Shelf Logic Software for Category Management Planning