Merchandise planning

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Influences

MerchandisingProcess

People Systems

SUPPLY CHAIN

P O S

MERCHANDISING

MANAGEMENT REPORTING

FINANCE

DISTRIBUTION

LOCATIONS

SUPPLIERS

MARKETING

STOCK ALLOCATION

INVENTORY MANAGEMENTPERFORMANCE

ANALYSIS

SALES & FORECASTING

OPEN TO BUY

MARGIN

MerchandisePlanning

Key Drivers

RightTime

Right Processes

RightPeople

Right Quantity

RightProduct

Right Location

Right Location

• Physical Location

• Size

• Occupancy Costs

• Demographics

• Classification

• Grade

• Sales per m²

Right Time

• Speed to Market

• Seasonality

• Seasonal Trends

Right Processes

• Sales and Forecasting• Inventory Management• Stock Allocation• Supply Chain• Margin Management• Performance Analysis• Open to Buy• Industry Benchmarks• KPI’s

Right People

• Level of Experience

• Level of Expertise

• Succession Planning

• Incentive Programs

• Training and Development Programs

Right Quantity

• Size Matrix• Colour Assortment• Fabric Assortment• No. of Styles• Quantity per Style• Sleeve Lengths• Pant Lengths• Category Mix

Right Product

• Target Market

• Suppliers

• International Trends

• Value Equation– Price– Fashion– Quality

Common Problems Experienced

• Late to Market• High Stock Holdings• Wrong Product on Racks• Timing of Markdowns• Inadequate Stock Allocation Methodology• Range Planning not identifying Key Trends• Inadequate Margin Management• Lack of detailed Management Reporting• No Lifecycle Management Strategy• No Pre-Season Strategic Plan

Step 2Initial Budget Proposal for New Season by Store at level taking into account• Current New Stores• Refurbishments• Relocations and • Closures• Indicative Market Financial Trends (CPI, Industry Growth)• Gross Margin Target

Step 3Commence Merchandising PlanningProcess at Department Level for • Sales• Stock (WOS and S/T )• Markdowns • Spend (Open to Buy) • Gross Margin • Average Retail Pricing

Step 4Grade Stores by Turn OverTake Department Product (Sales/Stock) Plans down to Category level• by month • by week • by Graded Store • by Climate Grid• by Store Demographic

Step 5Review Planned Sales % Contribution• by department, or• by category, or• by Store vs. Previous Like Season

Step 6Quantify Product Mix • Number of Styles• Quantity per Style• Sleeve Lengths• Pant Lengths • Top to Bottom Ratio’s• Colour Plan • Fabric Plan • GP Plan • Price Point Plan• Size Matrix

Step 7Sign-Off Product and Financial Plans

Step 8Supply Chain Optimisation• Supplier Selection (Fashion/ Quality/Price)• Logistics Planning (Speed to Market)

Step 10Sales/Stock Performance Review• by Store• by week• by month

Step 9Stock Allocation Process• by Style• by Store (incl new/Refurb)• by performance vs. planDelivery to Store

New SeasonMerchandise

PlanningCycle

• ADS• AUS

Step 1Review Past SeasonCompany Performance vs. Plan• Category/Dept/Store• Sell Thru by Product Type• Missed Opportunities

• Review Past Season• Company Performance vs. Plan• Category/Dept/Store• Sell Thru by Product Type• Missed Opportunities

Step 1

• Initial Budget Proposal for New • Season by Store at Company • level taking into account• Current Trends• New Stores• Refurbishments• Relocations and • Closures• Indicative Market Financial Trends • (CPI, Industry Growth)• Gross Margin Target

Step 2

• Commence Merchandising Planning• Process at Department Level for • Sales• Stock (WOS and S/T )• Markdowns • Spend (Open to Buy) • Gross Margin • Average Retail Pricing

Step 3

• Grade Stores by Turn Over• Take Department Product (Sales/Stock) • Plans down to Category level• by month • by week • by Graded Store • by Climate Grid• by Store Demographic

Step 4

• Review Planned Sales % Contribution• by department, or• by category, or• by Store • vs. Previous Like Season

Step 5

• Quantify Product Mix • Number of Styles• Quantity per Style• Sleeve Lengths• Pant Lengths • Top to Bottom Ratio’s• Colour Plan • Fabric Plan • GP Plan • Price Point Plan• Size Matrix

Step 6

• Sign-Off Product and Financial Plans

Step 7

• Supply Chain Optimisation• Supplier Selection (Fashion/• Quality/Price)• Logistics Planning (Speed to Market)

Step 8

• Stock Allocation Process• by Style• by Store (incl new/Refurb)• by performance vs. plan• Delivery to Store

Step 9

Step 10

• Sales/Stock Performance Review• by Store• by week• by month

FAQ Relating to Merchandise Planning Cycle

• Step 1– Do you review previous season?– At what level of your assortment do you analyze?– What is the format you use in this process, i.e. SWOT analysis?– Do you have a standard document?– What do you do with the information?– How quickly do you react to the analysis?– Who drives this process?– Do you have follow up meetings?– To whom is the analysis presented?– How long after the season is the analysis done?– Are there checks and balances in place to ensure results are taken into

next like season buy.

• Step 2– Who does initial sales forecast?– What factors are considered in preparing this forecast?– Who provides input into the process?– Are Operations involved in the process?– Who is accountable for the budget?– How is the budget presented?

• Step 3– Do you plan by week/month/season?– How do you determine benchmarks for:

• WOS• Stock Turn• Markdowns• OTB• Gross Margin• Ave. Retail Price

FAQ Relating to Merchandise Planning Cycle

FAQ Relating to Merchandise Planning Cycle

• Step 4– How are stores graded/ranked?– What factors are considered when grading stores?– Who provides input into this process?

• Step 5– How much emphasis is placed on % sales contribution?– At what level is this broken down to?

• Step 6– Who determines the assortment plan?– How do they go about developing their plan?– Who drives the plan?– Who owns the plan?

FAQ Relating to Merchandise Planning Cycle

• Step 7– Who signs off plans?

– Who is accountable and takes ownership of plans?

• Step 8– What are criteria for selecting suppliers?

– Who sets criteria?

– Are suppliers given regular feedback on performance?

– What happens if there are quality issues?

– What happens if there are late deliveries?

– What happens if a supplier cannot meet cost price?

FAQ Relating to Merchandise Planning Cycle

• Step 9– What criteria are applied to determine quantification to each store?

– How often are criteria reviewed?

– How do you determine what a new store should receive as opening stock?

– Who controls the allocation process?

• Step 10– Is there a process to review performance?

– What happens to information generated in these reviews?