Merchandising Plan
Jan 02, 2016
Merchandising Plan
Merchandising
Activities involved in acquiring particular goods and services and making them available at the places, times, and prices and in the quantity that enable a retailer to reach its goals
Merchandising Philosophy Sets the guiding principles for all the
merchandise decisions that a retailer makes
Decisions Should reflect
Target market desires Retailer’s institutional type Market-place positioning Defined value chain Supplier capabilities Costs Competitors Product trends
Thus merchandising philosophy includes every product decision from
what produce lines – carry to the shelf space allotted
to them inventory turnover – pricing
Costco’s Individualistic Merchandising Philosophy They have selection of 4000 items which when you go
to Target or Wal-Mart you’ll get 1,00,000
They say they may select only two toaster or two peanut butter to sell
But they would be of best values we can find at the time
Those items selectively chosen would be 3000 items
Rest 1000 are such that constantly changes
One week shoppers see Levis relaxed jeans and the next time they come will not find those items instead will find Tommy Hilfiger
It creates an attitude that if you see it you better buy it.
Merchandise Personnel's Scope of responsibilities must be stated Full array of merchandising functions
Buying and selling goods Service: Like Selection, pricing, display, customer
transactions
OR
Focus on buying function only leaving rest works for others
Normally retailers go for full array
Functions Performed
Merchandising viewMerchandising view
All buying and selling functions
Assortments Advertising pricing Point-of-sale displays Employee utilization Personal selling approaches
Functions Performed (cont.)
Buying viewBuying view
Buyers manage buying functions Buying Advertising Pricing
In-store personnel manage other tasks Assortment Point-of-sale displays Employee utilization Personal selling approaches
Nike’s Own Store Merchandising Philosophy
Harry & David’s Merchandising Philosophy
Keeps everything from fruits to nutsConcentrates more on Packing100 % Guarantee If not satisfied replacement or money back which ever you prefer.
Micromerchandising (to capitalize on opportunities)
Retailer adjusts shelf-space allocations to respond to
customer and other requirements of local
markets
Conti… Wal-Mart, Carrefour do follow
micromerchandising
As this approach puts the correct products in correct stores for our customers
So that we carry products that appeal customers or else we’ll carry “Dead inventory”
Cross-Merchandising (to capitalize on opportunities)
Retailers carry complementary goods and services to encourage shoppers to buy more.
(Selling electronic items along with right fitting furniture's)
Attributes and
Functions of
Buying Organizati
ons
Or
Decisions that the retailer needs to
take before
merchandise
planning
One product purchase
Degree of Centralization
Many chains combine the formats by organizing a centralized buying along with giving store manager chance to put inputs
Like Zara’s
In a bright & vast white room, 200 designers and product mangers are deciding on what to create
They regularly gather suggestions from more than 500 stores managers worldwide
Not for just specific orders but --- ideas related to cuts, fabrics, or even for a new line for apparels
After weighing the managers ideas, the team decides finally what to make.
Designers draw up the latest ideas on the computers and then pass them through Zara’s intranet to nearby factories
Within days cutting, dyeing, stitching and pressing begins.
In just three weeks the clothes will hang up in the stores
Zara isn’t just a bit faster than its rival Gap.
But is infact 12 times faster in this entire process
Merchandise Plans
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)
Types of Merchandise
Staple merchandise Assortment merchandise Fashion merchandise Seasonal merchandise Fad merchandise
Staple Merchandise
Regular products carried by a retailer Grocery store examples: milk, bread,
canned soup Basic stock lists Specific inventory level, color, brand,
style, category, size, package, etc.
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 Model stock plan: used to project specific
items such as number of green, red, blue
Fashion and Seasonal Merchandise
Fashion Merchandise: Products that may have changing sales due to changing tastes and life-styles (forecasting is difficult)
Seasonal Merchandise: Products that sell well over nonconsecutive time periods (forecasting is straight forward)
Fad Merchandise
High sales are generated for a short time
Often toys and games are fads
Like Harry Porters toy fly off each time when related movie or news is released
For such products Never-out list (keeping huge quantity to meet anticipated demand and later stock smaller quantity to be a best seller)
Innovativeness
An innovative retailer has great opportunity-----Distinctiveness by being first in the market
And also a great risk possibly misreading customers and stuck up in large inventories.
But success of innovative merchandise depends upon certain factors like
Target market:
Evaluate whether the target market is conservative or innovative
Retailer image:
Carry goods/services that reinforce the firm’s image (in past could satisfy)
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
And thereby find out the Number of customer acceptance for new ones
R&D at Wendy’sWendy’s R&D Department is dedicated
to continually improve products by refining cooking, serving procedures
and ingredients
Need to even go for a fashion check Check if fashion is
Vertical trend Horizontal trend
Retail Assortment Strategies
Width of assortmentWidth of assortment refers to the number of distinct goods/service categories a retailer carries
Depth of assortmentDepth of assortment refers to the variety in any one goods/service category a retailer carries
An assortment can range from wide and deep (department store) to narrow and shallow (box store)
Sephora’s (USA) Very Deep Assortment of Cosmetics
Offers 365 shades of lipsticks150 shades of nail polish150 shades of cosmetic pencils
Do’s for planning their assortment If variety is increased will overall sales go up
Will overall profits increase
How much space is required for each product category
How much space is available
Will carrying 10 varieties yield greater sales or profits than stocking 4 varieties
Investment cost that occurs with large varieties should also be taken care of.
As selling space is limited, it should be allotted to those goods generating the most customer traffic and sales.
Thus can even go for selection of some modern ways of distinction strategies for Assortment
Scrambled Merchandising: Retailer adds unrelated items To generate more revenue and lift up profits Like Florists keeping umbrella
Complementary Merchandising: Retailers sell basic product and related offerings
through cross-merchandising Like Stereos and CDs
Substitute Merchandising: Keeping all competing brand options so a s to shift
sales from one brand to other And causing no difference to retailers overall sales
Brands
Private(dealer or store)
Manufacturer(national)
Generic
(Local ProductsHaving secondary shelf allocationLeast promotionLow pricedOnly 1 % sales contribution)
Wal-Mart’s New Approach to Private Brands
Daffy’s Distinctive Branding Strategy
This is an off-price chain that caters to brand conscious shoppers who look for deals.
Daffy’s provide new meaning to the word bargain
For its online shoppers it has put up as follows
It says for everyone else we offer wide range of accessories, clothes etc
But you don’t have to hunt for a good deal We already pay people to do that for you i.e. our buyers load racks every week with new
merchandise from all over the world. You’ll get finest designer collections at savings up to
80 % off the regular retail price
Category Management Is a merchandising technique used to improve
productivity
It is even a way to manage a retail business that focus on the performance of product Category results than an individual brand
CM is a process of managing all SKU’s
It involves simultaneous management of
Price Shelf-space Merchandising Strategy Promotional efforts And all other elements of retail mix.
PRIL’s Category Management.
Applying Category
Management
Shelf Logic Software for Category Management Planning
Shelf Logic Software for Category Management Planning