Reatail Merchandising 1

8/6/2019 Reatail Merchandising 1

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Retail Merchandising 1

Yogendra Bhandari


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Objectives

To demonstrate the importance of a sound merchandisingphilosophy

To outline the considerations in devising merchandise

plans: forecasts, innovativeness, assortment, brands,timing, and allocation

To discuss category management

To study variousbuying organization formats and the

processes they use


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Retail Merchandising

Definition & the Concept of RetailMerchandising

Role & Responsibilities of a Merchandiser

Fashion Merchandising

Merchandise Characteristics

Merchandise Management- Merchandise Mix &

Merchandise Budget Basics of Merchandise Accounting


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RM - DEFINITION

Retail selling effort that is the principal task of in-store sales personnel through theuse of promotions designedby a manufacturer, such as unique displays, giveaways,or discount and premium offers. In this case, merchandising is the act of managing

and arranging the merchandise on display in a store so as to promote its sale.


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Merchandising

Versus StoreManagement Career

Tracks


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Functions of Merchandisers at Shoppers stop

Inventory-turn Management Achieving Sales & Margins Plans Merchandise Availability Management, as per range plan

Merchandising strategy & planning Processing of purchase orders

Analysis of Data & Sales Budgeting Profitability Targets & Expense Control Vendor/Supplier relations forboth, in-house products as well as for

brands.


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ARRANGING -MERCHANDISE


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Merchandising arrangement

MERCHANDISING ARRANGMENT

Why making effective use of your space is so important.

How to position your departments and products.

How to improve store lighting.

The importance of atmosphere and cleanliness in your store.

How to create great displays and signage.

WHAT WE WILL ACHIEVE AS A BUSINESS.

The consistentlybest Display standards against Competition in India

A great environment that will attract & satisfy Customers

Showcase tobest advantage our product offer

Dramatically enhance Customer Service


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Managing the Merchandise

Developing a sales forecast

Determining the merchandise requirements

Merchandise controlAssortment planning


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Determining the merchandise requirements

Merchandise Mix

Retail communication Mix


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Basics of Merchandise Accounting


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Merchandising Accounting

Cash Flow

The Balance sheet

Financial Ratios Income statements

Gross- Margin-Return on Investment


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Cash Flow

Cash In

CashOut

Negative Cash flow = Cash In < CashOut Positive Cash flow = Cash out > Cash In


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The Balance Sheet

The Balance Sheet is a statement of an

organization's Assets, Liabilities andOwners

Equity at a Particular Point in time.

Assets

Liabilities

Owner's Equity


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Assets

Assets Ownedby an organization

a. Short term (or) Current Assets

b. Long term


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Liability

Liability: Debts owedby an organization

Payment on Short term

Ex: Payment to supplierPayment on Long term

Ex: Mortgage on Land &

BuildingInvestment on Extension,

Expansion & renovation


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Owners Equity

Owners Equity : Differencebetween asset and

Liability.

Relationship:Assets = Liabilities +Owners Equity


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Income statement


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Income statement

Profit performance for a specific period of time

Income statement is otherwise called Statement of earnings or Profit

& loss statement

Income statement: Revenue Expenses = Net Income

Profit = Expenses < Revenue = positive Net Income

Loss = Expenses > Revenue = Negative Net Income


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Income statement contd

Income statement canbe computed for an entire organization

Individual Store

A Group of Store

Department

Profit and loss isbased on the revenue & expenses directly associated

with each unit ofbusiness.


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Components : 5 major components Revenue

Cost of goods sold

Gross margin Expenses

Net Profit

Relationship among the components Net revenue Cost of goods sold - Expenses

Gross margin Net Profit


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Relationship among the components Net revenue Cost of goods sold - Expenses

Gross margin Net Profit

Net revenue : composed of sales, Leasing or renting property or

interest on accounts

Net sales = Gross sales Customer return

Gross sales are used to determine the customer return rates

Customer return rate = Customer returns x100

Gross sales


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High customer return rate is often indicates of issue related

a. Customer service

b. Quality

c. Fit of merchandise High sales attest to the ability of an organizationbuyer to

select assortments of goods that are appealing to the storestarget customers.


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Cost of goods sold (or) Cost of Merchandise sold (or)

cost of sales

Cost of goods sold = Billed cost of Merchandise +work room costs +shipping cost cash Discount -

Returns to vendors


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Expenses: Payroll, rent, Utilities, advertising and

interest on debt.

Direct Expense: attributable to a specific unit (store rent )

Indirect Expense: is not attributable to a specific

unit. ( news paper advertisement )


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Gross margin : Differencebetween sales and cost of goods sold.

Net Income : Gross Margin Expenses

Income canbe increasedby Increasing sales Increasing Gross Margin Decreasing cost of goods sold

Any combination of above

Component Percentage :Cost of goods sold = cost of goods X 100

Net salesGross Margin = Gross Margin X 100

Net Sales

Expenses = Expenses X 100

Net Sales


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GMROI

Particulars Category A Category B

Sales 300000 250000

Cost of Goods Sold 180000 100000

Gross Margin 120000 150000

Gross Margin % 40% 60%


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GMROI

Gross Margin Return on Investment

Integrates two performance Gross Margin

TurnOver

To create a single measure of performance GMROI = Gross Margin X Net sales

Net Sales Average Inventory

GMROI = Gross Margin / average Inventory


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GMROI for 3 Merchandise Categories

Particulars Gross Margin Avg Inventory GMR OI

Specialty Food 120000 28000 4.3

Countertop

Appliance

80000 40000 2.0

Glassware 200000 130000 1.5


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Key terms

Assets

Balance sheet

Cash discount

Cash Flow

Component Percentage

Cost of goods soldCurrent ratio

Expenses

Factor

GMROI

Gross sales

Income statement

Liability

Net Income

Net Loss

Net Sales

Return to VendorOwners Equity

Time Series Comparison

Workroom cost

Reatail Merchandising 1

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