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Developing Merchandise Plans RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS.

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Presentation on theme: "Developing Merchandise Plans RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS."— Presentation transcript:

1 Developing Merchandise Plans RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS

2 14-2 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter Objectives  To demonstrate the importance of a sound merchandising philosophy  To study various buying organization formats and the processes they use  To outline the considerations in devising merchandise plans: forecasts, innovativeness, assortment, brands, timing, and allocation  To discuss category management and merchandising software

3 14-3 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Merchandising Activities involved in acquiring particular goods/ services and making them available at the places, times, prices, and quantities that enable a retailer to reach its goals.

4 14-4 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Merchandising Philosophy  Sets the guiding principles for all the merchandise decisions that a retailer makes  It should reflect Target market desires Retailer’s institutional type Market-place positioning Defined value chain Supplier capabilities Costs Competitors Product trends

5 14-5 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Scope of Merchandising Responsibility  Full array of merchandising functions Buying and selling Selection, pricing, display, customer transactions OR  Focus on buying function only

6 14-6 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-1: Dick’s Merchandising Philosophy

7 14-7 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Micromerchandising Retailers adjust shelf-space allocations to respond to customer differences and other differences among local markets.

8 14-8 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Cross-Merchandising Retailers carry complementary goods and services to encourage shoppers to buy more.

9 14-9 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-2: Attributes and Functions of Buying Organizations

10 14-10 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Merchandising and Store Functions Performed  Merchandising view All buying and selling functions Assortments Advertising pricing Point-of-sale displays Employee utilization Personal selling approaches

11 14-11 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall  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 Merchandising and Store Functions Performed (cont.)

12 14-12 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-4a: Merchandising Career Track at Macy’s

13 14-13 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-4b: Store Management Career Track at Macy’s

14 14-14 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-5: Devising Merchandise Plans

15 14-15 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 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)

16 14-16 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Types of Merchandise  Staple merchandise  Assortment merchandise  Fashion merchandise  Seasonal merchandise  Fad merchandise

17 14-17 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Staple Merchandise  Regular products carried by a retailer Grocery store examples: milk, bread, canned soup  Basic stock lists specify inventory level, color, brand, style, category, size, package, etc.

18 14-18 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 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

19 14-19 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 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

20 14-20 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Table 14-1a: Factors in Planning Merchandise Innovativeness FACTORRELEVANCE 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 Fashion trendsUnderstand vertical and horizontal fashion trends, if appropriate Retailer imageCarry goods/services that reinforce the firm’s image

21 14-21 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Table 14-1b: Factors in Planning Merchandise Innovativeness FACTORRELEVANCE for PLANNING CompetitionLead or follow competition in the selection of new goods/services Customer segmentsSegment 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

22 14-22 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Table 14-1c: Factors in Planning Merchandise Innovativeness FACTORRELEVANCE for PLANNING ProfitabilityAssess each new offering for potential profits RiskBe aware of the possible tarnishing of the retailer’s image, investment costs, and opportunity costs Constrained decision making Restrict franchisees and chain branches from buying certain items Declining goods/ services Delete older goods/services if sales and/or profits are too low

23 14-23 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-6: Saks: Looking for Hot New Fashions

24 14-24 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-7: Traditional Product Life Cycle

25 14-25 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall 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

26 14-26 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-8: Predicting Fashion Adoption

27 14-27 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Table 14-2a: Factors in Planning Merchandise Quality FACTORRELEVANCE for PLANNING Target market(s)Match merchandise quality to the wishes of the desired target market(s) CompetitionSell similar quality or different quality Retailer’s imageRelate merchandise quality directly to the perception that customers have of retailer Store locationConsider the impact of location on the retailer’s image and the number of competitors, which, in turn, relate to quality

28 14-28 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Table 14-2b: Factors in Planning Merchandise Quality FACTORRELEVANCE for PLANNING ProfitabilityRecognize that high quality goods generally bring greater profit per unit than lesser- quality goods; turnover may cause total profits to be greater for the latter 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. PersonnelEmploy skilled, knowledgeable personnel for high-quality merchandise

29 14-29 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Table 14-2c: Factors in Planning Merchandise Quality FACTORRELEVANCE 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

30 14-30 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Width of assortment Width of assortment refers to the number of distinct goods/service categories (product lines) a retailer carries. Depth of assortment 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 Strategies

31 14-31 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-10: Ikea’s Wide and Deep Assortment

32 14-32 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Brands Private (dealer or store) Manufacturer (national) Generic

33 14-33 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Table 14-3: Private Brand Test

34 14-34 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-11: Wal-Mart and Private Brands

35 14-35 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-12: Sears’ Distinctive Branding Strategy

36 14-36 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Category Management Category management  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.

37 14-37 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-13: Applying Category Management

38 14-38 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Merchandising Software General Merchandise Planning Software Forecasting Software Innovativeness Software Assortment Software Allocation Software Category Management Software

39 14-39 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-4a: Shelf Logic Software for Category Management Planning

40 14-40 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall Figure 14-4b: Shelf Logic Software for Category Management Planning

41 14-41 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.


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