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Chapter 9 Merchandise Buying and Handling Eric Sanders Ryan Snell.

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Presentation on theme: "Chapter 9 Merchandise Buying and Handling Eric Sanders Ryan Snell."— Presentation transcript:

1 Chapter 9 Merchandise Buying and Handling Eric Sanders Ryan Snell

2 Merchandise Management Analysis: Correctly identify customers needs and wants Analysis: Correctly identify customers needs and wants Planning: Merchandise must be purchased 6-12 months in advance Planning: Merchandise must be purchased 6-12 months in advance Acquisition: Merchandise must be bought from distributors or manufacturers Acquisition: Merchandise must be bought from distributors or manufacturers Handling: Assure the merchandise is where it needs to be, and in proper shape to be sold Handling: Assure the merchandise is where it needs to be, and in proper shape to be sold Control: Over large inventory investments to ensure adequate returns on merchandise Control: Over large inventory investments to ensure adequate returns on merchandise

3 Planning Dollar Inventory Investment Basic Stock Method: Basic stock level plus variable amount based on expected sales for period Basic Stock Method: Basic stock level plus variable amount based on expected sales for period Percentage Variation Method: Assumes the percentage variation in monthly stock from average stock should be half as great as the percentage variation in monthly sales from average sales Percentage Variation Method: Assumes the percentage variation in monthly stock from average stock should be half as great as the percentage variation in monthly sales from average sales

4 Planning Dollar Inventory Investment cont… Weeks Supply Method: Inventory level should be set equal to a predetermined number of weeks supply, which corresponds to desired rate of stock turnover Weeks Supply Method: Inventory level should be set equal to a predetermined number of weeks supply, which corresponds to desired rate of stock turnover Stock to Sales Method: Inventory planned for the beginning of the month is a ratio of stock to sales obtained from a trade association or retailers historical records Stock to Sales Method: Inventory planned for the beginning of the month is a ratio of stock to sales obtained from a trade association or retailers historical records

5 Inventory Planning Choosing the right merchandise mix Variety: Number of lines (menswear, women’s wear, sporting goods, etc…) Variety: Number of lines (menswear, women’s wear, sporting goods, etc…) Breadth: Number of brands found in a particular merchandise line Breadth: Number of brands found in a particular merchandise line Depth: Number of stock-keeping units within each brand of the merchandise line Depth: Number of stock-keeping units within each brand of the merchandise line

6 Constraining Factors Dollar merchandise constraints: only so much money to spend on inventory Dollar merchandise constraints: only so much money to spend on inventory Space constraints: important to fit everything in store while maintaining a nice shopping environment Space constraints: important to fit everything in store while maintaining a nice shopping environment Turnover Constraints: Must keep merchandise in stock, but not have merchandise left over Turnover Constraints: Must keep merchandise in stock, but not have merchandise left over Market Constraint: Must fit into the type of retailer you wish to be: specialty store vs. variety store Market Constraint: Must fit into the type of retailer you wish to be: specialty store vs. variety store

7 JCPenney Makes Shifts in Structure. ► First step was to bring in outside help…Vanessa Castagna ► She implemented change by centralizing all buying functions… this allows store management to focus on delivering a excellent shopping experience. ► Centralized buying process isn’t all that new, but if a retailer wants to stay competitive it must adapt or they will be gone. ► The new buying process is but one piece of their overall strategy…example women’s magazines.

8 Implementing Change ► New home office merchandise action teams…responsible for assortment, planning, & selling. ► Focus on reducing inventory levels, and will be supported by new software based on sales history data. ► The new game of retailing involves reaching the customer through nontraditional ways… Internet, catalogs and other marketing methods. Internet catalogs Internet catalogs ► FairMarket Inc. is an Auction network that features merchandise overstock from JCPenney’s.

9 Key Benefits ► Reduces inventory. ► Higher turnover…more adaptable to trends. ► Better customer service for better shopping experience. ► Fashionable merchandise. Fashionable merchandise Fashionable merchandise

10 Thank You Any Questions?


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