Presentation on theme: "FUNDAMENTAL S OF MERCHANDISIN G. Concept The word ‘merchandise’ means goods bought and sold for a profit. It originates from the French word ‘merchant’"— Presentation transcript:
FUNDAMENTAL S OF MERCHANDISIN G
Concept The word ‘merchandise’ means goods bought and sold for a profit. It originates from the French word ‘merchant’ which lead to merchandise—meaning ‘goods’ derived from the old French marchat According to business dictionary, ‘merchandise’ refers to goods and commodities sold at the retail level. ‘Merchandising’ is the buying, presenting and selling of merchandise. This includes all related activities such as advertising, display, and promotion of merchandise involving the retail customers
Principles of merchandising Understand the target market Build the right assortment Be consistent Offer value Share information Accept that mistakes happen Seek to surprise the customer
5 RIGHTS IN MERCHANDISING Have the Right ITEM At the Right TIME In the Right PLACE In the Right QUANTITY At the Right PRICE
STAPLE MERCHANDISE : Regular products/basic items carried by a retailer. Example: Grocery Store Milk, Bread, etc. Book Store Writing book, pencil, pen, etc. Automotive Oil, Lamp, etc.
ASSORTMENT MERCHANDISE: A variety of products which the retailer must carry in order to give customers a proper selection Example: Apparel Store Shirt in red colour, black colour, white colour, etc. Bicycle Store Kids bike, BMX, MTB, Road bike, etc. Shoes Store Sport shoes, Formal shoes, Canvas shoes, etc.
FASHION MERCHANDISE Products that may have cyclical sales due to changing tastes and life-styles.
SEASONAL MERCHANDISE: Products that sell well over non consecutive time periods.
FADS MERCHANDISE: Products which are generated by trend of technology, artist, movie, icon, event, etc.. High sales are generated for a short time. It is hard to forecast whether such products will reach specific sales targets and how long they will be popular.
Merchandise CONTROL – open to buy Adjusts merchandise buying Sales Reductions Maintains stock and sale relation. OTB = Planned EOM stock - projected EOM stock Projected EOM stock = actual BOM stock + actual additions to stock + actual on order - planned monthly sale – planned reductions for the month.
The concept of Merchandise planning Merchandising Planning planning and control of the merchandise inventory while balancing the customer’s expectation and retailer’s strategy. Right assortment of goods. Substantial depth - availability. Choice available to customer increases. Required goods always available.
Process of merchandise planning Planned sales : Projected sales for the period Planned purchases : Projected purchases for the period Planned reductions : Markdowns: Reduction in prices for Bad quality, Competition, Trend change etc Employee discounts: Inventory shrinkage: Theft, pilferage Planned markups: Planned difference in selling and cost (It is not a gross profit) Markup% = (Selling price – Cost price)/ Selling price Gross margin Gross margin = (Selling price – Cost price - Reductions)
Process of merchandising planning. Developing a sales forecast – Determining the Merchandise Requirement Merchandise Control Assortment Planning
Merchandise hierarchy Company Department Merchandise classification Merchandise category Merchandise sub category Stock keeping unit
Menswear The process of Merchandise Planning Shirts Trousers accessories Zodiac Van Heusen Louis Phillippe Arrow SIZE Color Style DEPARTMENT PRODUCT LINE BREADTH DEPTH
Merchandising strategy Fundamentally, a strategy defines a company’s position; Merchandising on the other hand refers to the basic product-mix that the retailer offers to the final consumer Thus a merchandising strategy is defined as a company’s position with respect to given product mix—aimed at ensuring optimization of resources, achieving target sales and margins.
Areas influenced by merchandising strategy Products to be sourced Vendor terms and conditions Price to be adopted Method of packing and presentation Merchandising strategy
sourcing First step after determining the products and quantities that are required across various stores is to determine the various sources of supply Sourcing refers to a number of procurement practices, aimed at finding, evaluating and engaging suppliers of goods and services. Process of merchandising sourcing starts with the identification of the sources of supply first decision, which has to be faced is whether the merchandise that is going to be sourced from domestic or international markets The importance of sourcing in a retail environment can be understood from the fact that sourcing of merchandising is a key element of cost.
Sources of supply Manufacturers: who directly manufactures the the product which he wishes to retail Wholesalers: According to the United nations statistics division, “wholesale” is the resale of new and used goods to retailers, or involves acting as an agent in buying merchandise for or selling to such person or companies
Wholesalers frequently physically assemble, sort and grade goods In large lots, break bulk, repack and redistribute in smaller lots Wholesalers of most products usually operate from independent premises.