1. Topic:- Organizing The Buying Process by Categories
CATEGORY :- is an assortment of items that the customer sees
as reasonable substitute for each other.
Ex:- Girls apparel , boys apparel & infant apparel are categories.
Retailers & Vendors might have different definition of categories :-
Ex:- VENDOR :- might assign shampoos & conditioners to different
categories on the basis of significant differences in product attributes .
CATEGORY MANAGER(RETAILER) :- might assign shampoos &
conditioners into a single category on the basis of common
consumers & buying behavior .
Retailers may define categories in terms of brands
ex:- Tommy Hilfiger & POLO/Ralp Lauren

2. CATEGORY MANAGEMENT :- is the process of managing a retail
Business with the objective of maximizing the sales and profits
of a category .
ADVANTAGES :-
Category Manager is responsible for success or failure of category
Easy to identify the source of problem & solve it .
Easy to manage & maximize profits.
As help to assure the “best” combinations of sizes , vendors & brands
Category Captain :- Since retailers & their vendors share the same
goals – to sell Merchandise & make profits . Therefore some retailers
turn to one favored vendor to help them manage a particular category
known as the CATEGORY CAPTAIN

3. Disadvantage :- Vendors could take a adv of their position. They could
Category Captain :- form an alliance with a retailer to help gain
-consumer insights
-Satisfy consumer needs
-Improve performance
-Gain Potential Profit
Disadvantage :- Vendors could take a adv of their position.
They could
Block other brands
Overshadow small brands
Acquire control on access to shelf space.

4. THE BUYING ORGANIZATION
Chairman/partner
Merchandise Group :- managed by sr. V.P of merchandise also called General Merchandise Manager who are responsible for several dept’s.
Sr. V.P
Merc Mgr
Womens
Ready to wear
Sr. V.P
Merc Mgr
Children’s,mens,sportwear
Ready to wear
Sr. V.P
Merc Mgr
Cosmetics, Shoes, jewellery
Sr. V.P
Merc Mgr
Furniture,
Kithcen
Department :- managed by divisional Merc Mgr responsible for a department
Div Merc Mgr
Mens suit,shirts etc
Div Merc Mgr
Mens sportwear , Polo
Div Merc Mgr
Children app,
Classification:-each div Merc Mgr responsible for a no. of buyers or category mgrs
Buyer /CM
Preteen
Buyer /CM
Girls 7-14
Buyer /CM
Toddlers
Buyer /CM
Little boys
Categories:-each buyer purchases a no. of categories
SKU:-smallest unit available for keeping inventory control
Sportwear
Dresses
Casuals
Girl’s Levi’s Jeans,
Size 5, Blue color, Straight legged

5. Topic :- Setting Objectives for the Merchandise Plan
MERCHANDISE PLAN :- tells the buyer & the planner how much money
To spend on a particular category of merchandise in each month so that
The sales forecast and other financial objectives are met .
In Retail instead of Return on Asset we calculate GMROI :-
Gross Margin Return on Inventory Investment
Reason :-
Buyers have control over gross margin but not expenses involved with
-operation of store
-cost of mgmt of Human Resources
-Cost of Location
-Cost of Systems etc.
As a result , the financial ratio is a return on inventory measure called
GMROI

6. GMROI :- Gross Margin percentage * Sales-to-stock ratio
Net Sales
Net sales
Average Inventory *
Gross margin
Average Inventory =
Note:-
Average Inventory in GMROI is measured at cost, because a retailer’s investment
in inventory is the cost of the inventory , not its retail value.
- Like ROI , GMROI combines th effects of both profits and turnover.
Useful :-
- GMROI is used as a return on investment profitability measure to evaluate
Departments, merchandise classifications, vendor lines, and items .
Useful for management in evaluating buyers performance since it can be
related to the retailer’s overall return on investment.

7. Inventory Turnover = merchandise in motion
Example :- Jeans are delivered to the store through the loading in the
back door Spend some time in the store on the racks ,
and then are sold and go out the front door .
ADVANTAGE OF HIGH INVENTORY TURNOVER
Increased Sales Volume
Less Risk of Obsolescence & Markdown
Improves Salesperson Morale
More Money for Market Opportunities
Decreased Operating Expenses
Increased Asset Turnover – inventory is the current asset

8. SALES FORECASTING
Forecasts done with the help of Category Product Life Cycle :-
Maturity
Growth
Decline
Total Retail Sales
Introduction
Time
-Knowing where a category is in its life cycle is useful for predicting
sales.
-Care must be that Category Life Cycle as a predictive tool does
not adversely affect sales.

9. Many products have been successfully maintained at the maturity stage
Because their buyers have maintained innovative strategies that are
consistent with a mature product .
For instance :- Kellogg’s Corn Flakes has been the best selling ready-to-eat
cereal over many decades because it has innovative advertising &
competitive pricing
Variations on the Category Life Cycle
Fad :- generates a lot of sales for relatively short time .
Fashion :- lasts several seasons & vary dramatically
Staple :- basic merchandise :- continues demand over a period of time .
Seasonal :- sales fluctuate according to the time of the year.
Sales
Sales
Sales
Sales
Time
Time
Time
Time

10. Developing a Sales Forecast
Sources of Information for Category-Level Forecasts :-
- Previous Sales Volume
- Published Sources
- GNP – national economic indicator
- monthly retail Trade report
- Customer Information
- Want Book :- salespeople record ot-o stock & requested merchandise
- Depth interview
- Focus Group
- Shop Competition
- Vendor & Resident Buying Office :- either are independent org or are
directly associated with particular retailer that offer a number of
services associated with the procurement of merchandise .

11. To predict store – level demand , forecasting systems need to be
Store-Level Forecasting :-
To predict store – level demand , forecasting systems need to be
able to measure simultaneously the impact of many factors on unit sales.
These factors include :-
Price
Promotion
Store Location
Product Placement
Seasonality
Other Factors
- Product Life cycle
- Product Availability
- Business Cycle
- Weather
- Unusual events
- Cannibalization :- apple boxes price decrease could lead to inc in apple sale
- Complementary products:- putting hot dogs on sale will also cause an inc in
sales of hot dog .

12. EDI Technology :- Electronic Data Interchange –
CPFR :- short for collaboration , planning , forecasting , and replenishment
EDI Technology :- Electronic Data Interchange –
Computer to computer exchange of business documents from
retailer to vendor & back.
CPFR :- is a collaborative inventory management system in which
a retailer shares Information with vendors. CPFR software uses the
data to construct a computer- Generated replenishment forecast
that is shared by the retailer & vendor before Its executed.