Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

What is merchandising Merchandising can be termed as the Merchandising can be termed as the planning,buying and the selling of planning,buying and the selling of merchandise\products merchandise\products

Merchandising  Is one of the most challenging function  “goods well bought are half sold”

Merchandise management  Termed as the analysis, planning, acquisition, handling and control of the merchandise investments of a retail operation

 Analysis --- retailers must be able to correctly identify their customers i.e consumers needs, desires.  Planning --- merchandise that has to be sold in the future must be bought now!  Acquisition --- merchandise has to be procured from others-either from distributors or manufacturers

 Handling --- seeing that the merchandise is where it is needed and is in the proper condition to be sold.  Control --- is required to control the amount of money spent on buying.

Buying Merchandise

Definition by American Marketing Association “ The planning involved in marketing the right merchandise at the right place at the right time in the right quantities at right price” “ The planning involved in marketing the right merchandise at the right place at the right time in the right quantities at right price”

 Merchandising is said to be core of retail.  it is day-to-day business of all retailers.  As inventory is sold,new stock needs to be purchased,displayed and sold.  Merchandise Management is a key driver of retailing success of retailing success

Planning Merchandise

definition  can be defined as the planning and control of merchandise inventory of the retail firm,in a manner which balances between the expectations of the target customer and the strategy of the firm.

Things to be considered while buying merchandise  What to buy  How much to buy  From whom to buy  When to buy

Merchandise Hierarchy

 Division Apparel  Department Men’s,Ladies, Kids  CategoryShirts, Trousers, Suits  Sub Category Full Sleeve, Half Sleeve  BrandArrow, V. Heusen, Polo  StyleButton down collar, cut away collar  Options Size(4),Design(3), colour(5),Price

Merchandise Hierarchy in a supermarket  Division: Food  Department: Packaged Food  Category: Sauces  Brand: Maggi, Kissan  Options: 250gms,500gms,1kg

Merchandise Sourcing  The term sourcing means finding or seeking out products from different places, manufacturers or suppliers.  Is the key element of retail.  it influences the availably of stock, the margins earned by the retailer.

Decision depends on the type of retail organization, product and target customer  Product like high fashion garments,exclusive watches,perfumes,cosmetics etc may be obtained from the international market.

Methods of procuring merchandise

1. Identifying the sources of supply  Have to decide whether the merchandise can be sourced from domestic or regional markets of from international markets ?

2. Contacting and evaluating the sources of supply  Wholesale Market Center  Characterized by a collection of large number of suppliers.  Selling similar products.  For e.g.  Manish Market, Crawford Market in Mumbai  Khan Market in Delhi

 Trade Shows  Also known as merchandise show  Permanent tenants of the wholesale market centers and vendors leasing temporary space participation.  For. E.g. Ustav held in Pune

 Meeting Vendors at Your Company  A representative of the supplier visit the office, meet the buyer and showcase a collection of merchandise.  Termed as vendor initiated contact.

The criteria for selecting a potential vendor  The target market for whom the merchandise is being purchased.  The merchandise and prices offered  Terms and services offered the vendor  Vendors reputation and reliability

3. Negotiating with Vendors Two-way communication designed to reach an agreement when two parties have shared interests. Two-way communication designed to reach an agreement when two parties have shared interests.

 The retail buyer needs to negotiate the price, delivery dates, the discounts, the shipping terms and possibilities of returns.  How to plan negotiations?  Consider prior history  Be aware of deadlines

Types Of Discounts that are made available to the buyer Trade (Functional) Discounts Trade (Functional) Discounts Referred to as volume discounts or booking discounts Referred to as volume discounts or booking discounts Quantity Discounts Quantity Discounts For purchasing certain quantity over a specific period of time For purchasing certain quantity over a specific period of time

Discounts Seasonal discounts Discount offered as an incentive to retailers to order merchandise in advance of the normal buying season Discount offered as an incentive to retailers to order merchandise in advance of the normal buying season Cash discounts Cash discounts Prompt payment for goods often ranks for a cash discount Prompt payment for goods often ranks for a cash discount Thirty to sixty days credit is usual Thirty to sixty days credit is usual

4. Establishing Vendor Relations Retailer and vendor committed to maintaining relationships over the long-term and investing in mutually beneficial opportunities Retailer and vendor committed to maintaining relationships over the long-term and investing in mutually beneficial opportunities

Building Blocks for Strategic Partnerships   Mutual Trust   trust helps vendors and buyers to share ideas, clarify goals and problems

  Open Communications In order to share information,develop sales forecasts together and coordinate deliveries. In order to share information,develop sales forecasts together and coordinate deliveries. For e.g.. Wal-Mart and P&G For e.g.. Wal-Mart and P&G

  Common Goals   Vendors and buyers must have common goals for a successful relationship to develop

5. Analyzing vendor Performance  vendor performance is based on the following criteria  The total order placed on the vendor in a year  Participation of the vendor in various schemes and promotions

 The total returns to the vendor, the quality of the merchandise  Cash discounts offered by the vendor  The sales performance of the merchandise

Role and responsibilities of buyer 1) Planning and selecting merchandise assortments, keep a stock of the assortment  Should know the current market trends and economic developments.  Should know the needs and wants of the target consumer.

2) Vendor selection, development and management  Should negotiate with vendors for favorable terms and service. 3) Pricing the merchandise to achieve the required targets

4) Inventory management-  Should control inventory i.e. not only procurement but also check the availability of the product in the store.  Suggest markdowns for slow moving goods.

5) Be a good judge of quality 6) Be up to date in their knowledge so that they can pick up ideas for new and profitable lines. (textiles, toys, fashion goods)

Merchandise Branding Strategies  Manufacturer (National) Brands Designed, produced, and marketed by a vendor and sold by many retailers Designed, produced, and marketed by a vendor and sold by many retailers  Private-Label (Store) Brands Developed by retailer and only sold in retailer’s outlets Developed by retailer and only sold in retailer’s outlets Carries the retailers name such as Westside,food world,Big Bazaar, Chitale Bandhu, Haldiram Carries the retailers name such as Westside,food world,Big Bazaar, Chitale Bandhu, Haldiram

 Private label goods are more successful where the number of competing products is lower  For e.g.  Number of brands in India, in shampoos and soaps is fairly large  Products like atta, salt, sugar, cereals and pulses have very few branded products.

Private Labels Advantages  Unique merchandise not available at competitive outlets  Difficult for customers to compare price with competitors  Higher margins Disadvantages  Need to develop expertise in developing and promoting brand  Unable to sell excess merchandise  Typically less desirable for customers

Manufacturer (National) Labels Advantages  More desired by customers  Resell excessive merchandise  Don’t need skills and people to develop and promote merchandise Disadvantages  Lower margins  Vulnerable to competitive pressures