Developing Merchandise Plans RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS.
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Transcript of Developing Merchandise Plans RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS.
14-1 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Developing Merchandise Plans
RETAIL MANAGEMENT:A STRATEGICAPPROACH11th Edition11th Edition
BERMAN EVANS
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
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.
14-4 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Merchandising PhilosophyMerchandising 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
14-5 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Scope of Merchandising ResponsibilityScope of Merchandising Responsibility
Full array of merchandising functions Buying and selling Selection, pricing, display, customer
transactions
OR
Focus on buying function only
14-6 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-1: Dick’s Merchandising Philosophy
14-7 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
MicromerchandisingMicromerchandising
Retailers adjust shelf-space allocations to respond to
customer differences and other differences among local markets.
14-8 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Cross-MerchandisingCross-Merchandising
Retailers carry complementary goods and services to encourage
shoppers to buy more.
14-9 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-2: Attributes
and Functions
of Buying
Organizations
14-10 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Merchandising and Store Functions Merchandising and Store Functions PerformedPerformed
Merchandising viewMerchandising viewAll buying and selling functions
AssortmentsAdvertising pricingPoint-of-sale displaysEmployee utilizationPersonal selling approaches
14-11 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Buying viewBuying viewBuyers manage buying functions:
BuyingAdvertisingPricing
In-store personnel manage other tasks:AssortmentsPoint-of-sale displaysEmployee utilizationPersonal selling approaches
Merchandising and Store Functions Merchandising and Store Functions Performed (cont.)Performed (cont.)
14-12 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-4a: Merchandising Career Track
at Macy’s
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 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-5: Devising Merchandise Plans
14-15 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
ForecastsForecasts
These are projections of expected retail sales for given periodsComponents:
Overall company projectionsProduct category projectionsItem-by-item projectionsStore-by-store projections (if
a chain)
14-16 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Types of MerchandiseTypes of Merchandise
Staple merchandise Assortment merchandise Fashion merchandise Seasonal merchandise Fad merchandise
14-17 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Staple MerchandiseStaple Merchandise
Regular products carried by a retailerGrocery store examples: milk,
bread, canned soup Basic stock lists specify inventory
level, color, brand, style, category, size, package, etc.
14-18 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Assortment MerchandiseAssortment 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 assortmentProduct lines, styles, designs, and
colors are projectedModel stock plan
14-19 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Fashion and Seasonal MerchandiseFashion 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
14-20 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Table 14-1a: Factors in Planning Merchandise InnovativenessFACTOR RELEVANCE 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 trends Understand vertical and horizontal fashion trends, if appropriate
Retailer image Carry goods/services that reinforce the firm’s image
14-21 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Table 14-1b: Factors in Planning Merchandise InnovativenessFACTOR RELEVANCE for PLANNING
Competition Lead or follow competition in the selection of new goods/services
Customer segments Segment 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
14-22 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Table 14-1c: Factors in Planning Merchandise InnovativenessFACTOR RELEVANCE for PLANNING
Profitability Assess each new offering for potential profits
Risk Be 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
14-23 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-6: Saks: Looking for Hot New Fashions
14-24 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-7: Traditional Product Life Cycle
14-25 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Structured Guidelines for Pruning ProductsStructured 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
14-26 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-8: Predicting Fashion Adoption
14-27 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Table 14-2a: Factors in Planning Merchandise QualityFACTOR RELEVANCE for PLANNING
Target market(s) Match merchandise quality to the wishes of the desired target market(s)
Competition Sell similar quality or different quality
Retailer’s image Relate merchandise quality directly to the perception that customers have of retailer
Store location Consider the impact of location on the retailer’s image and the number of competitors, which, in turn, relate to quality
14-28 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Table 14-2b: Factors in Planning Merchandise QualityFACTOR RELEVANCE for PLANNING
Profitability Recognize 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.
Personnel Employ skilled, knowledgeable personnel for high-quality merchandise
14-29 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Table 14-2c: Factors in Planning Merchandise QualityFACTOR RELEVANCE 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
14-30 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Width of assortmentWidth of assortment refers to the number of distinct goods/service categories (product lines) a retailer carries.
Depth of assortmentDepth 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 StrategiesRetail Assortment Strategies
14-31 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-10: Ikea’s Wide and Deep Assortment
14-32 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Private(dealer or store)
Manufacturer(national)
Generic
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Table 14-3: Private Brand Test
14-34 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-11: Wal-Mart and Private Brands
14-35 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-12: Sears’ Distinctive Branding Strategy
14-36 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Category ManagementCategory 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.
14-37 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-13: Applying Category Management
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
14-39 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-4a: Shelf Logic Software for Category Management Planning
14-40 Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall
Figure 14-4b: Shelf Logic Software for Category Management Planning
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