MERCHANDISING NOUN OR VERB? MERCHANDISNG Introduction : How Does Merchandise Get In Your Store? What...
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Transcript of MERCHANDISING NOUN OR VERB? MERCHANDISNG Introduction : How Does Merchandise Get In Your Store? What...
MERCHANDISING
NOUN OR VERB?
MERCHANDISNG
Introduction:How Does Merchandise
Get In Your Store?What Questions Should I
Ask Myself When Ordering?
OBJECTIVE
•Be able to define merchandising
MERCHANDISING
•Merchandising is being able to:
– get the right merchandise (color, size, style,quality,etc.)– at the right time– at the right price– at the right place– in the right amount
MERCHANDISNG•Where does it
come from?•Who ordered
the merch-andise?
•Does it sell?• Is it good
quality stuff?
MERCHANDISNG•How many
should we stock?
•What sizes should we have?
•What does the competition have?
MERCHANDISNG•Is it a fad or
a trend?•What kind of
price are people willing to pay?
•Etc. etc. etc.
THE JEANS ACTIVITY• With two partners,
spend $10,000 to stock a jean store. – Have 5 brands– Cost is $20 each– Identify sizes to be
carried– Identify the # of
jeans to be stocked in each size
THE JEANS ACTIVITY
• With a partner, spend $10,000 on stocking a jean store. (Cont.)– Calculate the total
dollars spent per style/brand
– Present your plan to the class & turn in to me
OBJECTIVE
•Be able to outline the buying process used by most marketing businesses
The Buying Process (OVERVIEW)
•Prepare a merchandise plan (Monthly plan of buys for year)
•Choose the assortment (color, type, size, variety, etc.)
•Find the best supplier (quality vs. price)
• Negotiate the order
OBJECTIVE
•Be able to describe the factors that effect a business’ merchandise assortment
Merchandise Assortment Considerations
• Image• Brand Policy• Pricing
Policy• Merch. Plan• Customers• “Experts”
How do Buyers Know What to Buy?
•Marketing Research
•Customer Contact
•Want Slips
OBJECTIVE
•Be able to define & complete a purchase order
Purchase Orders
•A business form used to tell a vendor that you want to buy merchandise
Purchase Orders•P.O. TERMS:
–To–Date–Shipping Date–Via–FOB
•(Shipping Point vs. Destination)
–Terms
Purchase Orders•P.O. TERMS:
–Order #–Items #–Description–Quantity–Unit Cost–Total Cost–Total Order
OBJECTIVE
•Be able to calculate Purchase order terms
Why do vendors offer terms?
•For Paying Cash•For Paying Early•For Buying in Volume•For Buying Regularly•For Buying Out of Season
Sample Terms
2/10 NET 30–The 2 is the amount of discount available
–The 10 is the number of days available to get the discount
–The 30 is the total number of days available to pay the bill
Sample Terms
2/10 NET 30–EOM–ROG–Advance Dating
Sample Problems
Assume a $1,000 purchase dated on 4/1/01 w/ the following terms Due Date
Discount = ________1.) 5/10 Net 30 _____2.) 5/10 Net 30 EOM _____3.) 5/10 Net 30 6/1/01 _____
Sample Problems
Assume a $1,000 purchase dated on 4/1/01 w/ the following terms Due Date
Discount = ________1.) 5/10 Net 30 5/ 1/012.) 5/10 Net 30 EOM 5/30/013.) 5/10 Net 30 6/1/01 6/30/01
ACTIVITY
OBJECTIVE
•Be able to complete an invoice
INVOICE TERMS•Pieces•Weight•Invoice #•Backordered
(B/O)•Unit Cost•Shipping Cost•Tax
ACTIVITY
OBJECTIVE
•Be able to define & complete the following forms:–Bill of Lading–Waybill–Freight Bill–Delivery Receipt–Packing Slip
Physical Distribution Forms
•Bill of Lading–Also called a shipping order. –Used to request that a transport company come pick up & deliver merchandise.
–Serves as a contract–Consignor vs. Consignee
Physical Distribution Forms
•Waybill–Used to keep track of merchandise as it moves through the “Channel of Distribution” (ex. Fed Ex Ad)
Physical Distribution Forms
•Freight Bill–An invoice (bill) for the shipping charge
–Tells who should be paying for the shipping charge
Physical Distribution Forms
•Delivery Receipt
–Form used to verify that merchandise has arrived
–Signed by the buyer
Physical Distribution Forms
•Packing Slip–Used to compare merchandise delivered w/ what was supposed to be in the carton
–Condition, number of items, correctness of order
ACTIVITY
.MERCHANDISNG
Retail Pricing
OBJECTIVE
•Be able to Define “Retail Pricing”
–Assigning a Dollar Value to Goods & Services
The Importance of Proper Pricing
•Attracts Customers•Determines Sales•Determines Profit•Keeps Up With the
Competition
OBJECTIVE
•Be able to Define the Terms Associated with Retail Pricing:
Retail Price: The amount that customers pay for a product or service
OBJECTIVE
•Be able to Define the Terms Associated with Retail Pricing:
Cost: The amount that a business pays to
purchase products to resell
OBJECTIVE
•Be able to Define the Terms Associated with Retail Pricing:
Markup: The additional amount that a
business adds to cost to cover its expenses ANDAND make a profit
OBJECTIVE
•Be able to Define the Terms Associated with Retail Pricing:
Markdown: A Reduction in
the amount of Retail Price
FORMULA
RP$ = C$ + M$
FORMULA
RP% = C% + M%
FORMULA (Variations)
C$ = RP$ - M$
M$ = RP$ - C$
C% = RP% - M%
M% = RP% - C%
ILLUSTRATION
But What do Business People Generally Know?
• Retail Price = 100 %
• Cost of Goods (C$)• Markup % (M%)• The Formulas
PROBLEM: You’ve Got Apples & Oranges
Set - UpRP$ =
RP% = 100%
C$ =
C% =
M$ =
M% =
EXAMPLEWhat can you
Calculate?RP$ =
RP% = 100%
C$ = $6.00$6.00
C% =
M$ =
M% = 40%40%
EXAMPLE
RP$ =
RP% = 100%
C$ = $6.00
C% = 60%60%
M$ =
M% = 40%
EXAMPLE
RP$ = C$ / C%
X = $6.00 / 60%
EXAMPLE
RP$ = $10.00$10.00
RP% = 100%
C$ = $6.00
C% = 60%
M$ =
M% = 40%
RP$ = $6.00 / 60%
EXAMPLE
RP$ = $10.00$10.00
RP% = 100%
C$ = $6.00
C% = 60%
M$ =
M% = 40%
M$ = RP$ - C$
EXAMPLE
RP$ = $10.00$10.00
RP% = 100%
C$ = $6.00
C% = 60%
M$ = $4.00
M% = 40%
M$ = RP$ - C$
DO SAMPLE PROBLEMS #S 7, 9, 10
OBJECTIVE
Be Able to Calculate Markdowns
MARKDOWNS
MD$ = RP$ x MD%MD$ = $10.00 x 40%
MD$ = $4.00New RP$ = Old RP$ - MD$
RP$ = $6.00
DO SAMPLE PROBLEM # 12
OBJECTIVE
•Be Able to Calculate a Store’s Markup Policy
Markup Policy
Consider a store that has business expenses of $125,000 (Heat, Electric, Salaries, etc.) and spends $200,000 on merchandise. The owner wants to take home a modest $50,000 income. – How much merchandise must
he/she sell this year? Per month?
– What must be the store’s markup policy?
Set - Up: What Do You Know?
RP$ =
RP% = 100%
C$ = $200,000
C% =
M$ =
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
Set - Up: What Do You Know?
RP$ =
RP% = 100%
C$ = $200,000
C% =
M$ = $125,000 +
$50,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
Set - Up: What Do You Know?
RP$ =
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
What is the Business’ Sales Goal?
RP$ =
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
What is the Business’ Sales Goal for the Year?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
What is the Business’ Sales Goal for the Month?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
What is the Business’ Sales Goal for the Month?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
$375,000 / 12 =
$31,250
What is the Business’ Markup Policy?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% =
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
OBJECTIVE
M% = M$ / RP$
M% = $175,000 /$375,000
M% = 46.67%
What is the Business’ Markup Policy?
RP$ = $375,000
RP% = 100%
C$ = $200,000
C% =
M$ = $175,000
M% = 46.67%
Cost of Goods:
$200,000
Overhead:
$125,000
Desired Profit:
$50,000
MARKUP POLICY
EVERY ITEM BOUGHT FOR THE STORE MUST BE
MARKED UP 46.67% IF THE STORE IS TO PAY FOR ITS
MERCHANDISE, ALL OF ITS EXPENSES, & MAKE THE
DESIRED PROFIT!!!
.MERCHANDISNG
Stock Turnover
OBJECTIVE
Be able to define stock turnover
and its importance
Stock Turnover
The number of times the average inventory of a
product is sold and reordered in a given
period of time
The Importance of Stock Turnover
Stock Turnover is the most often quoted
business ratio
&
is an indication of a business’ profitability.
The Importance of Stock Turnover
• The Retail Price of each product sold represents the company’s cost of goods, total expenses, & desired net profit.
The Importance of Stock Turnover
• If you multiply the number of items sold by the $ value of profit it represents, you can calculate how much profit a company has earned
The Importance of Stock Turnover
• Therefore, the faster you sell your product, the more profit your company can make. Plus, every additional product sold results in more profit for the business
The Importance of Stock Turnover
• Obviously, however, if you are selling out your merchandise to fast, the expense of ordering & shipping merchandise will eat into your net profit, so you can’t order to little merchandise
The Importance of Stock Turnover
• Calculating a business’ stock turnover ratio, therefore, is an art as well as a science
Stock Turnover (ST) Ratio
S T = Sales / Average
Inventory
Stock Turnover (ST) Ratio
Sales:The total amountof merchandise sold during a specific period of
time
Stock Turnover (ST) Ratio
Average Inventory:
The approximate amount of merchandise in the store at any given point in time
Average Inventory
Average Inventory =
BOM Inv. + Inv.2 + Inv.3 + Inv. 4 + . . .
Divided By
# of Inventories Taken
Stock Turnover (ST) Ratio “Story Time”
A small business has sales of $400,000 in a year. They took inventory 12 times. The average inventory was $50,000. What was their stock turnover ration?
Stock Turnover (ST) Ratio
S T = Sales / Average Inventory
X = $400K / $50K
X = __?__
Stock Turnover (ST) Ratio
S T = Sales / Average Inventory
X = $400K / $50K
X = __8__
Stock Turnover (ST) Ratio “Story Time”
A small business has sales of $400,000 in a year. They want a stock turnover of 10 because a 10 ST ratio will make them the profit they want and need. What should their average inventory be?
Stock Turnover (ST) Ratio
S T = Sales / Average Inventory
10 = $400K /__?__
X = __?__
Stock Turnover (ST) Ratio
S T = Sales / Average Inventory
10 = $400K /__?__
X = __$40,000__
The Importance of Stock Turnover
Stock Turnover is an important indication of
a business’ profitability.
OBJECTIVE
Be able to describe methods to increase a
product’s stock turnover ratio
The Importance of Stock Turnover
Increasing Stock Turnover:
•Increases profits
•Uses your capital efficiently
•Decreases your expenses
•Results in fewer markdowns
Increasing Stock Turnover
•Better Buying: Get merchandise that people want
•Better Pricing: Charge what people are willing to spend
Increasing Stock Turnover
•Better Stock Control: Get rid of the “slackers”
•Proper Stock Care: Make it look good
Increasing Stock Turnover
•Better Promotion: Sell the product better
Sample Quiz
Complete the sample quiz on pricing, markup goals, and stock turnover
OBJECTIVE
Be able to define terms and describe
procedures for the proper stocking of
merchandise
Stocking Terms
• Face• Salvage• Floats• Rotation• Code Dated• Mass Stacking• Signage
• Broken Down• Blocking• Back Stock• End-cap• Vertical vs
Horizontal• “Damaged”
Stocking Terms
• Face - Bringing merchandise forward
• Salvage - Material used in stock- ing that can be used again
• Floats - Carts used to haul merchadise around the store
Stocking Terms
• Rotation - “F I F O” Bringing old merchandise to the front
• Code Dated - Expiration dates• Mass Stacking - Using one
product to form large display
• Signage - Informational signs
Stocking Terms
•Broken Down - to collapse boxes for ease of storage
•Blocking - Creating space on a
shelf for products•Back Stock - Merchandise that
doesn’t fit on a shelf and must go back to storage
Stocking Terms
•End-cap - A display built at the end of an aisle
•Vertical vs. Horizontal - How products are placed on shelves
•“Damaged” - Merchandise that can be fixed and sold
Stocking Procedures
•Customer Service
•Safety•Efficiency•Appearance•Increased
Sales
Stocking Procedures
•Customer Service:–Customers come first. Help whenever possible
–Wear your uniform–Take customers to product vs. pointing in general direction
Stocking Procedures
• Safety:–Keep aisles clear–Don’t overstock shelves or floats–Be able to see when pushing floats
–Remove out of date merchandise
–Lift properly!!!!
Stocking Procedures
• Efficiency:–Stock using two hands–Use teamwork–Use your product knowledge!!!–Properly stocked merchandise uses less space allowing more profitable products to be stocked and sold
Stocking Procedures
• Appearance:–Shelves should always look full and orderly
–Keep shelves neat & clean–Repair damaged fixtures and products
–Keep yourself looking neat & clean
Stocking Procedures
• Increased Sales:–Signage is critical. It is the salesperson!!!
–Rotate products on the endcaps–Place your most profitable merchandise at eye level
–Being neat, clean, & orderly helps to sell also!!!
On the Job safety
Film:“Stocker Interactive
Program”
OBJECTIVE
Be able to define terms and describe
procedures for the proper inventory of
merchandise
Inventory Control Terms
•Unit Control•Dollar Control
•Basic Stock List•Model Stock
Plan
Inventory Control Systems
•Book Inventory
(Perpetual)
•Physical Inventory
Inventory Control
•Book Inventory–A paper record–Subtract Sales–Add purchases–Doesn’t allow for Shrinkage–Information is collected by POS systems or paper records
Inventory Control
•Physical Inventory–Simply counting the products–Tedious & costly–Accurate
OBJECTIVE
Be able to calculate the amount of profit earned
per square foot of selling space allocated
Profit Calculation Terms
•Gross Profit•Net Profit
– Item–Stock Turn–Month–Year–Per Sq. Foot
•Floor Plan•Square Feet of
Selling Space
Profit Calculation Terms
• Store Owners are faced w/ a limited amount of space
• He/She wants as much profit as possible (Mgrs. Job may depend on it!) from that space
• Products take up space!!!
Profit Calculation Terms
• Products that make profit stay
• Products that do not make profit leave
• Most profitable products get the best space
Profit Calculation Formula
Profit Per Square Foot of = Selling Space
Total __Net Profit__ Square Ft. of Selling Space
Profit Calculation Formula
SAMPLE PROBLEMS