Developing Merchandise Plans

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Chapter 14

• Developing Merchandise Plans

RETAIL MANAGEMENT A STRATEGIC APPROACH, 10th
Edition
BERMAN EVANS
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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

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Merchandising

• Activities involved in acquiring particular goods
  and/or services and making them available at the
  places, times, and prices and in the quantity
  that enable a retailer to reach its goals

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Merchandising Philosophy

• Sets the guiding principles for all the
  merchandise decisions that a retailer makes
• Should reflect
• Target market desires
• Retailers institutional type
• Market-place positioning
• Defined value chain
• Supplier capabilities
• Costs
• Competitors
• Product trends

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Scope of Merchandising Responsibility

• Full array of merchandising functions
• Buying and selling
• Selection, pricing, display, customer
  transactions
• OR
• Focus on buying function only

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Figure 14-1 Nikes Own Store Merchandising
Philosophy
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Micromerchandising

• Retailer adjusts shelf-space allocations to
  respond to customer and other differences among
  local markets

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Cross-Merchandising

• Retailers carry complementary goods and services
  to encourage shoppers to buy more

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Figure 14-2 Attributes and Functions of
Buying Organizations
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Functions Performed

• Merchandising view
• All buying and selling functions
• Assortments
• Advertising pricing
• Point-of-sale displays
• Employee utilization
• Personal selling approaches

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Functions Performed (cont.)

• Buying view
• Buyers manage buying functions
• Buying
• Advertising
• Pricing
• In-store personnel manage other tasks
• Assortments
• Point-of-sale displays
• Employee utilization
• Personal selling approaches

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Figure 14-4 Merchandising Versus Store
Management Career Tracks
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Figure 14-5 Devising Merchandise Plans
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Forecasts

• These are projections of expected retail sales
  for given periods
• Components
• Overall company projections
• Product category projections
• Item-by-item projections
• Store-by-store projections (if a chain)

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Types of Merchandise

• Staple merchandise
• Assortment merchandise
• Fashion merchandise
• Seasonal merchandise
• Fad merchandise

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Staple Merchandise

• Regular products carried by a retailer
• Grocery store examples milk, bread, canned soup
• Basic stock lists specify inventory level, color,
  brand, style, category, size, package, etc.

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Assortment Merchandise

• Apparel, furniture, auto, and other categories
  for which the retailer must carry a variety of
  products in order to give customers a proper
  selection
• Decisions on Assortment
• Product lines, styles, designs, and colors are
  projected
• Model stock plan

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Fashion 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

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Table 14-1a Factors in Planning Merchandise
Innovativeness
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Table 14-1b Factors in Planning Merchandise
Innovativeness
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Table 14-1c Factors in Planning Merchandise
Innovativeness
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Figure 14-6 RD at Wendys
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Figure 14-7 Traditional Product Life Cycle
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Structured Guidelines for Pruning Products

• Select items for possible elimination on the
  basis of declining sales, prices, and profits,
  appearance of substitutes
• Gather and analyze detailed financial and other
  data about these items
• Consider nondeletion 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

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Figure 14-8 Predicting Fashion Adoption
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Table 14-2a Factors in Planning Merchandise
Quality
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Table 14-2b Factors in Planning Merchandise
Quality
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Table 14-2c Factors in Planning Merchandise
Quality
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Retail Assortment Strategies
Width of assortment refers to the number of
distinct goods/service categories (product lines)
a retailer carries Depth 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)
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Figure 14-10 Sephoras Very Deep Assortment of
Cosmetics
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Brands
Manufacturer (national)
Private (dealer or store)
Generic
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Table 14-3 Private Brand Test Match the
Retailer with the Brand Name
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Figure 14-11 Wal-Marts New Approach to Private
Brands
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Figure 14-12 Daffys Distinctive Branding
Strategy
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Figure 14-13 Applying Category Management
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Merchandising Software

• General Merchandise Planning Software
• Forecasting Software
• Innovativeness Software
• Assortment Software
• Allocation Software
• Category Management Software

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Figure 14-4a Shelf Logic Software for Category
Management Planning
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Figure 14-4b Shelf Logic Software for Category
Management Planning