Merchandising Theory Grace Kunz

Copyright ©2010 Fairchild Books All rights reserved. No part of this presentation covered by the copyright hereon may be reproduced or used in any form or by any means–graphic, electronic, or mechanical, including photocopying, recording, taping, or information storage and retrieval systems–without written permission of the publisher. ISBN: 978-1-56367-983-4 GST R 133004424

Section One Merchandising Theory

Merchandising Technology Chapter Two Merchandising Technology

©2010 Fairchild Books, A Division of Condé Nast Publications. Learning Objectives Define merchandising technology Examine concepts of supply chain business systems Discuss the role of merchandising in a supply chain universe Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Overview of Merchandising Technology 1960s = mainframe computers, increasingly sophisticated cash registers, detailed sales information to retailers 1970s = introduction of micro-computers, weekly or daily sales reports 1980s = focus on expense control, increased amounts of merchandise purchased abroad 2000s = increasingly sophisticated supply chain business systems Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Concept of Merchandising Technology systematic application of information technology and telecommunications to planning, developing, and presenting product lines Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Merchandising Issues Needing Technology Escalated percentage of markdowns High levels of stockouts Lowered gross margins Excess inventory Increasing prices Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Goals of Merchandising Technology Use time efficiently Increase merchandise accuracy Optimize benefits to firms and customers Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Supply Chain Business Systems Customer driven Knowing what is selling over the retail counter in real time Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Fundamentals of Supply Chain Technology Customer-Driven Business System Retail customer’s purchase recorded by point of sale (POS) system using a scanner a Universal Product Code (UPC) and/or a radio frequency identification (RFID) system Pertinent data relayed to vendor via electronic data interchange (EDI) or the Internet Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Supply Chain Business Systems Customer driven Knowing what is selling over the retail counter in real time Time based competition Instead of focusing on doing business at the lowest possible cost focus on increased amount of business by generating shorter time lines Need for integrated technology Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Supply Chain Management Merchandise pulled through the systems in response to consumer desires ≠ Traditional pushing goods on consumers Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Theoretical Foundations of Technological Innovation Fundamental concepts of Behavioral Theory of the Apparel Firm (BTAF) consistent with supply chain systems Diffusion of innovation Theory Y management style Role of executive leadership Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications. 14

Five Factors Determining Acceptance of Technology Innovation Relative advantage Compatibility Complexity Trialability Observability Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Decision Making in a Supply Chain Universe Initiation Implementation Decision to adopt new technology The new technology is put in use Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Merchandising in a Supply Chain Universe Components of industry culture that must change: traditional focus on short term hostility of inter-firm relationships lack of attention to human resources inadequate production flexibility (Hammond, 1993) Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Example of a Supply Chain Universe Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Potential Outcomes of Merchandising Technology Systems Increased sales Reduced markdowns Increased stock turn lower average inventories Increased gross-margin return on inventory Increased adjusted gross margin Satisfied customers (Hunter, 1990; Lowson, King & Hunter, 1999) Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.

Sources and Capabilities of Merchandising Technology Proprietary systems—business owned Commercial systems—purchased system Third-party merchandising—hired service Front-end systems—address planning processes Back-end systems—address inventory management systems Kunz Chapter 2 ©2010 Fairchild Books, A Division of Condé Nast Publications.