Merchandising Plan

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

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

Thus merchandising philosophy includes every product decision from what produce lines – carry to the shelf space allotted to them inventory turnover – pricing

Costco’s Individualistic Merchandising Philosophy They have selection of 4000 items which when you go to Target or Wal-Mart you’ll get 1,00,000 They say they may select only two toaster or two peanut butter to sell But they would be of best values we can find at the time Those items selectively chosen would be 3000 items

Rest 1000 are such that constantly changes One week shoppers see Levis relaxed jeans and the next time they come will not find those items instead will find Tommy Hilfiger It creates an attitude that if you see it you better buy it.

Merchandise Personnel's Scope of responsibilities must be stated Full array of merchandising functions Buying and selling goods Service: Like Selection, pricing, display, customer transactions OR Focus on buying function only leaving rest works for others Normally retailers go for full array

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

Functions Performed (cont.) Buying view Buyers manage buying functions Buying Advertising Pricing In-store personnel manage other tasks Assortment Point-of-sale displays Employee utilization Personal selling approaches

Nike’s Own Store Merchandising Philosophy

Harry & David’s Merchandising Philosophy Keeps everything from fruits to nuts Concentrates more on Packing 100 % Guarantee If not satisfied replacement or money back which ever you prefer.

Retailer adjusts shelf-space allocations to respond to customer and Micromerchandising (to capitalize on opportunities) Retailer adjusts shelf-space allocations to respond to customer and other requirements of local markets

Conti… Wal-Mart, Carrefour do follow micromerchandising As this approach puts the correct products in correct stores for our customers So that we carry products that appeal customers or else we’ll carry “Dead inventory”

(Selling electronic items along with right fitting furniture's) Cross-Merchandising (to capitalize on opportunities) Retailers carry complementary goods and services to encourage shoppers to buy more. (Selling electronic items along with right fitting furniture's)

Attributes and Functions of Buying Organizations Or Decisions that the retailer needs to take before merchandise planning One product purchase

Degree of Centralization Many chains combine the formats by organizing a centralized buying along with giving store manager chance to put inputs Like Zara’s

In a bright & vast white room, 200 designers and product mangers are deciding on what to create They regularly gather suggestions from more than 500 stores managers worldwide Not for just specific orders but --- ideas related to cuts, fabrics, or even for a new line for apparels After weighing the managers ideas, the team decides finally what to make.

Designers draw up the latest ideas on the computers and then pass them through Zara’s intranet to nearby factories Within days cutting, dyeing, stitching and pressing begins. In just three weeks the clothes will hang up in the stores Zara isn’t just a bit faster than its rival Gap. But is infact 12 times faster in this entire process

Merchandise Plans

Forecasts Components: 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)

Types of Merchandise Staple merchandise Assortment merchandise Fashion merchandise Seasonal merchandise Fad merchandise

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

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: used to project specific items such as number of green, red, blue

Fashion and Seasonal Merchandise Fashion Merchandise: Products that may have changing sales due to changing tastes and life-styles (forecasting is difficult) Seasonal Merchandise: Products that sell well over nonconsecutive time periods (forecasting is straight forward)

Fad Merchandise High sales are generated for a short time Often toys and games are fads Like Harry Porters toy fly off each time when related movie or news is released For such products Never-out list (keeping huge quantity to meet anticipated demand and later stock smaller quantity to be a best seller)

Innovativeness An innovative retailer has great opportunity-----Distinctiveness by being first in the market And also a great risk possibly misreading customers and stuck up in large inventories. But success of innovative merchandise depends upon certain factors like

Target market: Evaluate whether the target market is conservative or innovative Retailer image: Carry goods/services that reinforce the firm’s image (in past could satisfy)

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 And thereby find out the Number of customer acceptance for new ones

R&D at Wendy’s Wendy’s R&D Department is dedicated to continually improve products by refining cooking, serving procedures and ingredients

Need to even go for a fashion check Check if fashion is Vertical trend Horizontal trend

Retail Assortment Strategies Width of assortment refers to the number of distinct goods/service categories a retailer carries Depth of assortment refers to the variety in any one goods/service category a retailer carries An assortment can range from wide and deep (department store) to narrow and shallow (box store)

Sephora’s (USA) Very Deep Assortment of Cosmetics Offers 365 shades of lipsticks 150 shades of nail polish 150 shades of cosmetic pencils

Do’s for planning their assortment If variety is increased will overall sales go up Will overall profits increase How much space is required for each product category How much space is available Will carrying 10 varieties yield greater sales or profits than stocking 4 varieties Investment cost that occurs with large varieties should also be taken care of. As selling space is limited, it should be allotted to those goods generating the most customer traffic and sales.

Scrambled Merchandising: Thus can even go for selection of some modern ways of distinction strategies for Assortment Scrambled Merchandising: Retailer adds unrelated items To generate more revenue and lift up profits Like Florists keeping umbrella Complementary Merchandising: Retailers sell basic product and related offerings through cross-merchandising Like Stereos and CDs Substitute Merchandising: Keeping all competing brand options so a s to shift sales from one brand to other And causing no difference to retailers overall sales

Brands Manufacturer (national) Private Generic (dealer or store) (Local Products Having secondary shelf allocation Least promotion Low priced Only 1 % sales contribution)

Wal-Mart’s New Approach to Private Brands

Daffy’s Distinctive Branding Strategy

But you don’t have to hunt for a good deal This is an off-price chain that caters to brand conscious shoppers who look for deals. Daffy’s provide new meaning to the word bargain For its online shoppers it has put up as follows It says for everyone else we offer wide range of accessories, clothes etc But you don’t have to hunt for a good deal We already pay people to do that for you i.e. our buyers load racks every week with new merchandise from all over the world. You’ll get finest designer collections at savings up to 80 % off the regular retail price

Category Management Is a merchandising technique used to improve productivity It is even a way to manage a retail business that focus on the performance of product Category results than an individual brand CM is a process of managing all SKU’s It involves simultaneous management of Price Shelf-space Merchandising Strategy Promotional efforts And all other elements of retail mix.

PRIL’s Category Management.

Applying Category Management

Shelf Logic Software for Category Management Planning

Shelf Logic Software for Category Management Planning