1. Merchandising Theory
Grace Kunz

2. 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:
GST R

3. Section One
Merchandising Theory

4. Merchandising Technology
Chapter Two
Merchandising Technology

5. ©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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. 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.

13. 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.

14. 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

15. 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.

16. 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.

17. 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.

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

19. 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.

20. 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.