1. Developing Merchandise Plans
Chapter 14
Developing Merchandise Plans
RETAIL
MANAGEMENT:
A STRATEGIC
APPROACH,
10th Edition
BERMAN EVANS

2. 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

3. 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

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

5. Scope of Merchandising Responsibility
Full array of merchandising functions
Buying and selling
Selection, pricing, display, customer transactions OR
Focus on buying function only

6. Figure 14-1: Nike’s Own Store Merchandising Philosophy

7. Micromerchandising
Retailer adjusts shelf-space allocations to respond to customer and other differences among local markets

8. Cross-Merchandising
Retailers carry complementary goods and services to encourage shoppers to buy more offer warranties

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

10. 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

11. Figure 14-5: Devising Merchandise Plans

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

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

14. 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.

15. 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

16. 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

17. Assessing each Factors in Planning Merchandise Innovativeness
RELEVANCE for PLANNING
Target market(s)
Evaluate whether the target market is conservative or innovative
Goods/service growth potential
Consider each new offering on the basis of rapidity of initial sales, maximum sales potential per time period, and length of sales life
Fashion trends
Understand vertical and horizontal fashion trends, if appropriate
Retailer image
Carry goods/services that reinforce the firm’s image

18. Table 14-1b: Factors in Planning Merchandise Innovativeness
RELEVANCE for PLANNING
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
Responsiveness to consumers
Carry new offerings when requested by the target market
Amount of investment
Consider all possible investments for each new good/service: product costs, new fixtures, and additional personnel

19. Table 14-1c: Factors in Planning Merchandise Innovativeness
RELEVANCE for PLANNING
Profitability
Assess each new offering for potential profits
Risk
Be aware of the possible tarnishing of the retailer’s image, investment costs, and opportunity costs
Constrained decision making
Restrict franchisees and chain branches from buying certain items
Declining goods/ services
Delete older goods/services if sales and/or profits are too low

20. Figure 14-7: Traditional Product Life Cycle

21. 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)

22. Brands
Manufacturer
(national)
Private
(dealer or store)
Generic

23. Timing & Location
Timing : For new produces the retailer should decide when they are first purchased, displayed and sold the must plan the merchandising flow per during a year
Location: location of products in store and stockroom or warehouse to be used