2. MERCHANDISING NOUN OR VERB?

3. MERCHANDISNG Introduction : How Does Merchandise Get In Your Store? What Questions Should I Ask Myself When Ordering?

4. OBJECTIVE Be able to define merchandising

5. MERCHANDISING Merchandising is being able to: –get the right merchandise (color, size, style,quality,etc.) – at the right time – at the right price – at the right place – in the right amount

6. MERCHANDISNG Where does it come from? Who ordered the merch- andise? Does it sell? Is it good quality stuff?

7. MERCHANDISNG How many should we stock? What sizes should we have? What does the competition have?

8. MERCHANDISNG Is it a fad or a trend? What kind of price are people willing to pay? Etc. etc. etc.

9. THE JEANS ACTIVITY With two partners, spend $10,000 to stock a jean store. –Have 5 brands –Cost is $20 each –Identify sizes to be carried –Identify the # of jeans to be stocked in each size

10. THE JEANS ACTIVITY With a partner, spend $10,000 on stocking a jean store. (Cont.) –Calculate the total dollars spent per style/brand –Present your plan to the class & turn in to me

11. OBJECTIVE Be able to outline the buying process used by most marketing businesses

12. The Buying Process (OVERVIEW) Prepare a merchandise plan (Monthly plan of buys for year) Choose the assortment (color, type, size, variety, etc.) Find the best supplier (quality vs. price) Negotiate the order

13. OBJECTIVE Be able to describe the factors that effect a business’ merchandise assortment

14. Merchandise Assortment Considerations Image Brand Policy Pricing Policy Merch. Plan Customers “Experts”

15. How do Buyers Know What to Buy? Marketing Research Customer Contact Want Slips

16. OBJECTIVE Be able to define & complete a purchase order

17. Purchase Orders A business form used to tell a vendor that you want to buy merchandise

18. Purchase Orders P.O. TERMS: –To –Date –Shipping Date –Via –FOB (Shipping Point vs. Destination) –Terms

19. Purchase Orders P.O. TERMS: –Order # –Items # –Description –Quantity –Unit Cost –Total Cost –Total Order

20. OBJECTIVE Be able to calculate Purchase order terms

21. Why do vendors offer terms? For Paying Cash For Paying Early For Buying in Volume For Buying Regularly For Buying Out of Season

22. Sample Terms 2/10 NET 30 –The 2 is the amount of discount available –The 10 is the number of days available to get the discount –The 30 is the total number of days available to pay the bill

23. Sample Terms 2/10 NET 30 –EOM –ROG –Advance Dating

24. Sample Problems Assume a $1,000 purchase dated on 4/1/01 w/ the following terms Due Date Discount = ________ 1.) 5/10 Net 30 _____ 2.) 5/10 Net 30 EOM _____ 3.) 5/10 Net 30 6/1/01 _____

25. Sample Problems Assume a $1,000 purchase dated on 4/1/01 w/ the following terms Due Date Discount = ________ 1.) 5/10 Net 30 5/ 1/01 2.) 5/10 Net 30 EOM 5/30/01 3.) 5/10 Net 30 6/1/01 6/30/01

26. ACTIVITY

27. OBJECTIVE Be able to complete an invoice

28. INVOICE TERMS Pieces Weight Invoice # Backordered (B/O) Unit Cost Shipping Cost Tax

29. ACTIVITY

30. OBJECTIVE Be able to define & complete the following forms: –Bill of Lading –Waybill –Freight Bill –Delivery Receipt –Packing Slip

31. Physical Distribution Forms Bill of Lading –Also called a shipping order. –Used to request that a transport company come pick up & deliver merchandise. –Serves as a contract –Consignor vs. Consignee

32. Physical Distribution Forms Waybill –Used to keep track of merchandise as it moves through the “Channel of Distribution” (ex. Fed Ex Ad)

33. Physical Distribution Forms Freight Bill –An invoice (bill) for the shipping charge –Tells who should be paying for the shipping charge

34. Physical Distribution Forms Delivery Receipt –Form used to verify that merchandise has arrived –Signed by the buyer

35. Physical Distribution Forms Packing Slip –Used to compare merchandise delivered w/ what was supposed to be in the carton –Condition, number of items, correctness of order

36. ACTIVITY

37. . MERCHANDISNG Retail Pricing

38. OBJECTIVE Be able to Define “Retail Pricing” –Assigning a Dollar Value to Goods & Services

39. The Importance of Proper Pricing Attracts Customers Determines Sales Determines Profit Keeps Up With the Competition

40. OBJECTIVE Be able to Define the Terms Associated with Retail Pricing: Retail Price: The amount that customers pay for a product or service

41. OBJECTIVE Be able to Define the Terms Associated with Retail Pricing: Cost: The amount that a business pays to purchase products to resell

42. OBJECTIVE Be able to Define the Terms Associated with Retail Pricing: AND Markup: The additional amount that a business adds to cost to cover its expenses AND make a profit

43. OBJECTIVE Be able to Define the Terms Associated with Retail Pricing: Markdown: A Reduction in the amount of Retail Price

44. FORMULA RP$ = C$ + M$

45. FORMULA RP% = C% + M%

46. FORMULA (Variations) C$ = RP$ - M$ M$ = RP$ - C$ C% = RP% - M% M% = RP% - C%

47. ILLUSTRATION

48. But What do Business People Generally Know? Retail Price = 100 % Cost of Goods (C$) Markup % (M%) The Formulas

49. PROBLEM: You’ve Got Apples & Oranges

50. Set - Up RP$ = RP% = 100% C$ = C% = M$ = M% =

51. EXAMPLE What can you Calculate? RP$ = RP% = 100% $6.00 C$ = $6.00 C% = M$ = 40% M% = 40%

52. EXAMPLE RP$ = RP% = 100% C$ = $6.00 60% C% = 60% M$ = M% = 40%

53. EXAMPLE RP$ = C$ / C% X = $6.00 / 60%

54. EXAMPLE $10.00 RP$ = $10.00 RP% = 100% C$ = $6.00 C% = 60% M$ = M% = 40% RP$ = $6.00 / 60%

55. EXAMPLE $10.00 RP$ = $10.00 RP% = 100% C$ = $6.00 C% = 60% M$ = M% = 40% M$ = RP$ - C$

56. EXAMPLE $10.00 RP$ = $10.00 RP% = 100% C$ = $6.00 C% = 60% M$ = $4.00 M% = 40% M$ = RP$ - C$

57. DO SAMPLE PROBLEMS # S 7, 9, 10

58. OBJECTIVE Be Able to Calculate Markdowns

59. MARKDOWNS MD$ = RP$ x MD% MD$ = $10.00 x 40% MD$ = $4.00 New RP$ = Old RP$ - MD$ RP$ = $6.00

60. DO SAMPLE PROBLEM # 12

61. OBJECTIVE Be Able to Calculate a Store’s Markup Policy

62. Markup Policy Consider a store that has business expenses of $125,000 (Heat, Electric, Salaries, etc.) and spends $200,000 on merchandise. The owner wants to take home a modest $50,000 income. –How much merchandise must he/she sell this year? Per month? –What must be the store’s markup policy?

63. Set - Up: What Do You Know? RP$ = RP% = 100% C$ = $200,000 C% = M$ = M% = Cost of Goods: $200,000 Overhead: $125,000 Desired Profit: $50,000

64. Set - Up: What Do You Know? RP$ = RP% = 100% C$ = $200,000 C% = M$ = $125,000 + $50,000 M% = Cost of Goods: $200,000 Overhead: $125,000 Desired Profit: $50,000 Cost of Goods: $200,000 Overhead: $125,000 Desired Profit: $50,000

65. Set - Up: What Do You Know? RP$ = RP% = 100% C$ = $200,000 C% = M$ = $175,000 M% = Cost of Goods: $200,000 Overhead: $125,000 Desired Profit: $50,000

66. What is the Business’ Sales Goal? RP$ = RP% = 100% C$ = $200,000 C% = M$ = $175,000 M% = Cost of Goods: $200,000 Overhead: $125,000 Desired Profit: $50,000

67. What is the Business’ Sales Goal for the Year? RP$ = $375,000 RP% = 100% C$ = $200,000 C% = M$ = $175,000 M% = Cost of Goods: $200,000 Overhead: $125,000 Desired Profit: $50,000

68. What is the Business’ Sales Goal for the Month? RP$ = $375,000 RP% = 100% C$ = $200,000 C% = M$ = $175,000 M% = Cost of Goods: $200,000 Overhead: $125,000 Desired Profit: $50,000

69. What is the Business’ Sales Goal for the Month? RP$ = $375,000 RP% = 100% C$ = $200,000 C% = M$ = $175,000 M% = $375,000 / 12 = $31,250

70. What is the Business’ Markup Policy? RP$ = $375,000 RP% = 100% C$ = $200,000 C% = M$ = $175,000 M% = Cost of Goods: $200,000 Overhead: $125,000 Desired Profit: $50,000

71. OBJECTIVE M% = M$ / RP$ M% = $175,000 / $375,000 M% = 46.67%

72. What is the Business’ Markup Policy? RP$ = $375,000 RP% = 100% C$ = $200,000 C% = M$ = $175,000 M% = 46.67% Cost of Goods: $200,000 Overhead: $125,000 Desired Profit: $50,000

73. MARKUP POLICY EVERY ITEM BOUGHT FOR THE STORE MUST BE MARKED UP 46.67% IF THE STORE IS TO PAY FOR ITS MERCHANDISE, ALL OF ITS EXPENSES, & MAKE THE DESIRED PROFIT!!!

74. . MERCHANDISNG Stock Turnover

75. OBJECTIVE Be able to define stock turnover and its importance

76. Stock Turnover The number of times the average inventory of a product is sold and reordered in a given period of time

77. The Importance of Stock Turnover Stock Turnover is the most often quoted business ratio & is an indication of a business’ profitability.

78. The Importance of Stock Turnover The Retail Price of each product sold represents the company’s cost of goods, total expenses, & desired net profit.

79. The Importance of Stock Turnover If you multiply the number of items sold by the $ value of profit it represents, you can calculate how much profit a company has earned

80. The Importance of Stock Turnover Therefore, the faster you sell your product, the more profit your company can make. Plus, every additional product sold results in more profit for the business

81. The Importance of Stock Turnover Obviously, however, if you are selling out your merchandise to fast, the expense of ordering & shipping merchandise will eat into your net profit, so you can’t order to little merchandise

82. The Importance of Stock Turnover Calculating a business’ stock turnover ratio, therefore, is an art as well as a science

83. Stock Turnover (ST) Ratio S T = Sales / Average Inventory

84. Stock Turnover (ST) Ratio Sales: The total amount of merchandise sold during a specific period of time

85. Stock Turnover (ST) Ratio Average Inventory: The approximate amount of merchandise in the store at any given point in time

86. Average Inventory Average Inventory = BOM Inv. + Inv.2 + Inv.3 + Inv. 4 +... Divided By # of Inventories Taken

87. Stock Turnover (ST) Ratio “Story Time” A small business has sales of $400,000 in a year. They took inventory 12 times. The average inventory was $50,000. What was their stock turnover ration?

88. Stock Turnover (ST) Ratio S T = Sales / Average Inventory X = $400K / $50K X = __?__

89. Stock Turnover (ST) Ratio S T = Sales / Average Inventory X = $400K / $50K X = __8__

90. Stock Turnover (ST) Ratio “Story Time” A small business has sales of $400,000 in a year. They want a stock turnover of 10 because a 10 ST ratio will make them the profit they want and need. What should their average inventory be?

91. Stock Turnover (ST) Ratio S T = Sales / Average Inventory 10 = $400K /__?__ X = __?__

92. Stock Turnover (ST) Ratio S T = Sales / Average Inventory 10 = $400K /__?__ X = __$40,000__

93. The Importance of Stock Turnover Stock Turnover is an important indication of a business’ profitability.

94. OBJECTIVE Be able to describe methods to increase a product’s stock turnover ratio

95. The Importance of Stock Turnover Increasing Stock Turnover: Increases profits Uses your capital efficiently Decreases your expenses Results in fewer markdowns

96. Increasing Stock Turnover Better Buying: Get merchandise that people want Better Pricing: Charge what people are willing to spend

97. Increasing Stock Turnover Better Stock Control: Get rid of the “slackers” Proper Stock Care: Make it look good

98. Increasing Stock Turnover Better Promotion: Sell the product better

99. Sample Quiz Complete the sample quiz on pricing, markup goals, and stock turnover

100. OBJECTIVE Be able to define terms and describe procedures for the proper stocking of merchandise

101. Stocking Terms Face Salvage Floats Rotation Code Dated Mass Stacking Signage Broken Down Blocking Back Stock End-cap Vertical vs Horizontal “Damaged”

102. Stocking Terms Face - Bringing merchandise forward Salvage - Material used in stock- ing that can be used again Floats - Carts used to haul merchadise around the store

103. Stocking Terms Rotation - “F I F O” Bringing old merchandise to the front Code Dated - Expiration dates Mass Stacking - Using one product to form large display Signage - Informational signs

104. Stocking Terms Broken Down - to collapse boxes for ease of storage Blocking - Creating space on a shelf for products Back Stock - Merchandise that doesn’t fit on a shelf and must go back to storage

105. Stocking Terms End-cap - A display built at the end of an aisle Vertical vs. Horizontal - How products are placed on shelves “Damaged” - Merchandise that can be fixed and sold

106. Stocking Procedures Customer Service Safety Efficiency Appearance Increased Sales

107. Stocking Procedures Customer Service: –Customers come first. Help whenever possible –Wear your uniform –Take customers to product vs. pointing in general direction

108. Stocking Procedures Safety: –Keep aisles clear –Don’t overstock shelves or floats –Be able to see when pushing floats –Remove out of date merchandise –Lift properly!!!!

109. Stocking Procedures Efficiency: –Stock using two hands –Use teamwork –Use your product knowledge!!! –Properly stocked merchandise uses less space allowing more profitable products to be stocked and sold

110. Stocking Procedures Appearance: –Shelves should always look full and orderly –Keep shelves neat & clean –Repair damaged fixtures and products –Keep yourself looking neat & clean

111. Stocking Procedures Increased Sales: –Signage is critical. It is the salesperson!!! –Rotate products on the endcaps –Place your most profitable merchandise at eye level –Being neat, clean, & orderly helps to sell also!!!

112. On the Job safety

113. Film: “Stocker Interactive Program”

114. OBJECTIVE Be able to define terms and describe procedures for the proper inventory of merchandise

115. Inventory Control Terms Unit Control Dollar Control Basic Stock List Model Stock Plan

116. Inventory Control Systems Book Inventory (Perpetual) Physical Inventory

117. Inventory Control Book Inventory –A paper record –Subtract Sales –Add purchases –Doesn’t allow for Shrinkage –Information is collected by POS systems or paper records

118. Inventory Control Physical Inventory –Simply counting the products –Tedious & costly –Accurate

119. OBJECTIVE Be able to calculate the amount of profit earned per square foot of selling space allocated

120. Profit Calculation Terms Gross Profit Net Profit –Item –Stock Turn –Month –Year –Per Sq. Foot Floor Plan Square Feet of Selling Space

121. Profit Calculation Terms Store Owners are faced w/ a limited amount of space He/She wants as much profit as possible ( Mgrs. Job may depend on it! ) from that space Products take up space!!!

122. Profit Calculation Terms Products that make profit stay Products that do not make profit leave Most profitable products get the best space

123. Profit Calculation Formula Profit Per Square Foot of = Selling Space Total __Net Profit__ Square Ft. of Selling Space

124. Profit Calculation Formula SAMPLE PROBLEMS