1. Lesson 8: Merchandising

2. Objectives  Give examples of the four main categories of merchandise  Explain the importance of stock lists and inventory control on merchandising  Describe how sales are affected by the strategic placement of merchandise throughout a store – including the store entry, checkout lanes, and back of the store  Analyze the financial impact of rearranging products

3. 1. What is Merchandising?  The coordination of buying merchandise that customers want in the proper quantities and then selling that merchandise at a price that customers are willing pay Also includes the skillful arrangement of where items are placed within a store

4. 2.Types of Merchandise  Staples  Fashion  Seasonal  Convenience

5. 3.Staple Merchandise  The ‘basics’ in your store  Stocked year round  Large portion of store sales  What customers need on an ongoing basis and sell well year after year  Ie: bread and eggs in a grocery store  Ie: socks and shoes in a department store

6. 4.Fashion Merchandise  Items that are stocked for several years and have solid sales over that time period  Eventually, fashion merchandise changes and customers will switch to buying different styles  Ie: skinny jeans, Wii, Tickle Me Elmo  Does NOT have to be clothing!

7. 5.Seasonal Merchandise  Items that sell well during particular times of the year that are stocked only for that selling period  Receive markdowns after selling season is over  Ie:

8. 6.Convenience Merchandise  Items customers buy without thinking very much about the purchase  Or, items purchased solely for the convenience of it being there  Can be purchased often or even daily  Ie:

9. 7.Stock Lists  Tools that retailers use to help them keep a close eye on the inventory they stock  Assist retailers with the task of maintaining correct quantities of merchandise  Itemized and detailed listings of the merchandise a store or department should have for sale Basic stock list Model stock list Never-out stock list

10. 8. Basic Stock Lists  Keeps track of the staple merchandise that the store should always keep in inventory (have a regular customer demand)  Notes a min. quantity that should always be in inventory and the number of items to be reordered when needed  Studied daily

11. 9.Model Stock List  Used to keep track of fashion merchandise  The list changes more often than basic stock list items, therefore is less detailed  Monitoring this will give valuable info about best pricing, styles, and colors of products

12. 10.Never-out Stock List  Used for all four types of merchandise  Keeps track of best-selling merchandise  Monitored frequently to ensure that popular items are always available in sufficient quantities  The list changes frequently (new items are added and less popular ones are removed)

13. 11.Merchandising and Sales  General rule of thumb: Plan for a ten percent increase over last year’s sales for the same time period Must consider current business circumstances when planning and act accordingly  There must be enough merchandise for customers to choose from  There shouldn’t be TOO much merchandise, it could overwhelm the customer

14. 12.Merchandising for Profit  Strategic placement of merchandise within the selling space is a big factor in generating sales  Staple merchandise usually has a permanent location and does NOT need to be in high traffic areas

15. 13.Store Entrance  Has the greatest customer exposure  Has the best chance of producing a large amount of sales

16. 14.Impulse Purchases  Small items that are purchased with little or no thought on behalf of the customer  Placed near entrance area, checkout area, and heaviest customer traffic areas  Ie: magazines, candy bars, gum

17. 15.Related Merchandise  Items that are related to each other and that usually sell together  If a customer buys one, they will likely buy the other  Should be located near one another  Ie: razors and shaving cream, peanut butter and jelly

18. 16.Key Math Concepts Planned Sales Increase = Last Year’s Sales X % Planned Increase New Estimated Sales = Last Year’s Sales + Answer from above Total Price Per Item Ordered = Quantity Ordered X Price Per Unit