Module 4

Retail Location
Strategic Retail Planning Process
Vision A vision statement identifies where the organization wants or intends to be in future or
where it should meet the needs of the stakeholders in the best way to. It describes dreams and
aspirations for future. For instance, Microsoft's vision is "to empower people through great
software, any time, any place, or any device." Wal-Mart's vision is "to become worldwide
leader in retailing". It is at the top in the hierarchy of strategic intent. It is what the firm
would ultimately like to become. A few definitions are as follows:
Kotler defined vision as "description of something (an organization, corporate culture, a
business, a technology and an activity) in the future". The definition itself is comprehensive
and states clearly the futuristic position. Miller and Dess defined vision as the "category of
intentions that are broad, all inclusive and forward thinking".
The definition lays stress on the following:
• Broad and all-inclusive intentions;
• Vision is the forward thinking process.
A few important aspects regarding vision are as follows:
• It is more of a dream than articulated idea.
• It is an aspiration of an organization. Organization has to strive hard and exert to achieve it.
• It is powerful motivator to action.
• Vision articulates the position of an organization which it may attain in distant future.

In order to realize the vision, it must be deeply instilled in the organization, being owned and
shared by everyone involved in the organization.

Mission
The mission statements stage the role that an organization plays in the society. It is one of the
popular philosophical issue which is being looked into business managers since last two
decades.

Definition
A few definitions of mission are as follows:
Hynger and Wheelen defines mission as "purpose or reason for the organization's existence".
David F. Harvey states "A mission provides the basis of awareness of a sense of purpose, the
competitive environment, degree to which the firm's mission fits its capabilities and the
opportunities which the government offers".

Thompson states mission as the "essential purpose of the organization, concerning "strategic
framework particularly why it is in existence, the nature of the business it is in, and the
customers it seeks to serve and satisfy"
The above definition reveals the following:
• It is the essential purpose of an organization.
• It answers "why the organization is in existence".
• It is the basis of awareness of a sense of purpose.
• It fits its capabilities and the opportunities which government offers

A mission statement differentiates an organization from the others by explaining its broad
scope of activities, its products, and technologies it uses to achieve its goals and objectives. It
talks about an organization's present (i.e., "about where we are"). For instance, Microsoft's
mission is "to help people and businesses throughout the world to realize their full potential".
Wal-Mart's mission is "to give ordinary folk the chance to buy the same thing as rich people."
Mission statements always exist at the top level of an organization, but may also be created
for various organizational levels. Chief executive plays a significant role in formulation of
mission statement.

Features of a Mission
• Mission must be feasible and attainable. It should be possible to achieve it.
• Mission should be clear enough so that an action can be taken.
• It should be inspiring for the management, staff and society at large.
• It should be precise enough, i.e it should be neither too broad nor too narrow.
• It should be unique and distinctive to leave an impact in everyone's mind.
• It should be analytical, i.e it should analyze the key components of the strategy.
• It should be credible, i.e all stakeholders should be able to believe it.

The strategic management process means defining the organization's strategy. It is also defined as
the process by which managers make a choice of a set of strategies for the organization that will
enable it to achieve a better performance. Strategic management is a continuous process that
appraises the business and industries in which the organization is involved; appraises its
competitors; and sets the goals to meet all the present and future competitor's and then reassesses
each strategy.
Strategic Planning Strategic planning is part of the strategic management process. Strategic
management entails both strategic planning and implementation, and is "the process of identifying
and executing the organization's strategic plan, by matching the company's capabilities with the
demands of its environment." Strategic planning comprises (see figure 1.1) the first 5 of 7 strategic
management tasks: (1) defining the business and developing a mission, (2) evaluating the firm's
internal and external strengths, weaknesses, opportunities, and threats, (3) formulating a new
business statement, (4) translating the mission into strategic goals, and (5) formulating strategies or
courses of action.

Define the Current Business:

Every company must choose the terrain on which it will compete—in particular, what
products it will sell, where it will sell them, and how its products or services will differ from
its competitors'. Rolex and Seiko are both in the watch business, but Rolex sells a limited
product line of high-priced quality watches. Seiko sells a wide variety of relatively
inexpensive but innovative specialty watches with features like compasses and altimeters.
Therefore, the most basic strategic decisions the managers make involve deciding "what
business" their firms should be in: For instance, in terms of the products or services they'll
sell, the geographic locales in which they'll sell them, and how they'll distinguish their
products or services from their competitors'.
They ask, "Where are we now in terms of the business we're in, and what business do we
want to be in, given our company's opportunities and threats, and its strengths and
weaknesses?" Managers then choose strategies—courses of action such as buying
competitors or expanding overseas—to get the company from where it is today to where it
wants to be tomorrow.

Perform External and Internal Audits:

Ideally, managers should begin their strategic planning by methodically analyzing their
external and internal situations. The strategic plan should provide a direction for the firm that
makes sense, in terms of the external opportunities and threats, the firm faces and the internal
strengths and weaknesses it possesses. To facilitate this strategic external/internal audit, many
managers use SWOT analysis. This involves using a SWOT chart like that in Figure 1.2 to
compile and organize the process of identifying company's strengths, Weaknesses,
Opportunities, and Threats.
Formulate New Business and Mission Statements:
Based on the situation analysis, what should our new business be, in terms of what products it
will sell, where it will sell them, and how its products or services will differ from its
competitors? What is our new mission and vision?
Translate the Mission into Strategic Goals:
Sayitig the mission is "to make quality job one" is one thing; operationalizing that mission for
your managers is another. The firm's managers need strategic goals. What exactly does that
mission mean, for each department, in terms of how we'll boost quality? As an example,
WebMD's sales director needs goals regarding the number of new medical-related content
providers—vitamin firms, hospitals, HMOs—it must sign-up per year, as well as ales revenue
targets. The business development manager needs goals regarding the number of new
businesses—such as using WebMD to help manage doctors' offices online—he or she is to
develop and sign. Similarly, Citicorp can't function solely with a mission like, "provide
integrated, comprehensive financial services worldwide." To guide managerial action, it
needs goals in terms of things like building shareholder value, maintaining superior rates of
return, building a strong balance sheet, and balancing the business by customer, product, and
geography.
Formulate Strategies to Achieve the Strategic Goals:
Again, a strategy is a course of action. It shows how the enterprise will move from the
business it is in now to the business it wants to be in (as laid out by its vision, mission, and
strategic goals), given the firm's opportunities, threats, strengths, and weaknesses. The
strategies bridge where the company is now, with where it wants to be tomorrow. The best
strategies are concise enough for the manager to express in an easily communicated phrase
that resonates with the employees.
Implement the Strategies:
Strategy implementation means translating the strategies into actions and results—by actually
hiring (or firing) people, building (or closing) plants, and adding (or eliMinating) products
and product lines. Strategy implementation involves drawing-on and applying all the
management functions: planning, organizing, staffing, leading, and controlling.
Strategic Evaluation or Control
This is the last step of the strategy making process. This is an ongoing process and
evaluation and control have to be done for future course of action as well. To get successful
results and to achieve organizational objectives, there has to be continuous monitoring of the
implementation of strategy. The evaluation and control of strategy may result in various
actions that the organization may have to take for successful well being, such actions may
involve certain kind of corrective measures concerned with any of the steps involved in the
whole process—be it choice for setting mission or objectives. The process of strategy
formulation is considered as a dynamic process wherein corrective actions are taken and
change is brought in any of the factors affecting strategy.
Evaluation of strategy is done by the top managers to determine whether their strategic choice
is implemented in a manner that it is meeting the organization's objectives. Evaluation
emphasizes the measurement of results of a strategic action. On the other hand, control
emphasizes on taking necessary action in the light of gap that exists between intended results
and actual results in the strategic action. When evaluation and control is carried out
efficiently, it contributes in three basic areas:
• Measurement of organizational process,
• Feedback for future actions, and
• Linking performance and rewards.
The board of directors, the chief executive and other managers all play a very important role
in strategy evaluation and control. Control can be of three types:
• Control of inputs that are required in an action, known as feed forward control.
• Control at different stages of action process, known as concurrent control.
• Past action control based on feedback from completed action known as feedback control.

RETAIL LOCATION
Retail stores should be located where market opportunities are best. After a country, region city or
trade area, and neighborhood have been identified as satisfactory; a specific site must be chosen
that will best serve the desired target market. Site selection can be the difference between success
and failure. A thorough study of customers and their shopping behavior should be made before a
location is chosen. The finest store in the world will not live up to it potential if it is located where
customers cannot or will not travel to shop.

Every retail store strives for its competitive advantage. For some stores, it is price. For others, it is
promotional expertise of the special services that are offered. Despite any differences among the
various stores that may competing for the shopper’s penny location offers a unique asset for all
stores because once a site is selected, it cannot be occupied by another store. This advantage,
however, points to the importance of location analysis and site selection. Once a facility is built,
purchased, or leased, the ability to relocate may be restricted for a number of years. In short,
location and site selection is one of the most important decisions made by a retail owner.

Importance of Location Decision

Location is a major cost factor because it
• Involves large capital investment
• Affects transportation cost
• Affects human resources
Location is major revenue factor because it
• Affects the amount of customer traffic
• Affect the volume of business
Factors affecting retail Location decision
Proper establishment of shop is very important for success in retail trade. While
deciding the location of a retail outlet the following factors should be taken into
consideration
1. Selection of the area Before commencing his business, a retailer should decide about
the area which he would like to serve. While deciding the area of operations, he should
examine the population of the area, its nature (permanent or shifting), income level of the
people, nearness to big markets, transport and communication facilities, etc. All these
factors will reveal the demand potential of the area.

2. Choice of the site Once the area is decided, a specific site is selected for location of the
retail shop. A retailer may open his shop in special markets or in residential areas. The
shop should be near the consumers in a congested locality or at a place frequently visited
by the consumers. The place of location should be easily accessible to consumers.

3.Scale of operation A retailer should decide the size of his business. Size will depend
upon his financial and managerial resources, capacity to bear risks and demand potential of
the area.

4.Amount of capital Then the retailer has to decide the amount and sources of capital.
The amount of capital required depends on the size of business, terms of trade, availability
of credit, cost of decoration of shop and display of goods. Adequate finance is necessary
for success in any business.

5.Decoration of shop The layout and decoration of shop are decided so that customers
find the place attractive and comfortable for shopping. The retailer should arrange and
display the goods in an attractive manner to attract more and more customers.

6.Selection of goods The goods to be sold are selected on the basis of the nature, status
and needs of the customers. Changes in incomes, habits and fashions of customers must be
considered in the choice of goods.

7.Source of supply The wholesalers and manufacturers from whom goods are to be
purchased must be selected carefully. Availability of supplies, reputation of the brand,
price range, and distance from the shop, means of transport, etc. should be considered.

8.Sales policy The retailer should adopt a suitable sales policy to increase sales and
profits. Sales policy and prices should be decided keeping in mind competition and
customers.
Site selection Analysis

Step 1 - Market identification: Analyze the market in terms of industry, product, and
competitors - How old is the company in this business? How many similar businesses are
there in this location? What the new location is supposed to provide new products or new
market? How far is the competitor’s location from the company’s prospective location?
Step 2 – Understand the Demographics – Literacy of customers in the prospective
location, age groups, profession, income groups, lifestyles, religion.
Step 3 – Evaluate the Market Potential – Density of population in the prospective
location, anticipation of competition impact, estimation of product demand, knowledge
of laws and regulations in operations.
Step 4 - Identify Alternative Locations – Is there any other potential location? What is
its cost of occupancy? Which factors can be compromised if there is a better location
around?
Step 5 – Select Site Finalize the best and most suitable Location for the retail outlet.

Retail Merchandising

What is Merchandising?
Merchandising is the sequence of various activities performed by the retailer such as planning,
buying, and selling of products to the customers for their use. It is an integral part of handling store
operations and e-commerce of retailing. Merchandising presents the products in retail environment
to influence the customer’s buying decision.
 Retail Merchandising refers to the various activities which contribute to the sale of products to
the consumers for their end use. Every retail store has its own line of merchandise to offer to
the customers. The display of the merchandise plays an important role in attracting the
customers into the store and prompting them to purchase as well.
 Merchandising helps in the attractive display of the products at the store in order to increase
their sale and generate revenues for the retail store.
 Merchandising helps in the sensible presentation of the products available for sale to entice the
customers and make them a brand loyalist.
merchandising is the planning involved in marketing the right merchandise at the right place at the
right time in the right quantities at the right price. To this definition, we can further add “marketing to
the right target customers.” This addition may give a completeness to the merchandising process.
Many Retailers would vouch for achieving the perfect balance among the right merchandise, right
place, right time, right quantity, and right price as a great challenge. Retailers who can achieve them
are surely successful in their ventur
Factors Influencing Merchandising The following factors influence retail
merchandising:

Size of the Retail Operations

This includes issues such as how large is the retail business? What is the demographic scope
of business: local, national, or international? What is the scope of operations: direct, online
with multilingual option, television, telephonic? How large is the storage space? What is the
daily number of customers the business is required to serve?
Shopping Options
Today’s customers have various shopping channels such as in-store, via electronic media
such as Internet, television, or telephone, catalogue reference, to name a few. Every option
demands different sets of merchandising tasks and experts.

Separation of Portfolios
Depending on the size of retail business, there are workforces for handling each stage of
merchandising from planning, buying, and selling the product or service. The small retailers
might employ a couple of persons to execute all duties of merchandising.

Seven Rights of Merchandising

Right Product
Right quantity
Right Service
Right place
Right Appeal
Right Price
Right time

Right Product
If you’re an existing multi-store retailer then your stores are already full of products. But are they the
right products? For most multi-store retailers the biggest working capital investment is in inventory.
One important method in determining if you have the right products is to analyse their return on
investment.
Right quantity
Allocating and replenishing the right quantities to maximize sales without disrupting display

Right Service
A big part of the modern retail mantra is service. Providing the right service can include having
enough well trained salespeople in your stores, but good service can be given in many other ways.
For example, if a customer enquires about a particular size or colour variation of an item but it’s not
available in that store, good service is the ability to advise the customer of the nearest store in your
chain that has the item. Even better, service is organising to take the customer’s details, have the
item transferred to the store the customer is in, and then advise the customer by SMS, email or
phone, that the item is in store awaiting pick-up. Great service is to offer for the customer to pay for
the item and then have it delivered directly to the customer.

If you’re a furniture or homewares retailer, great service is the ability to not only show your
customers the items you have in your showroom, but all other items you can supply. And once
customers choose their items, you can provide great service by keeping them informed, by email or
SMS, of any change in their order status, e.g. from waiting on delivery from supplier to in store
awaiting delivery scheduling.

Right place
Being a multi-store specialty retailer, you will know that there are substantial differences in your
stores including:
> Store size
> Gross profit generated
> Customer demographic served
Part of the solution to having your products in the right place is to determine the product
requirements for each store individually, or for each group of like stores.

Right Appeal
A very important aspect of modern retailing is promotions. A key aspect of any promotion is that it is
for a limited time and therefore is an additional reason to “buy now”. Unfortunately, many retailers
have virtually continuous store-wide sales, which over time, diminish or even eliminate the
additional reason to “buy now”. The other problem with store-wide sales is that during the
promotion the margin being made on sales is reduced store-wide.

A key element of a promotion is that the customer feels it is a rare event. Hence your promotions
should be, at the very least, restricted to only part of the merchandise in a store so that each
subsequent promotion can be on a different part of the merchandise. This has the additional
advantage over storewide sales in that customers are attracted to your store based on the
promotion, while any additional purchases they make that are not covered by the promotion, are at
full margin.

Right Price
If you’re a well-established multi-store retailer then you already know the factors to consider when
setting selling prices, including:
> Purchase price and all other costs associated with a product
> How many competitors sell the same or similar products
> Your positioning in the market – premium products at premium prices, discount value store, etc.

Right time
There are multiple ways of thinking about the right time for products. The most obvious is the time
of the year that you have a certain product available. For example, if you’re a clothing retailer it’s
important to have winter coats available as winter approaches and not during the summer months.

Getting product on display in your stores at the tight time is all about managing supplier and store-
distribution lead times, and even though lead times are reducing in some retail market segments,
there are a large number of retail market segments that still have to deal with long lead times.

The process of merchandise planning involves the following steps

1. Developing the Sales Forecast

Sales forecast is the projection of achievable sales revenue,

based on historical sales data, analysis of market surveys and trends and
salesperson’s estimates. Sales forecast also called sales budget, forms the
basis of a business plan, since the level of sales revenue affects practically
every aspect of a business. Forecasting involves what the consumer may
do under a given set of conditions.

A sales forecast may be made by the merchandiser based on the targets

given by the top management or may be handed down by the top
management itself depending on the retail organisation. A sales forecast
is the first step in determining inventory needs of the product or category.

The process of developing sales forecasts involves the following steps :

(a) Reviewing Past Sales : A review of the past sales records is necessary to establish if
there is any pattern or trend in the sales figures. A look at the sales figure of the past year for
the same period, would give an indication of the sales in the current year, given that the
conditions are constant.

b) Analysing the changes in the economic conditions : It is necessary to take into

account the changes happening at the economic front as this has a direct link to the consumer
spending patterns. Economic slowdowns, increase in unemployment levels etc, all affect
business,

(c) Analysing the changes in the sales potential : It is now necessary to relate the
demographic changes in the market to that of the store and the products to be sold.

(d) Analyse the changes in the marketing strategies of the retail organisation and the
competition : While creating the sales forecast, it is necessary to consider the marketing
strategy to be adopted by the organisation and the competition. Is there a new line of
merchandise to be introduced, a new store to be opened or an existing store to be remodelled?
All those factors are to be considered.

(e) Creating the sales forecast : Then, an estimate of the projected increase in sales is arrived at.
This is then applied to the various products/categories to arrive at the projected sales figures

2 Determining the Merchandise Requirements

Planning is essential to provide direction and serve as a basis of control for any merchandise
department. In order to be able to provide the right goods to the consumer at the right place
and time, one needs to plan a course of action. Planning in merchandise is at two levels.

(1) The creation of the merchandise budget and

(2) The Assortment Plan

There are two methods of developing a merchandise plan. They are top down planning and
bottom up planning. In top town planning, the top management works on the sales plan and
this is passed down to the merchandising team. In bottom up planning, individual department
managers work on the estimated sales projections. These are then added up to arrive at the
total sales figures.

The merchandise budget usually comprise of five parts

(a) The sales plan, i.e. how much of each product needs to be sold, this may be department
wise, division wise or store wise.

(b) The stock support plan, which tells us how much inventory or stock is needed to
achieve those sales.

(c) The planned reductions, which may need to be made in case the product does not sell.

(d) The planned purchase levels, i.e. the quantity of each product that needs to be procured
from the market.

(e) The gross margins (the difference between sales and cost of goods sold that the
department, division or store contributes to the overall profitability of the company.)

The assortment plan details the merchandise that will be sold in each product category, i.e.
the complete mix of products that will be made available to the consumer. This is the next
stage, after having determined the money available for the inventory.

Merchandise Hierarchy : Every retail organisation has a merchandise hierarchy, which is an

indicator of the manner in which product classification is done. It is a logical manner
depending on the manner in which the customers are likely to buy the products. It is a
disciplined way of grouping the merchandise mix at different levels, starting from a high
level grouping to the lowest level of Stock Keeping Unit (SKU). The grouping may at times
have even more than four five levels.
The merchandise hierarchy forms the platform needed to create the store merchandise mix.
The merchandising vision for the store dictates the different divisions and the lower rungs
that the store must have in the hierarchy.

Building the stores merchandise mix by following the concept of merchandise hierarchy has
its advantages.

(a) One can define in terms of ratios the mix of element at each level of the hierarchy.

(b) One can analyse and drill down through the rungs of the hierarchy to the problem areas,
if any upto SKU level.

(c) One can remove or add elements following security escalations.

3. Merchandise control – The Open To Buy : The purpose of the concept of Open to Buy is
twofold. First, depending on the sales for the month and the reductions, the merchandise
buying can be adjusted. Secondly, the planned relation between the stock and sales can be
maintained. When used effectively, open to buy ensures that the buyer-

(a) Limits overbuying and under buying.

(b) Prevents loss of sales due to unavailability of the required stock.

(c) Maintains purchases within the budgeted limits.

(d) Reduces markdowns which may arise due to excess buying.

When planning for any given month, the buyer will not be able to purchase the amount equal
to the planned stocks for that month. This is because there may be some inventory already on
hand or on order but not yet delivered.
4. Assortment Planning : Assortment planning is extremely important and challenging for
retailers.

Assortment has been defined .by Van Herpen as the combination of all products made
available in a store” and ‘a set of products offered within a product category’. These products
form a set because they share similar physical characteristics. Assortment Planning involves
determining the quantities of each product that will be purchased to fit into the overall
merchandise plan. Details of colour, size, materials, brand etc. have to be specified. The main
purpose of creating an assortment plan is to create a balanced assortment of merchandise for
the customer.

Various factors affect the assortment planning process. The first among these factors is the
type of merchandise that is to be stocked in the retail store. Merchandise may be classified as
basic or staple merchandise, fashion, convenience or specialty goods.

5.The Range Plan The aim of the range plan is to create a balanced range for each category
of products that the retailer chooses to offer. The process of range planning ensures that the
goals of the merchandise plan fall into specific lines, and many a times, the SKUs. Good
range planning should essentially take care of the following
  The number of items/options available to the customer should be sufficient at all
times and should be such that it helps the customer make a choice.
 The range planning process should ensure that overbuying and under buying is
limited.
 Sufficient quantities of the product should be available, so that all the stores can be
serviced and the product should be available at all stores across various locations

6.The Model Stock Plan : After determining the money available for buying, a decision
needs to be taken on what to buy and in what quantity. This results in the creation of the
Model Stock Plan. The model stock plan gives the precise items and quantities that need to be
purchased for each merchandise line. To arrive at the model stock plan, the buyer needs to
identify the attributes that the customer would consider in buying the product, then decide on
the levels under each attribute and finally, allocate the total money available or the units to
the respective item categories.

Open to Buy
Open to Buy and Unit Planning form the part of the merchandise planning process and need
to be considered as the continuation of the earlier unit discussed. This unit takes us into the
actual realm of the ordering process and hence needs separate attention from the buying and
merchandising team. The merchandising team details out their purchasing requirement
through the seasonal or yearly plan based on the planned sales, planned reductions, planned
EOM and planned BOM stocks. The Buying or The store operations management team figure
out how much they need to buy for the given month based on what is already available for the
given month. In this unit, you will learn about the importance of open to buy system in the
retail business and the unit planning for placing the orders. You will also learn about the
formats for replenishments and stock feedback.

Open to buy (OTB) is a system whereby the buyer or the merchandising team of the store
knows how much more they can buy based on the actual status as on date. OTB is also
known as how much to receive, so as to ensure that the purchasing determined at the start of
the season for the given month. The Purchasing should not go either very low or high as
compared to the change in sales position for the given month. The OTB is to be used as a
controlling process for ensuring at no point in time the inventory available in the store is
within the parameters. These Parameters are decided in the merchandising plan by the buyer
or the merchandising team. Thus, it is necessary that the store management must keep
constant tab on the inventory on hand. The buyer generally places order for the merchandise
to be received during a particular month much in advance. The suppliers or manufacturers of
the product show/present their collection for the season at least three months in advance to
the buyer. The buyer based on his purchase and merchandising plan places the order for the
required merchandise with the concerned suppliers.

The buyers as a matter of precaution do not place orders for 100 per cent of the store’s
requirement. It is necessary as the season may not turn up as expected and thereby resulting
into ordering excess inventory for the months of the season. Further, the buyer needs to keep
certain per cent of the purchase value balance for completing purchase position close to the
concerned month. This is done to take care of the following:
new styles/items which are in vogue or popular during a particular period/month and need to
be purchased for bringing in the freshness to the collection already on hand;
ii) as the season moves to close, the suppliers/manufacturers are ready to offer certain per
cent of rebate on new purchases;
iii) sometime certain styles/items may show fast movement and to take care of their
replenishments the retailer may need to take care of such purchases;
iv) the merchandising team may decide to go in for certain unplanned promotion. They may
like to promote certain items in some specific price range.
With the help of OTB, the buyer or the store management based on the actual sales
situation decides how much more to buy for the concerned month. They may also decide to
hold on the purchases further till the stock position is in balance with the sales position of the
store.

Generally OTB is calculated at retail value, but it can also be worked out in terms of
units. OTB can be defined as the amount of goods which needs to be purchased during a
given period. This ensures that the stock on hand at the end of the period is as per the closing
stock planned for the given period. Thus, for calculating OTB, we have to subtract the
merchandise on hand at a given point in time from the merchandise required at that point in
time.

Open to Buy = Merchandise Required as per Plan for the Given Period – Merchandise
Available at a Given Point in Time
OTB is the best tool available to the buyer or the merchandising planning team to
ensure that any unexpected situation can be brought under control with changes in new
purchases. This reduces the risk of excess stock and also to take care of change in consumer
demand or taste.