Developing Merchandise Plans
Venera Turaeva
Ruslan mamadaliev
Chapter Objectives
þ To demonstrate the importance of a sound merchandising
philosophy
þ
þ To study various buying organization formats and the
processes they use
þ
þ To outline the considerations in devising merchandise
plans: forecasts, innovativeness, assortment, brands,
timing, and allocation
þ
þ To discuss category management and merchandising
software
Retail Marketing Mix
While many elements may make up a firm’s retail
marketing mix, the essential elements may include:
Store location,
merchandise assortments
Store ambience,
customer service,
price,
Communication with customers
Definition
Merchandising consists of 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 goal
Merchandising=product + customer
Product: good care in buying it, it doesn’t come back
Customer: good care of your customers, they do come back
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
Scope of Responsibility
Full array of merchandising functions
Buying and selling
Selection, pricing, display, customer transactions
Focus on buying function only
Harry and David’s Merchandising Philosophy
Nike’s Own Store Merchandising Philosophy
Attributes and functions of buying organization
Level of Formality
Formal buying organization:
Informal buying organization:
Distinct task + department Not a distinct task, one person
responsible for both
Control over merchandise merchandising and other
retail tasks
Mostly used by big larger
Responsibility and authority
firms
are not always clear-cut
Used by informal
organizations
Degree of Centralization
Centralized: Decentralized:
all purchase decisions come purchase decisions made
from one office locally or geographically
Advantages: Advantages:
Integration of efforts Adaptability local conditions
Strict control Quick order processing
consistent image Improved personal morale
Staff support
Disadvantages:
Volume discount
Disjointed planning
Disadvantages:
Inconsistent image
Inflexibility Limited controls
Time delays Little staff support
Poor morale at local stores Loss of volume discounts
Excessive uniformity
Staffing
Buyer: responsible for selecting the merchandise to be carried by a
retailer and setting a strategy to market that merchandise, plans
proper merchandise assortments, styling, sizes, and quantities.
Sales manager: typically supervises the on-floor selling and
operational activities for a specific retail department.
Organizational Breadth:
General: one person responsible for all buying
Specialized: different personnel responsible for different product
categories, ex: dep.store having separate buyer for girls’, juniors’,
mothers’ clothes
Personnel resources:
Resident buying office: merchandise offices that provide valuable
data for retailers
Cooperative buying: several retailers buy cooperatively to get
discount and compete with large retailers
Functions performed:
Buying: buying & selling of the product
Merchandising: buying product
Devising Merchandise Plans
Forecasts
Forecasts are projections of expected retail sales for given
periods
Components:
Overall company projections
Product category projections
Item-by-item projections
Store-by-store projections (if a chain)
Types of Merchandise
Staple merchandise
Assortment merchandise
Fashion merchandise
Seasonal merchandise
Fad merchandise
Staple Merchandise
Regular products carried by a retailer
Department store staple examples
Jeans
Glassware
Watches
Grocery store staple examples
Milk
Bread
Canned soup
Assortment Merchandise
Apparel, furniture, auto, and other products 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
Model stock plan: popular size and colors
Fashion and Seasonal Merchandise
Fashion Merchandise: Products that may have cyclical sales due to
changing tastes and life-styles
Ex: hot colors
Seasonal Merchandise: Products that sell well over nonconsecutive
time periods
Ex: ski, bikini
Fad Merchandise
High sales are generated for a short time. It is hard to forecast
whether such products will reach specific sales targets and how
long they will be popular.
Innovativeness
An innovative retailer has :
1. A great opportunity- distinctiveness (by being 1st in the market)
2. A great risk-possible misreading customers and being stuck with
large inventories
Therefore, should assess the growth of the potential for each new
good/service they carry.
One tool to assess this potential is the product life cycle, which
shows the expected behavior of a good/service over its life
R&D at Wendy’s
Product Life Cycle
