Merchandising Developing Merchandise Plans International Retail Management Activities involved in acquiring particular goods/ services and making them available at the places, times, prices, and in the quantity that enable a retailer to reach its goals. 14-2 Merchandising Philosophy selecting the right products, ordering the right quantity, having them in stock at the right time, displaying them in the right place in the store, and selling them at the right price Breadth, depth, quality of the assortment, store brands vs. national brands, pricing policies It should reflect Target market desires Retailer s institutional type Market-place positioning Defined value chain Supplier capabilities Costs Competitors Product trends 14-3 14-4 Merchandise Management Merchandising view Inventory control Assortments Pricing Financial objectives Analyze merchandising performance Employee utilization Planning promotions 14-5 14-6 1
Standard Merchandise Classification Merchandise Classification Merchandise Group The highest classification level Eg// Zara Apparel/Home Department The second level in the merchandise classification Zara Women/Men/TRF/Kids Classification Some retailers such as department stores may define categories interms of brands. Vans, Hummel, Converse are categories in Boyner Category Sportswear/Dresses/Swimwear/Outwear etc. 14-7 14-8 Category Management Category management is a merchandising technique used to improve productivity. It is a way to manage a retail business that focuses on the performance of product category results rather than individual brands. Retail managers make merchandising decisions that maximize the total return on the assets assigned to them. 14-9 14-10 Applying Category Management The Category Product Life Cycle A merchandise category s sales pattern over time. Shape of the life cyle can be affected from various factors Retailer s strategies Rate of adoption Prices Environmental factors etc. 14-11 14-12 2
Variations on the Category Life Cycle Staple merchandise Assortment merchandise Fashion merchandise Seasonal merchandise Fad merchandise Staple Merchandise Regular products carried by a retailer Grocery store examples: milk, bread, canned soup Not chanage much over time Basic stock lists specify inventory level, color, brand, style, category, size, package, etc. 14-13 14-14 Staple Merchandise Example: Milk Section in a Supermarket 14-15 14-16 Fad Merchandise Fad is a merchandise category that generates a lot of sales for a relatively short time- often less than a season. Fads are often illogical and unpredictable Furbys, Pokemon, Tamagotchi (digital pet), some computer games 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 14-17 14-18 3
Fashion and Seasonal Merchandise Neon Colors What are the possible fashion merhandise items in different kind of retailers? What are the possible seasonal merhandise items in different kind of retailers? 14-19 14-20 Fashion and Seasonal Merchandise Ramadan and Holy Feast Fashion and Seasonal Merchandise: Tchibo Case 14-21 14-22 Are jeans a fad, a fashion, or a staple? Structured Guidelines for Pruning Products Select items for possible elimination on the basis of declining sales, prices, profits, and appearance of substitutes Gather and analyze detailed financial/ miscellaneous data about these items Consider non-deletion strategies such as cutting costs, revising promotion efforts, adjusting prices, and cooperating with other retailers After making a deletion decision, do not overlook timing, parts and servicing, inventory. 14-23 14-24 4
Figure 14-5: Devising Merchandise Plans Forecasts These 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) 14-25 14-26 Forecasting Staple Merchandise Relatively constant from year to year Relatively predictable Based on historical sales Controllable factors affecting sales? Uncontrollable factors affecting sales? Forecasting in «Fashion Merchandise Categories» is challenging. WHY? 14-27 14-28 The Assortment Planning Process List of items that a retailer will ofer in a merchandise category VARIETY (BREADTH) ASSORTMENT (DEPTH) 14-29 14-30 5
An assortment can range from broad and deep (department store) to narrow and shallow (box store). Walmart s Wide and Deep Assortment 14-31 14-32 Decathlon s Narrow and Deep Assortment An assortment plan indicates that a buyer can purchase 1000 units of fashion wristwatches. The buyer must choose between buying 20 styles of 50 units each or 5 styles of 200 units each. In terms of the store s philosophy toward risk and space utilization, how does the buyer make this decision? Profitability of Merchandising Mix Physical Characteristics of Store and Layout Corporate Philosophy toward the Assortment Customer Demands 14-33 14-34 Micromerchandising Retailers adjust shelf-space allocations to respond to customer differences and other differences among local markets. «One size fits all» vs. Micromerchandising Walmart: Store of Community Program Placing merchandise in stores based on community demographics and preferences Micro-Merchandising works by defining local assortments for meeting specifically needs of the local customers 14-35 14-36 6
Cross-Merchandising 01.04.2017 Cross-Merchandising the practice of displaying products from different categories (or store departments) together, in order to get customers interested in additional items at the point of sale Retailers carry complementary goods and services to encourage shoppers to buy more. Cross Merchandising helps the customers to know about the various options which would complement their product Example: Shoe laces, shoe shiners, shoe racks with shoes 14-37 14-38 Top Tips about Cross-Merchandising Brands Group together products that are related in some way (Correlation - logical connection ) Create your product display around a central theme. The merchandise should be neatly arranged without giving a cluttered look to the store. If it s not performing well, don t be hesitant to make some changes. (Controling) Think like a customer. Ask yourself does this display make me want to buy the product? If you answered no, it s probably time to re-think your product display.!!! The holidays are a great time to cross-merchandise 14-39 14-40 Private Brands Private label brands (PLBs), also referred to as store brands, are brands owned by a retailer or wholesaler Private label growth has been driven by the expansion of large grocery retailers and propensity of customer preferences to buy less expensive products 14-41 14-42 7
Private Brands Private Brands Generally, private brands are 10-30 % cheaper than leading national brands (NBs) Premium PLBs are positioned in the same way as successful NBs Branded House (only retailer name used), House of Brands (only separate brand name used) 14-43 14-44 Figure 14-4a: Shelf Logic Software for Category Management Planning PLANOGRAM Schematic drawing of shelves and fixtures that helps in making the optimal use of available shelf-space in a retail store Figure 14-4b: Shelf Logic Software for Category Management Planning 14-45 https://www.youtube.com/watch?v=-jnxpgc8wik http://www.visualretailing.com/asda-george/ 14-46 Eye-tracking https://www.youtube.c om/watch?v=8sfo2akv 8Io 14-47 8