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BBRC Merchandise Planning

Academy

PlaceSizeLocationLayout

ProductStyle/FashionIntensityAssortment

ValuePriceQuality

CommunicationsPositionalPromotional

PeopleServiceKnowledgeClimate

System

LogisticsSuppliers

ProductStyle/FashionIntensityAssortment

ProductIntensityAssortment

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4

The History of Merchandise

Planning.

Data versus Opinion

• Stock counters

• Store based replenishment

• Information technology

• Nationalisation

• Data versus opinion

• Globalisation

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6

Our Market/Philosophy

What's our market and why?

• MAINSTREAM is the positioning: we must

have success in the main market

• Don’t chase fringe, styles, sizing, colours

- Bed jackets

- Dance

7

Product Curve

Core Customer

(our market)

Fringe Fringe

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Your Role

Your Role

• Right product (P)

• Right place (MP + P)

• Right time (MP + P)

• Right quantities (MP)

You and your department are the data/facts.

The product team is the “fluffy/creativity”

What role does your CEO play in merchandise

planning?

11

• CEO is head of product

• Will be involved

• Must be involved

• Time allocation

Head of product

Product Merchandise

planning

Responsible For:

• Product and quantity

• How we display it

• What costs what

• What we sell it for

• Listen to merchandise planning

Responsible for:

• Supporting product team with right brain and data based thinking

• Look forward (option

based)

• Create product

• Fashion

• Ongoing

• Promotional

• Core

• GMROM

• GMROI

• Planograms

• Store product layout

• Supplier relationships

• Negotiation – cost

• Retail pricing

• Timing

• Order placement and

tracking

• OTB compliance

• Analysis

• Stock balancing

• Allocations

• GMROM

• GMROI

• Store rankings

• Category ranking within

store ranking

• Look back(data based)

• Recommend markdowns

• Managing OTB

• Input and

recommendations into

buying decisions,

merchandising, timing, etc

• Sense check

• Very trendy, generally more expensive than rest of assortment

• Image enhancer

• “One and done" (no replen: Sell-through or mark-down in short time

frame)

• Often bought to minimum order quantities

• Seasonal SKUs but less trendy than "fashion"

– product in store for 2-6 months

• Sell-through, but mark down to clear out at end of season

• Used to identify "new" anchors/basics

• Typically some replen

• Long-term styles

– carry through of >12 months, or cyclical

• Typically larger buys, with several Key Items

• Generally, largest profit share

• Sales driven by competitive pricing

• Replenishment and ensuring "never out of stock" critical

Basics

Fashion

Core

Assortment Mix

Your Role

14

• Measure, Measure, Measure - everything that matters

- People

- Product

• Analyse and act

• Min/max management - Monthly/Event

- Follow the life cycle of each SKU

- Up and down

- Cull/add fringe sizes

• Quarterly review of ongoing lines

• Quarterly review of store gradings

• Semi Annual Reviews (SARs)

• GMROM & GMROI

• Tail Management

• Replenishment - 96% in stock at store and SKU level

Measure Your Performance

• Measure yours and the brand’s performance

- Sell through %

- First margin, final margin

- % aged inventory

- % in stock of basics (replenishment) at store

and SKU level

- GMROM

- GMROI

- Weeks cover/ stock turns

If you do not understand or are not getting this info,

please do something about it

Know Your Stuff

• Know your business well, be on top of all

aspects of your role:

- Be interested

- Know the system well

- Know the quantity you sell by week

- Know what's on order and the quantity on

order

- Know the good, bad and ugly

These are all signs of your commitment and

confidence in your role

16

Training. Teaching

• Who does the training?

• Who is responsible?

• What happens if we don’t train?

• Is this a shared responsibility

17

What Do We Teach?

• Our business

• Our market

• Our customer

• The systems/processes

• Lead times

• Our culture

• Urgency

Replenishment / Repeats

Exercise

Topics we will cover in today’s session

✓ Formula versus outcome driven

✓ Our ‘pull’ system and what that means

✓ Allocations - how they work

✓ DNR (do not reorder) - methodology

✓ Stock smoothing/transferring

✓ MIN/MAX management

✓ Product lifestyles

✓ Markdowns - clearance store methodology

✓ Online

✓ Ongoing & Repeats

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Opening Truths

21

• The bra business is unique

• Size range is unique

• Requires different disciplines

o Longer life

o Wide customer base

• Has a unique cost versus benefit threshold

• Must be a focus

o Merchandise planning

o Operational excellence

o Data integrity

• One SKU, one store, one sale at a time

o Then repeat in multiple stores

• One in one out

• Keep it simple

Formula versus outcome driven

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▪ Issue we have to focus on: outcome

driven as opposed to formula driven

▪ See example on following slide

▪ Sweet spot between efficiency and

effectiveness

▪ Being outcome driven means having

stock

- In the right store

- In the right quantities

- ...and at the right time

Briefs examples

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8 10 12 14 16

1 1 1 1 1

1 1 3 2 1

- 1 2 2 1

1 2 2 1 -

2 2 1 - -

Outcome drivenFormula driven

Ideal SOH

BRIEFS 10 – 12

units

Pull vs Push

Discussion and commitment to our ‘pull’ system and what that means for Bras N

Things, when it's appropriate to push

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Go to RECAPS WEEK 36

• Line 600

• “New Lines” tab

• ITEM CODE: 11299304

CATEGORY DESCRIPTION COLOUR SEASON C.P. RRP STORESSALES U

LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM% Offer

Bottoms WISH BRAZ PINK 14W 1.76 14.99 182 335 243 114 13.8% $2,544 $1,941 76.3%

• Allocations

Order allocation

Store grading

Store turnovers

Category grading within store grading

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• Line 1109

• ITEM CODE: 217401

DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO

N C.P. RRP STORESSALES U LW

SALES U LW-1

SALES U LW-2

SALES U LW-3

SALES U LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM% TOTAL SALES

STORE SOH

Bras-Playboy Push UpELECTRIC BUNNY STN & LCE

BUNNY BRA BLACK 14W 11.38 64.99 176 204 212 116 6.3% $11,666 $9,344 80.1% 2,735

Stock smoothing/transferring up

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• Line 733



N C.P. RRP STORESSALES U

LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL


STORE SOH

Bottoms-Playboy Mini-VSECRET SOCIETY STN & LCE

MINI-V WHITE 14W 5.94 24.99 137 73 6.5% $1,594 $1,160 72.8% 782

• The very last SKU of any style should be sold through the location with the highest probability of selling

• Review of the current process of stock smoothing

• Progressively discontinue product

• Min units to transfer

• Frequency and rhythm

• Do we stock smooth ongoing lines?

• Do we stock smooth ‘sell out’ lines?

Product lifestyles – birth until death

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Methodology

• Trending - up and down

• Whole style vs stepped approach - by size and store gradings

• Add or delete sizes

• Timing/frequency

• Sign offs/ approvals

• Importantly, never zero model/Min Max fringe sizing or style until zero stock in DC


• “ONGOINGS” tab

• Line 126




LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL


Bras-Ongoing Contoured NINE TO FIVE MF CONT U/W BLACK ONG 7.45 49.99 192 101 127 122 142 133 1.7% $4,564 $3,830 83.9%

Product lifestyles – birth until death

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• Line 606

• ITEM CODE: 11299408


N C.P. RRP STORESSALES U LW

SALES U LW-1

SALES U LW-2

SALES U LW-3

SALES U LW-4

SELL THRU

LW

TOTAL SELL


STORE SOH

Bottoms-Ongoing

Offer Bottoms WISH B/LEG PINK 14W 2.01 14.99 176 221 178 75 8.7% $1,662 $1,209 72.7% 2,325


• “Ongoings” tab

• Line 5 & 35 & 121

• ITEM CODES: 10034401, 11273201 & 86902



LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM%

Accesories Lingierie

Accessories REVEAL ADHESIVE LIFT STICKER NUDE (SKIN) ONG 1.74 9.99 190 1,142 1,105 1,040 1,117 1,140 7.2% 78.4% $10,278 $8,337 81.1%

Accesories Washbag LINGERIE PRINT BAGWHITE/PINK (2

TONE) ONG 0.97 5.99 51 3 11 24 51 75 2.3% 99.7% $17 $15 83.3%

Bras-Ongoing ContouredNINE TO FIVE FULL CUP MF CONT

U/W NUDE ONG 9.04 49.99 189 162 150 183 189 202 7.1% $7,313 $5,873 80.3%

Markdowns

• Weeks cover is the only criteria to

determine the markdown price. Ignore

margin

• Clearance store methodology and

transferring

• Online clearance methodology and

transferring process

• Diligence is essential in sale periods for

stock smoothing

30

General discussion

31


• “ONGOINGS” tab

• Line 184 & 186

• ITEM CODE: 87902 & 82901

DEPARTMENT CATEGORY ITEM CODE DESCRIPTION COLOURSEASO


LW SALES U

LW-1 SALES U

LW-2 SALES U

LW-3 SALES U

LW-4

SELL THRU

LW

TOTAL SELL

THRU SALES $ GM$ GM%

Lingerie Extras-Ongoing Shapewear 87902

MICROFIBRE CUPLESS BODYSUIT BLACK ONG 9.12 39.99 190 37 30 27 31 19 2.1% $1,336 $1,072 80.3%

Lingerie Extras-Ongoing Shapewear 82901

MICROFIBRE HIGH WAIST LONG LEG BRF BLACK ONG 7.73 39.99 190 33 39 27 31 31 1.2% $1,199 $944 78.7%

Ongoing and basics reorders

• Methodology

• Minimums

• Frequency

• Forecasting

• Random check

• Regular and often… don’t over order

See hand out example

32

General

• Confirmation that online is the last place to

hold the very last SKU in a style and how

that occurs

• Ongoing: 95% in stock by location by SKU

• Grading - online AAA stands alone

33

Replenishment

One question related to replenishment

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Rules, Tips and Tricks

36

• Best sellers must have lower weeks cover

• Ongoing styles need to run tighter cover

• If we're not getting lower weeks cover on best

sellers we're not forecasting properly

• Stock smoothing (transfers/reallocations)


http://www.dusk.com.au/products/true-scent/default.aspx

On Fashion

Your first order is your best order:

repeats quite often fail

37

Never, never, never stop replenishing basics

(ongoing):

38

• Overspend

• Freeze on all orders

• No OTB

Basics are demand driven

Replenishment considerations are:• Sales rate

• Lead time

• Product cycle

• Being in stock

All new products are seasonal and one off, until

sales and customers say otherwise

39

There is not ‘a one size fits all’ methodology for

order forecasting, or replenishment

40

DC cover “buffer” is a flawed

process - it is actually the ‘we

screwed up’ cover

41

Address unacceptable MOQs –

smaller orders more frequent

42


43

Holding fabric, raw

materials or forward

order commitments

almost always ends in

tears

Don't think of an "all stores" and

"all product“ approach - one

at a time!

44

Stores

Go visit stores – with a plan

45

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Fast, Flat and Flexible

Structure

46

Less is more

• It’s too easy to fall into the trap of more and

more product

• Depth and width of ranging - we tend to go

too wide and too deep

• Less is more

- in allocations

- in ranging

- in order quantities

• A golden rule - ”one in, one out”

Less is more

We work our store space hard

• High stock intensity (width and depth)

• ‘Less is more’

How do these work together?

48

Why we mostly have too much stock and rarely,

too little

• Afraid to give something up

• Hang on to the last

• If we put in more options, we sell more

• Never range or range extend to fill space or

fixtures

Our Methodology

• Pull system versus push system

• Pull gives the best results for us

with few exceptions

Margin Management

• It’s not the first margin that matters, it’s the final

margin

• There is no secret formula on margin policy

51

Open to Buy

52

Why we have Open to Buy:

• It tells us exactly how much we are allowed to

spend on product each month

• Is the key control to prevent us from being

overstocked or understocked

• It’s a blunt instrument that forces communication

between merchandise planners, buyers, finance

and the CEO

Open To Buy

What is your role (merch planner) in open to

buy?

▪ Forecasting customer demand

▪ Forecasting replenishment of basics (ongoing)

▪ Make sure there is a %$ for when we find a

gold-vein or a ‘must have’

▪ Based on data, challenge the product team

53

Open to Buy

54

• Has failed on too many occasions

• Blunt instrument

• OTB is set around current trend % positive or negative

(not budget)

• CEO sign off/CFO audits

• 1% over trend is acceptable

• GM forecast secondary to sales, GM mustn’t be driver

in OTB, Sales is the primary metric

• Need to determine ideal stock holdings (build up and

decreases) by month fluctuations prior and post

Christmas etc

• Ongoing doesn’t have an OTB – it has a demand

requirement (sales rate and lead time) – demand

driven

What is Data Integrity?

55

• Data integrity is about how accurately the physical

product in our stores is reflected in our system

-Physical quantity of items versus system quantity

-Physical price of item versus system price

• Getting data integrity right is critical to sales

-Overstocks (mark downs)

-Missed sales

• Also important because future decisions/forecasts

are based on historic sales data – if this data is

wrong, we can end up making wrong decisions

• Fraud

What is Data Integrity?

56

• Data Integrity is everything

- You have to be paranoid

- If you see a negative stock on hand, action MUST

be taken

• Tending the garden - keep cleaning it up

• We need to be part of the solution - issues are

inevitable, it’s ongoing, correct it and stay positive

• Everything must go through the system

- No paper

- No workarounds

• Keep a tally/records

• Product hierarchy and descriptions need to be

accurate

• Our data is to be perfect

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Sale and Markdown

Sale and markdown

Clearing our product and quantity mistakes

• It is never an exact science but we can always do better

• Your first markdown is the best markdown

• The numbers never lie

- No emotion

- A dog is a dog

• Weeks cover drives your markdown, nothing else

- Margin does not

- Hopes and wishes do not

- Price pointing does not

• Once a week

• Use similar data from previous sales to determine what

will happen – proactive learning not reactive – but don’t

over think it!58

Sale and Markdown

59

When do you take second

markdowns?

Rules, Tips and tricks

• IOP

• What is its purpose?

61

ONE QUESTION

62

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