fundamentals of fashion merchandising

Fundamentals of fashion

MerchandisingUnderstanding Fashion,

Merchandising,Merchandise Management of Retail, Export

& Buying House.

Prashanth KC- Fashion Merchandising, AD VI, NIFT- Bengaluru.

Fashion


Fashion Accepted by a substantial group of people

at a given time , in a given place.


Understanding Fashion Movement

Fashion movement is the ongoing change in what is considered fashionable from acceptance to obsolescence (the rejection of a fashion in favor of a new one)

A fashion trend is the direction fashion is moving

OBSOLETE


The fashion cycle

•Fashion cycle: The ongoing introduction, rise, peak, decline, and obsolescence in popularity of specific styles or shapes.

•All styles that come into fashion rotate through the fashion cycle.

•Fashion acceptance can be illustrated using a bell-shaped curve.


Overall Fashion Cycle Variations . . . From Flop to Classic


The Fashion Cycle

IntroductionNew style is introduced (colors and textures)

RiseSlowly increases in popularity

DeclineDecreases in popularity (saturation)

ObsolescenceDiscarded for a newer style

PeakHeight of popularity; Worn by the majority of people (culmination)

ALSO KNOWN AS THE MERCHANDISE ACCEPTANCE CURVEPrashanth KC- Fashion Merchandising,

AD VI, NIFT- Bengaluru.

The fashion cycle (cont.)

•The cycles for some styles are exceptions to the bell-shaped curve.

•Flops: Fashions that are introduced and expected to sell but that are not accepted by consumers.

•Fads: Temporary, passing fashions that have great appeal to many people for a short period of time; styles that gain and lose popularity quickly.

•Classics: Styles that continue to be popular over an extended period of time even though fashion changes; styles that remain in fashion year after year.


Kurtis


Skirts


Fashion Classics


Fashion Fads


Cycle within Cycles


Recurring Cyclic Fashions

PLAT FORMS SHOESHOTPANTSPrashanth KC- Fashion Merchandising,


Stages of the fashion cycle (cont.)

Introduction: The first stage of the fashion cycle when new styles, colors, textures, and fabrics are introduced.

The new style may be accepted by a small number of people called fashion leaders.

Promotional activities include fashion shows and advertising in high fashion magazines.

Fashions are produced in small quantities at high prices. Retail buyers purchase limited numbers to see if the style

will be accepted.



Rise: The second stage of the fashion cycle when consumer interest grows and the fashion becomes more readily accepted by consumers.

Mass production brings down the price of the fashion, which results in more sales.

Styles are manufactured in less expensive materials and in lower quality construction than the original style.

Promotional efforts are increased in high fashion magazines to heighten consumer awareness.

Retail buyers order items in quantity.Prashanth KC- Fashion Merchandising, AD VI, NIFT- Bengaluru.


Peak (Culmination stage): The third stage of the fashion cycle during which a style is at its height of popularity.

The fashion is demanded by almost everyone because it is now within the price range of most consumers and is mass produced in many variations.

Each retailer tries to persuade customers that its version of the style is the best.


Stages of the fashion cycle (cont.)Peak (Culmination stage)

The style may have a long or short stay at this stage. Short-run fashions: Styles that are popular for a brief period

of time. Fads, usually lasting only one season Accepted and rejected quickly Teenagers’ fashions change the fastest and have the most

trends. Styles are easy for the manufacturer to produce and are

relatively inexpensive to the consumer. Styles typically have more details than seen in classics.


Stages of the fashion cycle (cont.)Peak (Culmination stage)

Long-run fashions: Styles that take a long time to complete the fashion cycle.

Classics, basics, and/or staple fashions Slow introduction, long peak, slow decline Styles have simple lines, minimal detail.



Decline: The fourth stage of the fashion cycle when the market is saturated and popularity decreases.

The fashion is overused and becomes dull and boring.

As the fashion decreases in popularity, retailers mark down their prices.

Promotions center around major clearance or closeout sales of the fashion.



Obsolescence: The fifth stage of the fashion cycle when the style is rejected, is undesirable at any price, is no longer worn, and is no longer produced.


Lengths of fashion cycles Cycles have no specific lengths. Recurring fashions: Styles which have been in

fashion at one time, gone out of fashion, and come back in fashion again. Fashion trends seem to recur about every generation or

every 20 to 30 years. Fashion cycles are less distinct now than in the

past.


Theories of Fashion Movement

TRICKLE UP TRICKLE ACROSS

TRICKLE DOWN

Fashion trends start at the top of the “social ladder”

Fashion trends start with the young or lower income groups

Fashion moves horizontally through similar social levels

Lower $

Higher $ Royalty Rich

White collar

Blue collar


Trickle-Down Theory18th-19th Century

Source of fashion ideas designers catered

to wealthy Fashion leaders

highly visible elite served as models for lower class

Direction down from elite

class to working class

Change of speed how quickly the

lower class could obtain and copy the elite

Dynamics of change drive for

differentiation and imitation


Mass Market Trickle-Across Essentials

Mass production Newest looks available

quickly Fast-paced

communication and mass media Style information

available to all at same time

Each social group has own fashion leaders


Trickle-Up Theory

Starts with young trendsetters

May be lower income groups

Fashion defined by street wear

Examples may include: Tattooing, body piercing,

“grunge” looks


1960’s Trickle-Across Within group at similar social level Vietnam Civil rights Integration Mass communication Mass media Growing middle class Availability of quick, easy knockoffs Mass production makes fashion

available at all price levelsPrashanth KC- Fashion Merchandising, AD VI, NIFT- Bengaluru.

Merchandise


Types of Merchandise Staple Goods – items that are constantly in

demand by customers. Examples are toothpaste, milk, or bread. Used consistently and replaced on a regular basis Sales are easily predictable because they are bought on

a consistent basis. Convenience Goods – small, inexpensive items

that customers purchase frequently. Examples are gum, bottled water, or magazines. Found in convenience stores, grocery stores or gas

stations.


Fashion Goods – items that are popular at a certain time. An example is clothing. Includes any item that comes in or out of style Retailer will maximize sales by acquiring the

product as it is gaining popularity Seasonal Goods – products that are

popular only at a certain time of year. Examples are swimsuits, boxed chocolates, or snow skis.


The Merchandise Mix Businesses must pay close attention to

their target market and must obtain, develop, maintain, and continually improve upon their merchandise mix. Components of the Mix

Merchandise Mix – made up of all the products that a business sells

Product Line – a group of closely related products that a business sells

Product Items – the products that make up a product line. A specific model or brand


Types of Merchandise Merchandise Mix Strategies

Development – develop new products to bolster the company’s image or to expand their market share.

Expansion – businesses can choose to add either new product items or new product lines.

Modification – altering a company’s existing product.

Deletion – may occur when a product is no longer useful, obsolete, not fashionable, or room is needed for another product.


Merchandising


Definition

AMA defines “The planning involved in marketing the right merchandise at the right place at the right time in the right quantities at the right price.”


Mantra of Merchandising Achieving the five Right is the key to

successful merchandising and many a times, this remains an elusive goal for most retailers.


Definition 2 Merchandising management can be

termed as “Planning, analysis, acquisition, handling and control of the merchandise investments of a retail operation”


Explanation of the Definition Analysis: because retailers must be able

to correctly identify their customers before they can ascertain consumer desires and their needs/requirements for making a good buying decision.

Planning is important because merchandise to be sold in the future must be bought now.


Contd. Acquisitions because the merchandise

needs to be procured from others, either distributors or manufactures.

Handling involves seeing that the merchandise is where it is needed and in the proper condition to be sold.

Control is required since the function of merchandise involves spending money for acquiring products it is necessary to control the amount of money spent on buying


Merchandise Planning


THE CARDINAL SIN OF FASHION MERCHANDISING IS TO BE OUT OF TREND


MAIN PRINCIPLES AND DYNAMICS OF FASHION

The constant in fashion is change Changes in fashion are gradual and

evolutionary rather than revolutionary. Fashion is cyclical Customers make fashion Acceptance level of fashion vary Fashion depends on place and reflects

lifestyle


INTERPRETING INTERPRETING CONSUMER CONSUMER DEMAND DEMAND


TARGET MARKET

BUYING MOTIVATIONS

Elements of Customer Demand


Identifying Target Market

Behavioral

Geographic

Psychographic

Demographic

Market Segmentation


Demographic SegmentationMainly grouped on the basis of:- Population Age Income Sex Occupation Education


Geographic Segmentation

Mainly grouped on the basis of:- Cities States Regions

Climate plays an important role


Psychographic Segmentation

Grouped on the basis of the lifestyle- Social activities Interests leisure pursuits needs and wants

People having similar lifestyles can make up a target market group.


Behavioral Segmentation

Grouped on the basis of opinion on specific products or services-

Rating of usage of products & services.

Help in improving the service/product and make it different from others.


DETERMINIG WHY CUSTOMERS BUY

BUYING MOTIVATIONS

RATIONAL MOTIVATIONS EMOTIONAL MOTIVATIONS

•Durability

•Dependability

•Comfort

•Economy of Operation

•Price

•Imitation

•Emulation

•Prestige

•Pride of Appearance

•Distinctiveness


FASHION PURCHASESSPECIFIC SELECTION FACTORS

Silhouette- Degree to which an item is considered moderate or extreme in form in relation to the currently popular shape or form of such products.

Decoration or trim- Presence or absence of all types of ornamentation

Material/Fabric-Quality of fabric

Surface interest- Texture, Hand feel

Color-Actual hues used

Workmanship- construction, stitching, finishing


Size- Preciseness of Fit

Sensory factors- Touch, Taste, Smell, etc.

Ease and cost of care

Brand- Identity of manufacturer or distributor of an item

Utility- Extent of usefulness and service

Appropriateness-Degree of suitability and acceptability

Price- Value placed by individual customerPrashanth KC- Fashion Merchandising,


The Uniqueness of Fashion Merchandising Obsolescence factor. Higher markdowns Faster turnover Seasonal factor Sales promotion.


Key targets of a merchandiser Sales

By Units By Rupees ( Dollars)

Inventory Stock turnover Percent Shortage to net sales Old goods Vs. new Goods

Margin results Initial markup ( cost- original retail) Gross margin ( net sales- cost of goods sold) Controllable margin ( gross margin- direct department

expense) Operating profit ( Gross margin- ( cost of sales+ operating

exp.Prashanth KC- Fashion Merchandising,


Functions of Merchandisers at Shopper’s stop

Inventory-turn Management Achieving Sales & Margins Plans Merchandise Availability

Management, as per range plan Merchandising strategy & planning Processing of purchase orders Analysis of Data & Sales Budgeting Profitability Targets & Expense Control Vendor/Supplier relations for both, in-

house products as well as for brands.


Fashion Industry- Levels of Merchandising


Fashion Industry- Types of Merchandising

Retail Organization Merchandising

Buying Agency Merchandising

Export House Merchandising


What is Merchandising?

IN RETAIL ORGANISATION- Merchandising is a specialized management function within the

fashion industry. It is the business that moves the world fashion from designers showroom to retail sales floor and into the hands of consumers.

It is the internal planning that takes place within a retail organization in order ensure adequate amount of merchandise are on hand to be sold at prices that the consumers are willing to pay to ensure a profitable operation.


Marketing Vs Merchandising

Marketing functionMarketing function Focuses on broadly defining a company’s market and characteristics. It pinpoints new opportunities for growth through self analysis and market research and promotes company’s image and products.

Merchandising functionMerchandising function is more specific concerning itself with the development, execution and delivery of the product line with its close ties with the market it serves. Merchandising is not only able to adjust to market variations rapidly but is capable of actually anticipating and helping to create market changes.


MerchandiserMerchandiser is a person who get converted inspiration into design , use technology to conceptualize and address the planning , production, promotion and distribution of products in the fashion industry to meet the consumer needs and demands


FASHION RETAIL ORGANISATIONS

Organizational Structure & Responsibility


Organizational structure includes the clear understanding of the authority and

responsibility for each job to be done.

Organizational system differs with the difference in type of merchandise, size of retail firm, and

target customer.


Various Fashion Retail Businesses

Three basic Formats- The Small Single- Unit Store The Departmentalized Store The Chain Store

The Specialty Store, Discount Store are also few of the other formats


Major Divisions & Responsibilities

Merchandising division- buying, merchandise planning and control, selling, fashion coordination

Sales and promotion division- advertising, visual merchandising, special events, publicity and public relations

Finance and control division- credit, account payable, and inventory control.

Operational division- maintenance of facilities, stores and merchandise protection, personnel, customer service and receiving and marking of merchandise.

o Personnel and Branch Store Division may function separately if the store operations are very large.


Stock holders

Board of Directors

President

Vice President and General Manager

Merchandisingdivision GMM

Sales PromotionDivisionSales Promotion Manager

Finance andControl DivisionTreasurer &Controller

Operating DivisionStoreSuperintendent

Personnel DivisionPersonnel Director

Branch storesExecutive in charge of branches

STAFFLegal counsel research department

STAFFOther advisory services

-BUYING OFFICES-COMPARISON BUREAU-DIVISIONAL MANAGERS -department managers -assistant buyers -sales people-FASHION COORDINATORS-HOME PLANNING BUREAU-MERCHANDISE PLANNING & CONTROL-MERCHANDISE RESEARCH

-ADVERTISING DEPARTMENT -artists -copywriters -direct mail -layout -radio & television-DISPLAY DEPT. -Interior displays -sign room -window displays -exterior displays-PUBLIC RELATIONS -news releases -public fashion shows -special events -use of auditoria

-ACCOUNTING OFFICE -a/c payable -cash office -general a/cing -inventory taking -insurance & taxes -payroll office -sales audit -statistical-CREDIT OFFICE -bil ling customers -cashiers in office -charge a/cs -charge authorization -credit interviewers -defered payments-CREDIT UNION-EXPENSE CONTROL-LAYAWAY OFFICE-MERCHANDISE STATISTICS

-ADJUSTMENTS-ARCHITECT’S OFFICE-CUSTOMER SERVICE -sales people -service desk -telephone & mail orders -bridal registry-DELIVERY-ELEVATORS-MAIL DIVISION-MAINTENANCE-PACKING & PICK UP-PRINTING-PURCHASING DEPT.-RECEIVING & MARKING-RESTAURANTS-STORE PROTECTION-TRAFFIC DEPT.-WAREHOUSE-WORKROMS

-EMPLOYMENT OFFICE -interviewing -placement -termination-HOUSE ORGAN-PERSONNEL BUDGETS-PERSONNEL TESTING-RECORDS & REVIEWS -budgets & records -job analysis -rating & reviews-TRAINING -induction & system -on the job-WELFARE & HEALTH

-Audit-credit-store planning-maintenance-receiving-transfer of merchandise-employment training-merchandising-sales planning-advertising-displays-special events-liaison with main store


The Merchandising DivisionGeneral Merchandise Manager (GMM)

Divisional Merchandise Manager (DMM)

Merchandise Managers (MM)

Buyers

Assistant Buyers

Trainees

Hard Line

Soft Line


Qualities of a Fashion Buyer

Dedication Enthusiasm Awareness Stamina Foresight Creativity

• Product Knowledge• Decision-making skill• Mathematical ability• Communication skills• Negotiation skills• Managerial skills


Work Area of a Fashion Buyer

Liaising with suppliers (immediate vendor) Liaising with internal departments

Quality Control/Tech

Finance

Marketing/PR Retail Sales people

Fabric technology

Design

Buying Colleagues

Buyer


THE BUYER’S JOB

Planning Buying Selling


Planning Based on 2 factors

-How much the store expects to sell?-How much inventory is needed to achieve that sales goal?

The buyer must plans stocks so that the store image is reflected in the merchandise.

Preparation of 6 months buying plan with knowledge of fashion trends, market conditions, economic factors, other records of the past seasons.

Flexibility is the most important factor to be kept in mind.

Includes provision for constant adjustment to actual results.


Buying

Adequately stocking the department’s price lines and securing the best possible mark ups on all purchases.

Supervising the physical inventory or stock counts to verify the accuracy of stock records.

Establishing and maintaining effective buying relationships with vendors.


Selling

Communication and promotional activities.

Determining the selling features of the merchandise for promotion purposes and the timing of these promotions.


What is the difference between Buyer & Merchandiser ?


The buyer’s role in USA includes the administrative and financial input part also besides core buying responsibility.

In USA buying is often a subdivision of the merchandising team, whereas in many companies in UK, Buying is perceived as central role and merchandising as parallel department to buying.

Job Details for both these profiles are different with different organizations and are quite overlapping but all fashion buyers are responsible for overseeing the development of range of products aimed at a specific type of customer and price bracket.


BUYING PATTERNS


CENTRAL BUYING

The centralization of all buying activities from a central headquarters with the authority and responsibility for the selection and purchase of merchandise limited to buyers of particular merchandise categories


Three Forms of Central Buying

The central merchandise plan The warehouse and requisition plan The price agreement plan


The central merchandise plan

Central buying assumes complete authority for buying the assortment of goods, pricing, warehousing and distribution to the many stores.

Central make their purchases and have the merchandise delivered to the warehouse. Buyer has an opportunity to check the goods to be sure they have been shipped as ordered.


ADVANTAGES- It provides a steady flow of merchandise provides

for specialists in each merchandise category. Goods are inspected before delivery. It allows better stock control.

DISADVANTAGES- Adjustment to local conditions is difficult Cooperation may be lacking An enthusiastic selling force may be lacking

The central merchandise plan


The warehouse and requisition plan The central buyer arranges for the initial

assortment and has the merchandise shipped to the individual stores. Used for staple goods.

The store manager is provided a list of the stock that is inventoried in the warehouse where the central buyer will see it is properly filled.

The store manager has the responsibility for ordering enough merchandise to carry the store through the buying season.


ADVANTAGES- Gives the store manger some responsibility in merchandise

selection. Reorders or fill-ins are usually filled promptly.

DISADVANTAGES- There is little control over the composition of the merchandise

selection. Poor warehouse control may lead to an imbalance in store

inventory.

The warehouse and requisition plan


The price agreement plan

Central buyer working with vendors and manufacturers will agree on the retail price, color, size, style and assortment of staple types of merchandise as well as the terms of shipping.

The merchandise is illustrated and described adequately in catalog to be given to store manager.

The central buyer is responsible for prearranging the minimum amount of goods to be purchased by the entire chain, keeping the store catalog up to date, adding new items, canceling old items.

The store manager has complete authority for the composition of the stock and orders can be placed directly with the vendors concerned.


ADVANTAGES- It develops a feeling of responsibility on the part of the store

manager. Reduces the expense of warehouse and the necessity of keeping

detailed records of each unit.

DISADVANTAGES- Problems arise with tardy deliveries and with high transportation

cost.

The price agreement plan


SOURCING


Suppliers of Fashion Goods

Suppliers of Fashion Goods

Suppliers from Domestic Market Suppliers from Foreign Markets

Local ManufacturersImporter wholesaler

Exporter Foreign selling agentsResident buying Office

Import trade fairs

Buying trips abroad to market & Manufacturers

Foreign Buying OfficeForeign trade fairs


Advantages of Domestic Manufacturers

Delivery Proven specification Availability of merchandise in selected quantities Availability of reorder Very close control on the merchandise planning and production Accommodation of changes due to any reason is easy Planning and control of stock relatively easy Permit the stock adjustment to new trends


BUYING FOREIGN MERCHANDISE


Objectives Of Foreign Buying

Prestige- image store & Uniqueness

Better quality

Lower cost

Specification buying


Foreign Buying Problems

Variation of quality standards

Deliveries and reorders

Size discrepancy

Monetary problems

Time involved

Other conditionsPrashanth KC- Fashion Merchandising, AD VI, NIFT- Bengaluru.

Other Problems Language Barriers

Unethical practices (e.g. Child Labor)

Political unrest


Methods Of Buying Foreign Merchandise

Domestic importers

Resident buying office

Foreign selling agents

Import trade fairs

Domestic sources

Liaison Offices

Foreign buying offices

Foreign sources

Direct Exporters


Domestic Importers/Wholesalers

Stockers of foreign merchandise Prove to be more useful for smaller stores Goods can be bought closer to the time of need Risk involved lies with the importer Costs higher than direct buying Offers less exclusivity No concessions are offered Very small qty. of merchandise can also be purchased. Sells through showrooms or directly from warehouse


RBO situated in the same place where the retailers are. RBO has many retailers as their members. RBO also offers trend inputs in forms of periodicals and catalogues

to the members. Goods are sourced keeping the member stores and their target

customers in mind. The orders can be large or small as they can absorb Group purchasing plan is also offered which lowers the cost for the

participants. Commitments must be made far in advance of the selling season Risk & problems of off shore sourcing are managed by RBO.

Resident Buying Office (RBO)


Foreign selling agents They are a group of foreign manufacturers who may or may

not carry stock in the importing country.

They make periodic trips abroad to be up to date with the foreign market developments.

Buyer can actually see the merchandise with the styling and uniqueness.

Orders need not be large as many orders are compiled together before sending

No guarantee of quality standards, size discrepancies etc.


Import Trade Fairs

• Fairs organized in the importing countries with the goods from the exporting countries

• Some trade fairs feature the fashion merchandise of only one country, such as Italian Donna Moda.

• Although there is an advantage in being able to view so many lines in one place, because of space limitations ,most manufacturers can only show a small portion of what they can manufacture.


LIAISON OFFICE

• Store owned foreign buying offices• Located in major fashion centers & in exporting

bases of the world• Advise buyers about new trends• Accompany buyers on their market visits acting as

interpreters and planning market itineraries• Because of their broad & strong base in the local

market they get the best resources according to the need of the buyer

• Function as a follow up service to ensure prompt delivery and quality control

• Each liaison office works as a separate profit centre• Types of stores that have such offices are –

GAP,NIKEPrashanth KC- Fashion Merchandising,


Foreign Buying Offices

Generally located in a major city of the foreign buying area and facilitates indirect exporting

They are independent buying agencies and are also known as Foreign Commissionaires

They work for many buyers/retailers They often organize buyer manufacturer meet in their offices and

also take the buyers to visit manufacturer's’ facilities. They must have very strong vendor base with them. They do not make purchases for the client unless authorized to do so The client pays them fee usually a percentage of the first cost They then follow up to make sure the delivery is made on time and

the quality is checked


Direct Exporters The manufacturer- exporter undertakes the entire

export process. Increases its profit margin by saving on payments to

an intermediary Develops a closer relationship with the overseas

buyer. Cost of establishing another market may overweigh

the monetary benefits of direct exporting The exporter may be exposed to more direct risks.


MERCHANDISING RESPONSIBILITIES IN BUYING & EXPORT HOUSES


Export House

Coordinator of all activities at the manufacturer's end

Correspondence with buying Agencies Could be handling many buyers at a time Takes care of PD, sampling, costing, negotiations,

delivery schedules, production planning, fabric and trim orders, regular follow up.

Sources of information are limited as compared to buying house merchandiser

Is directly responsible for the merchandise Ensuring inspections and quality levels.


Buying House

• Could be looking after one account/ one division of a buyer but many vendors

• Product exposure is much more• Depends for all information on vendors• Are responsible for- PD, sampling, costings,

negotiations,delivery schedules, production planning• Responsible for vendor selection and development


fundamentals of fashion merchandising

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