lesson 8 merchandising virtual business retailing 3.0
TRANSCRIPT
LESSON 8MERCHANDISING
VIRTUAL BUSINESSRETAILING 3.0
In this unit, we will explore merchandising and its importance to store sales and profit
We will discuss merchandise plans, types of merchandise, and stock lists
Then we will learn how merchandising affects sales,
Lastly, we will review some merchandising math
After completing this lesson you will be able to: Give examples of the four main categories of
merchandise Explain the importance of stock lists and inventory
control on merchandising Describe how sales are affected by the strategic
placement of merchandise throughout a store—including the store entry, checkout lanes, and back of the store
Analyze the financial impact of rearranging products Calculate projected sales based on past sales data and
planned percentage increase
What Is Merchandising?
Involves the coordination of buying merchandise that customers want in the proper quantities & then selling that merchandise at a price that customers are willing to pay Customers want merchandise where they want to buy it Customers will often buy products where it is convenient Customers will occasionally overlook convenience when
the product is one that they want badly enoughA successful retailer will stock an assortment of
merchandise types that appeal to the customers’ various buying needs
Types of Merchandise
When planning the merchandise assortment for a store it is important to be aware of & understand the types of merchandise
Merchandise of all sorts can be grouped into 4 categories or types: Staple Fashion Seasonal Convenience
Staple MerchandiseThe basic stock of a storeStocked year roundComprises a good portion of store salesWhat customers need on an ongoing basis &
tend to sell well year after yearExamples:
Bread & eggs in a grocery store Socks & shoes in a department store
Fashion MerchandiseItems that are stocked for several years &
that have solid sales over that time periodExample:
Women’s capri pants – they have been selling well for several seasons & will probably continue to sell well for several more; eventually women will tire of them & will switch to buying a different style
Seasonal MerchandiseItems that sell well during particular times of
the year that are stocked only for that selling period
Once the selling period is over, unsold seasonal merchandise is marked down to encourage quick sales
Examples: Windshield wiper fluid in the fall & winter Sunscreen in the spring & summer
Convenience MerchandiseItems customer buy without thinking very
much about the purchasePurchased often or even on a daily basisExamples:
A cup of coffee A can of soda
Stock Lists
Itemized & detailed listings of the merchandise a store or department should have for sale
A tool that retailers use to help them keep a close eye on the inventory they stock
Assists retailers with the task of maintaining correct quantities of the 4 types of merchandise
Most retailers categorize their merchandise into 3 lists: A basic stock list A model stock list A never-out stock list
Basic Stock ListKeeps track of the staple merchandise that the
store should always keep in inventory (the items with regular customer demand)
Have a minimum quantity that should always be in inventory for each item on the list
Has the # of items to be reordered when needed
Benefits: Daily study of the list will help ensure that basic items
are always in stock & that no sales are lost
Model Stock ListUsed to keep track of items of fashion
merchandiseThese change more often than basic stock list
items so the list is not as detailedBenefits:
Gives valuable information about best-selling price points, styles, & colors
Never-out Stock ListCan be used for all 4 types of merchandisingUsed to keep track of the best-selling
merchandiseShould be monitored frequently to ensure
that these popular items are always available in sufficient quantities
List changes often as newly popular items are added & less popular ones are removed
Merchandising & Sales
Merchandising can have a decisive effect on sales in a store or department
Most retailers plan sales for their stores based on the sales for the same period in the previous year
The general rule in forecasting sales is to plan for a 10% increase over last year’s sales for the same time period Consider current business circumstances when
planning & act accordingly
To meet sales goals there must be merchandise for customers to buy There must be enough merchandise for customers to
feel that they are able to make a choice from an adequate selection
There must not be so much merchandise that customers are overwhelmed or unwilling to sort through very large quantities in order to make their merchandise selections
Merchandise for Profit
Retail selling space is a valuable commodity that retailers use to maximize store profits
The strategic placement of store merchandise within the selling space is a big factor in helping to generate merchandise sales & subsequent profits
Staple merchandise is generally placed in a permanent location & does not need to be placed in the heaviest customer traffic areas
Customers will seek out staple items, so placing them in a permanent location makes it easier for customers to locate them when making return visits to the store
Store EntrancePlacing the most appealing merchandise near
the front entrance of the store to get customers to come in is a basic merchandising principle
Benefits: Greatest customer exposure Best chance of producing the largest amount of sales
Impulse PurchasesUsually small items of merchandise that are
purchased with little or no thought on the part of the customer
Generally placed near the customer entrance, at the checkout area, & in areas of heaviest customer traffic so that customers can easily see them
Examples: Candy bars Breath mints
Point of purchase (POP) displays are sales promotional tools that are designed to encourage impulse purchasing & highlight special offers
Merchandise manufacturers usually supply these displays to retailers to promote the sale of their merchandise
Often used at the checkout area so that customers can easily add the item to their purchase
Related MerchandiseItems that are related to each other & that
usually sell togetherIf a customer buys one, they will usually buy
the otherShould be placed near each otherAdjacent placement reminds customers of a
possible need & makes it convenient for them to just pick up the other item & buy it
Examples: Razors & shaving cream
Key Math Concepts
Compute Planned Sales IncreaseMerchandising is a tool to help retailers
reach their sales goalsMost retailers plan sales goals as a
percentage increase of the previous year’s sales for the same time period
To compute planned sales increase, use this formula:
Planned Sales Increase=Quantity Ordered x Price Per Unit
Total Price Per ItemWhen placing reorders from the basic stock
list, the total price per item is computed using this formula:
Total Price Per Item=Quantity Ordered x Price Per Unit
Summary
In this unit we learned about merchandising & the types of merchandise stores stock
Next we learned about stock lists & how they can assist retailers in maintaining & monitoring stock inventory levels
We then discussed how merchandising affects store sales
Lastly, we reviewed some mathematics associated with merchandising