Merchandise Planning

Dr. S. K. Singh

Merchandise Planning

“Goods well bought are half sold”

Merchandise Mgmt decisions

Should reflect:

– Target market desires– Retailer type– Market-place positioning– Supplier capabilities– Costs– Competitors– Product trends

Process of Merchandise planning

Developing the sales forecast

Determining the Merchandising requirements (Assortment planning)

Deciding on the Merchandise control i.e. Merchandise level

Deciding on the Merchandise allocation within a store or/and among various stores in the retail-chain.

ForecastsComponents:

• 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

Factors to Bear in Mind When Planning Merchandise Innovativeness

FACTOR RELEVANCE for PLANNING

Target market(s) Evaluate whether the target market is conservative or innovative

Goods/ service growth potential

Consider each new offering on the basis of rapidity of initial sales, maximum sales potential per time period, and length of sales life

Fashion trends Understand vertical and horizontal fashion trends, if appropriate

Retailer image Carry goods/ services that reinforce the firm’s image

-Contd. Factors to Bear in Mind When Planning Merchandise Innovativeness

FACTOR RELEVANCE for PLANNING

Competition Lead or follow competition in the selection of new goods/services

Customer segments Segment customers by dividing merchandise into established-product displays and new-product displays

Responsiveness to consumers

Carry new offerings when requested by the target market

Amount of investment

Consider all possible investment for each new good/service: product costs, new fixtures, and additional personnel

-Contd. Factors to Bear in Mind When Planning Merchandise Innovativeness

FACTOR RELEVANCE for PLANNING

Profitability Assess each new offering for potential profits

Risk Be aware of the possible tarnishing of the retailer’s image, investment costs, and opportunity costs

Constrained decision making

Restrict franchisees and chain branches from buying certain items

Declining goods/ services

Delete older goods/services if sales and/or profits are too low

Factors to Consider When Planning Merchandise Quality

FACTOR RELEVANCE for PLANNING

Target market(s) Match merchandise quality to the wishes of the desired target market(s)

Competition Sell similar quality or different quality

Retailer’s image Relate merchandise quality directly to the perception that customers have of retailer

Store location Consider the impact of location on the retailer’s image and the number of competitors, which, in turn, relate to quality

-Contd. Factors to Consider When Planning Merchandise Quality

FACTOR RELEVANCE for PLANNING

Profitability Recognize that high quality goods generally bring greater profit per unit than lesser-quality goods; turnover may cause total profits to be greater for the latter

Manufacturer versus private brands

Understand that, for many, manufacturer brands connote higher quality than private brands

Customer services offered

Know that high-quality goods require personal selling, alterations, delivery, and so on

Personnel Employ skilled, knowledgeable personnel for high-quality merchandise

-Contd. Factors to Consider When Planning Merchandise Quality

FACTOR RELEVANCE for PLANNING

Perceived goods/ service benefits

Analyze consumers. Lesser quality goods attract customers who desire functional product benefits; High-quality goods attract customers who desire extended product benefits

Constrained decision making

Face reality. Franchises or chain store managers have limited or no control over products; Independent retailers that buy from a few large wholesalers are limited to the range of quality offered by those wholesalers

Brands

Private(dealer or store)

Manufacturer(national)

Generic