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Merchandise Management: Buying and Handling the
Merchandise MixChapter 9
Goals for Chapter 9
Goals for Chapter 9
Describe a Merchandise Logistic System
Goals for Chapter 9
Describe a Merchandise Logistic System
Discuss Merchandise Buying Process
Goals for Chapter 9
Describe a Merchandise Logistic System
Discuss Merchandise Buying Process
Discuss Merchandise Ordering Process
Goals for Chapter 9
Describe a Merchandise Logistic System
Discuss Merchandise Buying Process
Discuss Merchandise Ordering Process
Discuss Merchandise Handling Process
Goals for Chapter 9
Describe a Merchandise Logistic System
Discuss Merchandise Buying Process
Discuss Merchandise Ordering Process
Discuss Merchandise Handling Process
Examine 21 Common Buying Errors
Retail Logistics
Retail Logistics
“The process of managing the integrated flow of merchandise from buying, through distribution, into the retail store, and ultimately into the hands of the consumer”
Retail Logistics
“The process of managing the integrated flow of merchandise from buying, through distribution, into the retail store, and ultimately into the hands of the consumer”
Consists of three subsystems
Retail Logistics
“The process of managing the integrated flow of merchandise from buying, through distribution, into the retail store, and ultimately into the hands of the consumer”
Consists of three subsystems
Merchandise Buying
Retail Logistics
“The process of managing the integrated flow of merchandise from buying, through distribution, into the retail store, and ultimately into the hands of the consumer”
Consists of three subsystems
Merchandise Buying
Merchandise Ordering
Retail Logistics
“The process of managing the integrated flow of merchandise from buying, through distribution, into the retail store, and ultimately into the hands of the consumer”
Consists of three subsystems
Merchandise Buying
Merchandise Ordering
Merchandise Handling
Merchandise Buying
Merchandise Buying
Four step process
Merchandise Buying
Four step processIdentify sources of
supply
Merchandise Buying
Four step processIdentify sources of
supplyContact sources of
supply
Merchandise Buying
Four step processIdentify sources of
supplyContact sources of
supplyEvaluate sources of
supply
Merchandise Buying
Four step processIdentify sources of
supplyContact sources of
supplyEvaluate sources of
supplyNegotiate with sources
of supply
Buying Process
Buying Process
Some considerations:
Buying Process
Some considerations: Manufacturer versus
Wholesaler as vendor
Buying Process
Some considerations: Manufacturer versus
Wholesaler as vendor Determine suitability of
product - quality, colors, durability, etc.
Buying Process
Some considerations: Manufacturer versus
Wholesaler as vendor Determine suitability of
product - quality, colors, durability, etc.
Determine suitability of Distribution - available, order time, consistency, etc.
Buying Process
Some considerations: Manufacturer versus
Wholesaler as vendor Determine suitability of
product - quality, colors, durability, etc.
Determine suitability of Distribution - available, order time, consistency, etc.
Price
Buying Process
Some considerations: Manufacturer versus
Wholesaler as vendor Determine suitability of
product - quality, colors, durability, etc.
Determine suitability of Distribution - available, order time, consistency, etc.
Price Promotional support
Buying Process
Some considerations: Manufacturer versus
Wholesaler as vendor Determine suitability of
product - quality, colors, durability, etc.
Determine suitability of Distribution - available, order time, consistency, etc.
Price Promotional support Service support
Methods of Merchandise Planning
Methods of Merchandise Planning
Gross margin Return on Inventory (GMROI)
Methods of Merchandise Planning
Gross margin Return on Inventory (GMROI)
Basic Stock Method
Methods of Merchandise Planning
Gross margin Return on Inventory (GMROI)
Basic Stock Method Percentage Variation
Method
Methods of Merchandise Planning
Gross margin Return on Inventory (GMROI)
Basic Stock Method Percentage Variation
Method Weeks’ supply Method
Methods of Merchandise Planning
Gross margin Return on Inventory (GMROI)
Basic Stock Method Percentage Variation
Method Weeks’ supply Method Stock to Sales Method
Determinants of Merchandise Mix
Determinants of Merchandise Mix
Variety
Determinants of Merchandise Mix
VarietyBreadth
Determinants of Merchandise Mix
VarietyBreadthDepth
Determinants of Merchandise Mix
VarietyBreadthDepthConstraints
Determinants of Merchandise Mix
VarietyBreadthDepthConstraints
Finances
Determinants of Merchandise Mix
VarietyBreadthDepthConstraints
Finances Space
Determinants of Merchandise Mix
VarietyBreadthDepthConstraints
Finances Space Turnover
Determinants of Merchandise Mix
VarietyBreadthDepthConstraints
Finances Space Turnover Market
Exhibit 9.1
Dimensions of and Constraints on Optimal Merchandise Mix
Dollar Merchandise Constraints
Merchandise Turnover Constraints
Space Constraints
Market Constraints
Optimal Merchandise Mix
Variety
Depth
Breath
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
Pricing by Vendors
Pricing by Vendors
List prices (remember Robinson-Patman)
Pricing by Vendors
List prices (remember Robinson-Patman)
Trade Discounts
Pricing by Vendors
List prices (remember Robinson-Patman)
Trade Discounts Quantity Discounts
Pricing by Vendors
List prices (remember Robinson-Patman)
Trade Discounts Quantity Discounts Seasonal Discounts
(Deals)
Pricing by Vendors
List prices (remember Robinson-Patman)
Trade Discounts Quantity Discounts Seasonal Discounts
(Deals) Cash discounts
Pricing by Vendors
List prices (remember Robinson-Patman)
Trade Discounts Quantity Discounts Seasonal Discounts
(Deals) Cash discounts Promotional allowances
Pricing by Vendors
List prices (remember Robinson-Patman)
Trade Discounts Quantity Discounts Seasonal Discounts
(Deals) Cash discounts Promotional allowances Who pays the freight
Merchandise Ordering
Merchandise Ordering
Traditional Purchase Order System (often adversarial relationship)
Merchandise Ordering
Traditional Purchase Order System (often adversarial relationship)
Quick Response System - uses computer technology (partnership of vendor and retailer)
Merchandise Ordering
Traditional Purchase Order System (often adversarial relationship)
Quick Response System - uses computer technology (partnership of vendor and retailer)
Electronic Data Interchange - technology connecting retailer and vendor in a quick response system
Merchandise Ordering
Traditional Purchase Order System (often adversarial relationship)
Quick Response System - uses computer technology (partnership of vendor and retailer)
Electronic Data Interchange - technology connecting retailer and vendor in a quick response system
Just-in-Time Delivery Systems - Reduces inventory requirements
Merchandise Ordering
Traditional Purchase Order System (often adversarial relationship)
Quick Response System - uses computer technology (partnership of vendor and retailer)
Electronic Data Interchange - technology connecting retailer and vendor in a quick response system
Just-in-Time Delivery Systems - Reduces inventory requirements
Direct Store Delivery (DSD) - no warehouse; vendor delivers directly to store
Merchandise Handling
Merchandise Handling
Stocking of merchandise can be at store or at warehouse
Merchandise Handling
Stocking of merchandise can be at store or at warehouse
In either case, receiving function must inspect, verify and log in deliveries and compare to vendor invoice
Merchandise Handling
Stocking of merchandise can be at store or at warehouse
In either case, receiving function must inspect, verify and log in deliveries and compare to vendor invoice
Price marking of product must be performed, if required
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
1. Failures to analyze previous year’s merchandise results before going to
market or making purchases.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
1. Failures to analyze previous year’s merchandise results before going to
market or making purchases.2. Failure to have kept records from the previous year.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
3. Determining only the quantity and leaving the merchandise selection to the vendor, especially size and color
selections.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
3. Determining only the quantity and leaving the merchandise selection to the vendor, especially size and color
selections.4. Using too many vendors.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
5. Merchandise whose sizes and/or colors were wrongly bought or in too large quantity or were wrongly delivered and prove to be
disproportionate to customer demand at regular prices.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
5. Merchandise whose sizes and/or colors were wrongly bought or in too large quantity or were wrongly delivered and prove to be
disproportionate to customer demand at regular prices.
6. Not helping out inexperienced buyers.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
7. Failure to know the selling season for your market.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
7. Failure to know the selling season for your market.
8. Buying too many items rather than just a few styles.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
9. Buying too many hot, new styles.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
9. Buying too many hot, new styles.
10. Failure to make small initial purchases, that can be followed up by reorders.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
11. Failure to determine if buyer can deliver on time the merchandise ordered or accepting changes by the manufacturer.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
11. Failure to determine if buyer can deliver on time the merchandise ordered or accepting changes by the manufacturer.
12. Buying too broad of a product line.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
13. Failure to cancel past due orders.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
13. Failure to cancel past due orders.
14. Making the last re-order once too often. The last may arrive just in time to be marked down.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
15. Failure to negotiate all possible discounts from the vendor.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
15. Failure to negotiate all possible discounts from the vendor.
16. Failure to study the market sufficiently so as to know the best quality merchandise and best price.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
17. Failure to ask one of the following questions: a. “Does your company substitute ship?” b. “Does your company backorder often?” c. “How long has your
company been in business?”.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
17. Failure to ask one of the following questions: a. “Does your company substitute ship?” b. “Does your company backorder often?” c. “How long has your
company been in business?”.
18. Failure to shop the competition so as not to buy identical items.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
19. Failure to talk with the central office (where applicable) in order to see what other buyers services are offered.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
19. Failure to talk with the central office (where applicable) in order to see what other buyers services are offered.
20. Failure to buy enough merchandise, resulting in lost sales volume.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
21. Buying your personal preferences, instead of the market’s preferences.
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
Maintain Higher Turnover Goals
CONFLICTS IN BUILDING A MODEL STOCK PLAN
Maintain Strong In-Stock Position in Genuinely New Items
Avoid the 90 Percent of Products That Will Fall During Introduction
Stock Basic Popular ItemsHave Inventory Dollars to Capitalize on Opportunities
Maintain High Margin Goals
Have Selection Don’t Confuse Customer
Utilize Space Don’t Congest Store
Retailing, 3rd Edition, Dunne and Lusch Copyright © 1999 by Harcourt Brace & Company All rights reserved.
Summary
Summary
Merchandise Management is extremely important aspect of Retail Operations Many consider it the MOST important)
Summary
Merchandise Management is extremely important aspect of Retail Operations Many consider it the MOST important)
Good merchandise management does not guarantee success but bad merchandise management almost certainly will result in failure
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