merchandise management merchandise buying planning merchandise assortments merchandise management...
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Merchandise ManagementMerchandise Management
Merchandise
Buying
PlanningMerchandiseAssortments
Merchandise
management
Pricing
Merchandise Selling
What is merchandisingWhat is merchandising
Merchandising can be termed as the Merchandising can be termed as the
planning ,buying and the sellingplanning ,buying and the selling of of
merchandise\products merchandise\products
Merchandising Merchandising
Is one of the most challenging function Is one of the most challenging function
““goods well bought are half goods well bought are half sold”sold”
Merchandise managementMerchandise management
Termed as the analysis, Termed as the analysis, planning, acquisition, handling planning, acquisition, handling and control of the merchandise and control of the merchandise investments of a retail investments of a retail operationoperation
Analysis --- retailers must be able to Analysis --- retailers must be able to correctly identify their customers i.e correctly identify their customers i.e consumers needs, desires.consumers needs, desires.
Planning --- merchandise that has to be Planning --- merchandise that has to be sold in the future must be bought now!sold in the future must be bought now!
Acquisition --- merchandise has to be Acquisition --- merchandise has to be procured from others-either from procured from others-either from distributors or manufacturersdistributors or manufacturers
Handling --- seeing that the merchandise Handling --- seeing that the merchandise is where it is needed and is in the proper is where it is needed and is in the proper condition to be sold.condition to be sold.
Control --- is required to control the Control --- is required to control the amount of money spent on buying.amount of money spent on buying.
Buying Buying MerchandiseMerchandise
Definition by American Marketing Definition by American Marketing AssociationAssociation
“ “ The planning involved in The planning involved in marketing the marketing the right merchandiseright merchandise at the at the right placeright place at the at the right timeright time in the in the right quantitiesright quantities at at right right price”price”
Merchandising is said to be Merchandising is said to be core of retail.core of retail.
it is it is day-to-day business of all retailersday-to-day business of all retailers..
As inventory is sold ,new stock needs to As inventory is sold ,new stock needs to be purchased ,displayed and sold.be purchased ,displayed and sold.
Merchandise Management is a key driver Merchandise Management is a key driver
of retailing successof retailing success
Planning Planning MerchandiseMerchandise
definitiondefinition
can be defined as the can be defined as the planning andplanning and control of merchandise inventorycontrol of merchandise inventory of of the retail firm ,in a manner which the retail firm ,in a manner which balances between the expectations of balances between the expectations of the target customer and the strategy the target customer and the strategy of the firm.of the firm.
Things to be considered while Things to be considered while buying merchandisebuying merchandise
What to buyWhat to buy
How much to buyHow much to buy
From whom to buyFrom whom to buy
When to buyWhen to buy
Merchandise HierarchyMerchandise Hierarchy
DivisionDivision Apparel Apparel DepartmentDepartment Men’s ,Ladies, Kids Men’s ,Ladies, Kids CategoryCategory Shirts, Trousers , SuitsShirts, Trousers , Suits
Sub CategorySub Category Full Sleeve, Half Sleeve Full Sleeve, Half Sleeve BrandBrand Arrow, V. Arrow, V. Heusen,Heusen,
PoloPolo StyleStyle Button down collar, Button down collar,
cut away collarcut away collar
OptionsOptions Size(4),Design(3), Size(4),Design(3), colour(5),Pricecolour(5),Price
Merchandise Hierarchy in a Merchandise Hierarchy in a supermarketsupermarket
Division: FoodDivision: Food
Department: Packaged FoodDepartment: Packaged Food
Category: SaucesCategory: Sauces
Brand: Maggi, KissanBrand: Maggi, Kissan
Options: 250gms,500gms,1kgOptions: 250gms,500gms,1kg
Merchandise SourcingMerchandise Sourcing
The term sourcing means finding or The term sourcing means finding or seeking out products from different places, seeking out products from different places, manufacturers or suppliers .manufacturers or suppliers .
Is the key element of retail. Is the key element of retail.
it influences the availably of stock , the it influences the availably of stock , the margins earned by the retailer .margins earned by the retailer .
Decision depends on the type of Decision depends on the type of retail organization, product and retail organization, product and
target customertarget customer
Product like high fashion Product like high fashion garments ,exclusive garments ,exclusive watches ,perfumes ,cosmetics etc may be watches ,perfumes ,cosmetics etc may be obtained from the international market.obtained from the international market.
Methods of procuring Methods of procuring merchandisemerchandise
1. Identifying the sources of supply1. Identifying the sources of supply
Have to decide whether the merchandise Have to decide whether the merchandise can be sourced from domestic or regional can be sourced from domestic or regional markets of from international markets ?markets of from international markets ?
2. Contacting and evaluating the 2. Contacting and evaluating the sources of supplysources of supply
Wholesale Market CenterWholesale Market Center
Characterized by a collection of large number of Characterized by a collection of large number of suppliers.suppliers.
Selling similar products.Selling similar products. For e.g.For e.g.
Manish Market, Crawford Market in MumbaiManish Market, Crawford Market in Mumbai
Khan Market in DelhiKhan Market in Delhi
Trade ShowsTrade Shows
Also known as merchandise showAlso known as merchandise show
Permanent tenants of the wholesale Permanent tenants of the wholesale market centers and vendors leasing market centers and vendors leasing temporary space participation.temporary space participation.
For. E.g. For. E.g. Ustav held in PuneUstav held in Pune
Meeting Vendors at Your CompanyMeeting Vendors at Your Company
A representative of the supplier visit the A representative of the supplier visit the office, meet the buyer and showcase a office, meet the buyer and showcase a collection of merchandise.collection of merchandise.
Termed as Termed as vendor initiated contactvendor initiated contact..
The criteria for selecting a potential The criteria for selecting a potential vendorvendor
The target market for whom the The target market for whom the merchandise is being purchased.merchandise is being purchased.
The merchandise and prices offered The merchandise and prices offered
Terms and services offered the vendorTerms and services offered the vendor
Vendors reputation and reliabilityVendors reputation and reliability
3. Negotiating with Vendors3. Negotiating with Vendors
Two-way Two-way communication communication designed to reach designed to reach an agreement an agreement when two parties when two parties have shared have shared interests.interests.
The retail buyer needs to The retail buyer needs to negotiate the negotiate the price, delivery dates, the discounts, the price, delivery dates, the discounts, the shipping terms and possibilities of returns.shipping terms and possibilities of returns.
How to plan negotiations?How to plan negotiations?
Consider prior historyConsider prior history
Be aware of deadlines Be aware of deadlines
Types Of Discounts that are made Types Of Discounts that are made available to the buyer available to the buyer
Trade (Functional) DiscountsTrade (Functional) Discounts
Referred to as volume discounts or booking Referred to as volume discounts or booking
discountsdiscounts
Quantity DiscountsQuantity Discounts
For purchasing certain quantity over a For purchasing certain quantity over a
specific period of timespecific period of time
DiscountsDiscounts
Seasonal discountsSeasonal discounts
Discount offered as an incentive to retailers to Discount offered as an incentive to retailers to
order merchandise in advance of the normal order merchandise in advance of the normal
buying seasonbuying season
Cash discountsCash discounts
Prompt payment for goods often ranks for a Prompt payment for goods often ranks for a
cash discountcash discount
Thirty to sixty days credit is usualThirty to sixty days credit is usual
4. Establishing Vendor Relations4. Establishing Vendor Relations
Retailer and vendor committed to maintaining Retailer and vendor committed to maintaining relationships relationships over the long-term and investing in over the long-term and investing in mutually beneficial opportunitiesmutually beneficial opportunities
Building Blocks for Strategic Partnerships
Mutual Trust
trust helps vendors and buyers to share ideas, clarify goals and problems
Open Communications
In order to share information ,develop In order to share information ,develop sales forecasts together and coordinate sales forecasts together and coordinate deliveries.deliveries.
For e.g.. Wal-Mart and P&GFor e.g.. Wal-Mart and P&G
Common Goals
Vendors and buyers must have common goals for a successful relationship to develop
5. Analyzing vendor Performance5. Analyzing vendor Performance
vendor performance is based on the vendor performance is based on the following criteriafollowing criteria
The The total order placed on the vendor in a total order placed on the vendor in a yearyear
Participation of the vendor in Participation of the vendor in various various schemes and promotionsschemes and promotions
The total returns to the vendor, the The total returns to the vendor, the quality quality of the merchandiseof the merchandise
Cash discounts offeredCash discounts offered by the vendor by the vendor
The The sales performance of the sales performance of the merchandisemerchandise
Role and responsibilities of buyerRole and responsibilities of buyer
1)1) Planning and selecting merchandise Planning and selecting merchandise assortments, keep a stock of the assortments, keep a stock of the assortmentassortment
Should know the current market trends Should know the current market trends and economic developments.and economic developments.
Should know the needs and wants of the Should know the needs and wants of the target consumer.target consumer.
2)2) Vendor selection, development and Vendor selection, development and managementmanagement
Should negotiate with vendors for Should negotiate with vendors for favorable terms and service.favorable terms and service.
3)3) Pricing the merchandise to achieve the Pricing the merchandise to achieve the required targetsrequired targets
4)4) Inventory management-Inventory management-
Should control inventory i.e. not only Should control inventory i.e. not only procurement but also check the procurement but also check the availability of the product in the store.availability of the product in the store.
Suggest Suggest markdowns for slow moving markdowns for slow moving goods.goods.
5)5) Be a good judge of qualityBe a good judge of quality
6)6) Be up to date in their knowledge so that Be up to date in their knowledge so that they can pick up ideas for new and they can pick up ideas for new and profitable lines. (textiles, toys, fashion profitable lines. (textiles, toys, fashion goods)goods)
Merchandise Branding Merchandise Branding StrategiesStrategies
Manufacturer (National) BrandsManufacturer (National) Brands Designed, produced, and marketed by a Designed, produced, and marketed by a
vendor and sold by many retailersvendor and sold by many retailers
Private-Label (Store) BrandsPrivate-Label (Store) Brands Developed by retailer and only sold in Developed by retailer and only sold in
retailer’s outletsretailer’s outlets
Carries the retailers name such as Carries the retailers name such as Westside ,food world ,Big Bazaar, Chitale Westside ,food world ,Big Bazaar, Chitale Bandhu, Haldiram Bandhu, Haldiram
Private label goods are more successful Private label goods are more successful where the number of competing products where the number of competing products is loweris lower
For e.g.For e.g. Number of brands in India, in shampoos Number of brands in India, in shampoos
and soaps is fairly largeand soaps is fairly large
Products like atta, salt, sugar, cereals and Products like atta, salt, sugar, cereals and pulses have very few branded products.pulses have very few branded products.
Private LabelsPrivate Labels
AdvantagesAdvantages
Unique merchandise not Unique merchandise not
available at competitive available at competitive
outletsoutlets
Difficult for customers to Difficult for customers to
compare price with compare price with
competitorscompetitors
Higher marginsHigher margins
DisadvantagesDisadvantages
Need to develop Need to develop
expertise in developing expertise in developing
and promoting brandand promoting brand
Unable to sell excess Unable to sell excess
merchandisemerchandise
Typically less desirable Typically less desirable
for customersfor customers
Manufacturer (National) LabelsManufacturer (National) Labels
AdvantagesAdvantages
More desired by More desired by
customerscustomers
Resell excessive Resell excessive
merchandisemerchandise
Don’t need skills and Don’t need skills and
people to develop and people to develop and
promote merchandisepromote merchandise
DisadvantagesDisadvantages Lower marginsLower margins
Vulnerable to Vulnerable to competitive pressurescompetitive pressures
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