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TRANSCRIPT
BB retail capital
BBRC Merchandise Planning
Academy
PlaceSizeLocationLayout
ProductStyle/FashionIntensityAssortment
ValuePriceQuality
CommunicationsPositionalPromotional
PeopleServiceKnowledgeClimate
System
LogisticsSuppliers
ProductStyle/FashionIntensityAssortment
ProductIntensityAssortment
BB retail capital
4
The History of Merchandise
Planning.
Data versus Opinion
• Stock counters
• Store based replenishment
• Information technology
• Nationalisation
• Data versus opinion
• Globalisation
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6
Our Market/Philosophy
What's our market and why?
• MAINSTREAM is the positioning: we must
have success in the main market
• Don’t chase fringe, styles, sizing, colours
- Bed jackets
- Dance
7
Product Curve
Core Customer
(our market)
Fringe Fringe
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Your Role
Your Role
• Right product (P)
• Right place (MP + P)
• Right time (MP + P)
• Right quantities (MP)
You and your department are the data/facts.
The product team is the “fluffy/creativity”
What role does your CEO play in merchandise
planning?
11
• CEO is head of product
• Will be involved
• Must be involved
• Time allocation
Head of product
Product Merchandise
planning
Responsible For:
• Product and quantity
• How we display it
• What costs what
• What we sell it for
• Listen to merchandise planning
Responsible for:
• Supporting product team with right brain and data based thinking
• Look forward (option
based)
• Create product
• Fashion
• Ongoing
• Promotional
• Core
• GMROM
• GMROI
• Planograms
• Store product layout
• Supplier relationships
• Negotiation – cost
• Retail pricing
• Timing
• Order placement and
tracking
• OTB compliance
• Analysis
• Stock balancing
• Allocations
• GMROM
• GMROI
• Store rankings
• Category ranking within
store ranking
• Look back(data based)
• Recommend markdowns
• Managing OTB
• Input and
recommendations into
buying decisions,
merchandising, timing, etc
• Sense check
• Very trendy, generally more expensive than rest of assortment
• Image enhancer
• “One and done" (no replen: Sell-through or mark-down in short time
frame)
• Often bought to minimum order quantities
• Seasonal SKUs but less trendy than "fashion"
– product in store for 2-6 months
• Sell-through, but mark down to clear out at end of season
• Used to identify "new" anchors/basics
• Typically some replen
• Long-term styles
– carry through of >12 months, or cyclical
• Typically larger buys, with several Key Items
• Generally, largest profit share
• Sales driven by competitive pricing
• Replenishment and ensuring "never out of stock" critical
Basics
Fashion
Core
Assortment Mix
Your Role
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• Measure, Measure, Measure - everything that matters
- People
- Product
• Analyse and act
• Min/max management - Monthly/Event
- Follow the life cycle of each SKU
- Up and down
- Cull/add fringe sizes
• Quarterly review of ongoing lines
• Quarterly review of store gradings
• Semi Annual Reviews (SARs)
• GMROM & GMROI
• Tail Management
• Replenishment - 96% in stock at store and SKU level
Measure Your Performance
• Measure yours and the brand’s performance
- Sell through %
- First margin, final margin
- % aged inventory
- % in stock of basics (replenishment) at store
and SKU level
- GMROM
- GMROI
- Weeks cover/ stock turns
If you do not understand or are not getting this info,
please do something about it
Know Your Stuff
• Know your business well, be on top of all
aspects of your role:
- Be interested
- Know the system well
- Know the quantity you sell by week
- Know what's on order and the quantity on
order
- Know the good, bad and ugly
These are all signs of your commitment and
confidence in your role
16
Training. Teaching
• Who does the training?
• Who is responsible?
• What happens if we don’t train?
• Is this a shared responsibility
17
What Do We Teach?
• Our business
• Our market
• Our customer
• The systems/processes
• Lead times
• Our culture
• Urgency
Replenishment / Repeats
Exercise
Topics we will cover in today’s session
✓ Formula versus outcome driven
✓ Our ‘pull’ system and what that means
✓ Allocations - how they work
✓ DNR (do not reorder) - methodology
✓ Stock smoothing/transferring
✓ MIN/MAX management
✓ Product lifestyles
✓ Markdowns - clearance store methodology
✓ Online
✓ Ongoing & Repeats
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Opening Truths
21
• The bra business is unique
• Size range is unique
• Requires different disciplines
o Longer life
o Wide customer base
• Has a unique cost versus benefit threshold
• Must be a focus
o Merchandise planning
o Operational excellence
o Data integrity
• One SKU, one store, one sale at a time
o Then repeat in multiple stores
• One in one out
• Keep it simple
Formula versus outcome driven
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▪ Issue we have to focus on: outcome
driven as opposed to formula driven
▪ See example on following slide
▪ Sweet spot between efficiency and
effectiveness
▪ Being outcome driven means having
stock
- In the right store
- In the right quantities
- ...and at the right time
Briefs examples
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8 10 12 14 16
1 1 1 1 1
1 1 3 2 1
- 1 2 2 1
1 2 2 1 -
2 2 1 - -
Outcome drivenFormula driven
Ideal SOH
BRIEFS 10 – 12
units
Pull vs Push
Discussion and commitment to our ‘pull’ system and what that means for Bras N
Things, when it's appropriate to push
24
Go to RECAPS WEEK 36
• Line 600
• “New Lines” tab
• ITEM CODE: 11299304
CATEGORY DESCRIPTION COLOUR SEASON C.P. RRP STORESSALES U
LW SALES U
LW-1 SALES U
LW-2 SALES U
LW-3 SALES U
LW-4
SELL THRU
LW
TOTAL SELL
THRU SALES $ GM$ GM% Offer
Bottoms WISH BRAZ PINK 14W 1.76 14.99 182 335 243 114 13.8% $2,544 $1,941 76.3%
• Allocations
Order allocation
Store grading
Store turnovers
Category grading within store grading
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Go to RECAPS WEEK 36
• “New Lines” tab
• Line 1109
• ITEM CODE: 217401
DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO
N C.P. RRP STORESSALES U LW
SALES U LW-1
SALES U LW-2
SALES U LW-3
SALES U LW-4
SELL THRU
LW
TOTAL SELL
THRU SALES $ GM$ GM% TOTAL SALES
STORE SOH
Bras-Playboy Push UpELECTRIC BUNNY STN & LCE
BUNNY BRA BLACK 14W 11.38 64.99 176 204 212 116 6.3% $11,666 $9,344 80.1% 2,735
Stock smoothing/transferring up
27
Go to RECAPS WEEK 36
• “New Lines” tab
• Line 733
• ITEM CODE: 218801
DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO
N C.P. RRP STORESSALES U
LW SALES U
LW-1 SALES U
LW-2 SALES U
LW-3 SALES U
LW-4
SELL THRU
LW
TOTAL SELL
THRU SALES $ GM$ GM% TOTAL SALES
STORE SOH
Bottoms-Playboy Mini-VSECRET SOCIETY STN & LCE
MINI-V WHITE 14W 5.94 24.99 137 73 6.5% $1,594 $1,160 72.8% 782
• The very last SKU of any style should be sold through the location with the highest probability of selling
• Review of the current process of stock smoothing
• Progressively discontinue product
• Min units to transfer
• Frequency and rhythm
• Do we stock smooth ongoing lines?
• Do we stock smooth ‘sell out’ lines?
Product lifestyles – birth until death
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Methodology
• Trending - up and down
• Whole style vs stepped approach - by size and store gradings
• Add or delete sizes
• Timing/frequency
• Sign offs/ approvals
• Importantly, never zero model/Min Max fringe sizing or style until zero stock in DC
Go to RECAPS WEEK 36
• “ONGOINGS” tab
• Line 126
• ITEM CODE: 85601
DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO
N C.P. RRP STORESSALES U
LW SALES U
LW-1 SALES U
LW-2 SALES U
LW-3 SALES U
LW-4
SELL THRU
LW
TOTAL SELL
THRU SALES $ GM$ GM% TOTAL SALES
Bras-Ongoing Contoured NINE TO FIVE MF CONT U/W BLACK ONG 7.45 49.99 192 101 127 122 142 133 1.7% $4,564 $3,830 83.9%
Product lifestyles – birth until death
29
Go to RECAPS WEEK 36
• “New Lines” tab
• Line 606
• ITEM CODE: 11299408
DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO
N C.P. RRP STORESSALES U LW
SALES U LW-1
SALES U LW-2
SALES U LW-3
SALES U LW-4
SELL THRU
LW
TOTAL SELL
THRU SALES $ GM$ GM% TOTAL SALES
STORE SOH
Bottoms-Ongoing
Offer Bottoms WISH B/LEG PINK 14W 2.01 14.99 176 221 178 75 8.7% $1,662 $1,209 72.7% 2,325
Go to RECAPS WEEK 36
• “Ongoings” tab
• Line 5 & 35 & 121
• ITEM CODES: 10034401, 11273201 & 86902
DEPARTMENT CATEGORY DESCRIPTION COLOURSEASO
N C.P. RRP STORESSALES U
LW SALES U
LW-1 SALES U
LW-2 SALES U
LW-3 SALES U
LW-4
SELL THRU
LW
TOTAL SELL
THRU SALES $ GM$ GM%
Accesories Lingierie
Accessories REVEAL ADHESIVE LIFT STICKER NUDE (SKIN) ONG 1.74 9.99 190 1,142 1,105 1,040 1,117 1,140 7.2% 78.4% $10,278 $8,337 81.1%
Accesories Washbag LINGERIE PRINT BAGWHITE/PINK (2
TONE) ONG 0.97 5.99 51 3 11 24 51 75 2.3% 99.7% $17 $15 83.3%
Bras-Ongoing ContouredNINE TO FIVE FULL CUP MF CONT
U/W NUDE ONG 9.04 49.99 189 162 150 183 189 202 7.1% $7,313 $5,873 80.3%
Markdowns
• Weeks cover is the only criteria to
determine the markdown price. Ignore
margin
• Clearance store methodology and
transferring
• Online clearance methodology and
transferring process
• Diligence is essential in sale periods for
stock smoothing
30
General discussion
31
Go to RECAPS WEEK 36
• “ONGOINGS” tab
• Line 184 & 186
• ITEM CODE: 87902 & 82901
DEPARTMENT CATEGORY ITEM CODE DESCRIPTION COLOURSEASO
N C.P. RRP STORESSALES U
LW SALES U
LW-1 SALES U
LW-2 SALES U
LW-3 SALES U
LW-4
SELL THRU
LW
TOTAL SELL
THRU SALES $ GM$ GM%
Lingerie Extras-Ongoing Shapewear 87902
MICROFIBRE CUPLESS BODYSUIT BLACK ONG 9.12 39.99 190 37 30 27 31 19 2.1% $1,336 $1,072 80.3%
Lingerie Extras-Ongoing Shapewear 82901
MICROFIBRE HIGH WAIST LONG LEG BRF BLACK ONG 7.73 39.99 190 33 39 27 31 31 1.2% $1,199 $944 78.7%
Ongoing and basics reorders
• Methodology
• Minimums
• Frequency
• Forecasting
• Random check
• Regular and often… don’t over order
See hand out example
32
General
• Confirmation that online is the last place to
hold the very last SKU in a style and how
that occurs
• Ongoing: 95% in stock by location by SKU
• Grading - online AAA stands alone
33
Replenishment
One question related to replenishment
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Rules, Tips and Tricks
36
• Best sellers must have lower weeks cover
• Ongoing styles need to run tighter cover
• If we're not getting lower weeks cover on best
sellers we're not forecasting properly
• Stock smoothing (transfers/reallocations)
Rules, Tips and Tricks
On Fashion
Your first order is your best order:
repeats quite often fail
37
Never, never, never stop replenishing basics
(ongoing):
38
• Overspend
• Freeze on all orders
• No OTB
Basics are demand driven
Replenishment considerations are:• Sales rate
• Lead time
• Product cycle
• Being in stock
All new products are seasonal and one off, until
sales and customers say otherwise
39
There is not ‘a one size fits all’ methodology for
order forecasting, or replenishment
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DC cover “buffer” is a flawed
process - it is actually the ‘we
screwed up’ cover
41
Address unacceptable MOQs –
smaller orders more frequent
42
Rules, Tips and Tricks
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Holding fabric, raw
materials or forward
order commitments
almost always ends in
tears
Don't think of an "all stores" and
"all product“ approach - one
at a time!
44
Stores
Go visit stores – with a plan
45
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Fast, Flat and Flexible
Structure
46
Less is more
• It’s too easy to fall into the trap of more and
more product
• Depth and width of ranging - we tend to go
too wide and too deep
• Less is more
- in allocations
- in ranging
- in order quantities
• A golden rule - ”one in, one out”
Less is more
We work our store space hard
• High stock intensity (width and depth)
• ‘Less is more’
How do these work together?
48
Why we mostly have too much stock and rarely,
too little
• Afraid to give something up
• Hang on to the last
• If we put in more options, we sell more
• Never range or range extend to fill space or
fixtures
Our Methodology
• Pull system versus push system
• Pull gives the best results for us
with few exceptions
Margin Management
• It’s not the first margin that matters, it’s the final
margin
• There is no secret formula on margin policy
51
Open to Buy
52
Why we have Open to Buy:
• It tells us exactly how much we are allowed to
spend on product each month
• Is the key control to prevent us from being
overstocked or understocked
• It’s a blunt instrument that forces communication
between merchandise planners, buyers, finance
and the CEO
Open To Buy
What is your role (merch planner) in open to
buy?
▪ Forecasting customer demand
▪ Forecasting replenishment of basics (ongoing)
▪ Make sure there is a %$ for when we find a
gold-vein or a ‘must have’
▪ Based on data, challenge the product team
53
Open to Buy
54
• Has failed on too many occasions
• Blunt instrument
• OTB is set around current trend % positive or negative
(not budget)
• CEO sign off/CFO audits
• 1% over trend is acceptable
• GM forecast secondary to sales, GM mustn’t be driver
in OTB, Sales is the primary metric
• Need to determine ideal stock holdings (build up and
decreases) by month fluctuations prior and post
Christmas etc
• Ongoing doesn’t have an OTB – it has a demand
requirement (sales rate and lead time) – demand
driven
What is Data Integrity?
55
• Data integrity is about how accurately the physical
product in our stores is reflected in our system
-Physical quantity of items versus system quantity
-Physical price of item versus system price
• Getting data integrity right is critical to sales
-Overstocks (mark downs)
-Missed sales
• Also important because future decisions/forecasts
are based on historic sales data – if this data is
wrong, we can end up making wrong decisions
• Fraud
What is Data Integrity?
56
• Data Integrity is everything
- You have to be paranoid
- If you see a negative stock on hand, action MUST
be taken
• Tending the garden - keep cleaning it up
• We need to be part of the solution - issues are
inevitable, it’s ongoing, correct it and stay positive
• Everything must go through the system
- No paper
- No workarounds
• Keep a tally/records
• Product hierarchy and descriptions need to be
accurate
• Our data is to be perfect
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Sale and Markdown
Sale and markdown
Clearing our product and quantity mistakes
• It is never an exact science but we can always do better
• Your first markdown is the best markdown
• The numbers never lie
- No emotion
- A dog is a dog
• Weeks cover drives your markdown, nothing else
- Margin does not
- Hopes and wishes do not
- Price pointing does not
• Once a week
• Use similar data from previous sales to determine what
will happen – proactive learning not reactive – but don’t
over think it!58
Sale and Markdown
59
When do you take second
markdowns?
60
Rules, Tips and tricks
• IOP
• What is its purpose?
61
ONE QUESTION
62