product assortment strategies: written report

7/13/2019 Product Assortment Strategies: Written Report

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Planning Merchandise Assortment

Assortmentrefers to the number of SKUs within a merchandise category, group or

department (depending on the retailersreference).

Assortment planningis the process to determine what and how much should be carried

in a merchandise category. Assortment plan is a trade-off between the breadth and depth of

products that a retailer wishes to carry.

Merchandise managementis the process by which a retailer attempts to offer the right

quantity of the right merchandise in the right place at the right time while meeting the

companys financial goals.

Merchandise Assortment Planning is a tradeoff between: Variety Assortment Product Availability

VarietyIt refers to the number of different categories of merchandise within a store or

department.

AssortmentIt refers to the number of SKUs within a category.

Product AvailabilityIt refers to the percentage of demand for a particular SKU which issatisfied.

Factors affecting Variety and Assortment

Physical characteristics and layout of the store and internet site. Workout a balance between too much versus too little assortment. Work at profitable mix of products. Corporate strategy towards assortment.

Factors affecting Product Availability

Work out for a tradeoff between inventory investment and productavailability.

Plan sufficient back up of stock to meet each SKUs stock demand. SKUs stock demand depends upon: Product availability the retailer wishes to provide. The fluctuations in demand. Lead time for the vendor. Fluctuations in lead time.


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The vendors product availability also affects the retailers back up stock.

PLANNING MERCHANDISE ASSORTMENTS

Organize the buying process by categories

Set merchandise financial objectives

Develop an assortment plan

Merchandise planning system

Merchandise planning and control systems can play a key role in increasing profitability.

Merchandise planning systems have enjoyed a very high profile in the retail industry for

some time now.

To put it simply the goal of a merchandise planning system should be to maximise sales and

achieved margins by reducing stock-outs and mark-downs.

In order to achieve this there are a set of clearly defined stages that will be followed by

most retailers using a seasonally based planning system. Non-seasonally based systems will

have similar requirements, but will need greater flexibility in terms of time periods, and will

use different methods of extrapolation.

You should normally expect a Merchandise Planning System to be capable of

providing a large subset of the following:

normalisation of base data plan seeding strategic planning (3-5 year time horizon) channel planning category level plan range planning


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store grading assortment planning line level planning In-season control and re-forecasting. store layout design (numeric and visual)

Normalisation of base data

Historic data will contain all sorts of abnormalities due to such things as promotions, branch

refits, bad delivery, bomb scares, and moveable feasts like Easter. If we are to use this data

as a basis for extrapolation we must first remove these abnormalities.

Plan seeding

Seeding is the process of creating the initial version of the plan based on historical data.

Strategic Planning

Is an organization's process of defining its strategy, or direction, and making decisions on

allocating its resources to pursue this strategy.

Channel planning

One of the key areas in merchandise planning is trying to assess the impact of store

openings, closures and refits, and the impact of any new channels such as E-commerce (the

Net New Channel effect).

Category level plan

We are simply moving one section of the plan (a seasons worth) down to a lower level of

time (week) and product (category).

Range Planning

The system should be capable of extending the results so that we can see the effect on

overall margin mix, for example, of a change in cost price of an item.

Store grading

Efficient store grading for assortment planning should ideally be based on planned space as

this is the key determinant of range width in a retail store. (Web stores are a special case

and should be treated differently). If you dont have space data then you will probably usesales performance to grade with.

Assortment planning

The process to determine what and how much should be carried in a merchandise category.

Assortment plan is a trade-off between the breadth and depth of products that a retailer

wishes to carry.

Line level planning

The final part of most planning systems is to break the category level plans down to a line

level. This is purely on the grounds of manageability. This type of module replicates the


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stock cards kept by most buyers / merchandisers, but being fed from a centralised system is

almost always an area of great efficiency gains.

in-season control and re-forecasting.

In season control is a twofold process. Firstly we must monitor the variance between the

forecast and what actually happens when merchandise goes on sale. Secondly we must usethe information constructively to ensure that we maximise profit.

Store layout

Astore layoutis the design in which a store's interior is set up. Store layouts are well

thought out to provide the best exposure possible. They are designed to create an attractive

image for consumers.

Planogram

Is graphic schematic which shows the precise location of every store keeping unit (SKU) on a

shelf or other merchandise display.

Types of store layout and design

Circulation

The circulation pattern not only ensures efficient movement of large numbers of shoppers

through the store, exposing them to more merchandise, but also determines the character

of the store.

Free flow

The simplest type of store layout in which fixtures and merchandise are group into free

flowing patterns on the sales floor. Customers are encouraged to flow freely through all the

fixtures since there are usually no defined traffic patterns in the store.


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Grid layout

The counters and fixtures are placed in long rows or runs, usually at right angles,

throughout the stores. In grid layout customers circulate up and down through the fixtures,

and, in fact, the grid layout is often referred to as a maze.

Loop layout

A loop provides a major customer aisle that begins at the entrance, loops through the store

usually in the shape of a circle, square, or rectangle and then returns the customer to the

front of the store.


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Spine layout

A spine layout is based on a single main aisle running from the front to the back of the store,

transporting customers in both directions.

Buying strategies

Retail buying process:

Merchandise planning Assortment planning Actual buying and rearrangement

Merchandise planning For realistic Merchandise planning retail buyer must consider

1) Target market demand

2) Local retail competition

3) Physical expansion needed in the store

4) Planned promotional efforts

5) Trend analysis

6) Seasonal consumer demand

7) Economic condition

Merchandise planning may require fashion forecast, sales forecast. Objective of Fashion Forecast in merchandise planning.1) Studying market condition consumer buying behavior.2) Evaluating up to date fashion trend information.3) Noting street fashion of target consumer. Objective of sales forecast in merchandise planning1) Trend analysis2) Effective order in term of quantity decisions of specific style,colors, size.3) To develop efficient and effective inventory control plan.


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Two approach used for sales forecast

1) Top-down

4 Steps of top-down forecasting process

Planning sales goal Planning stock level for company & each store Planning assortment plan Making a sales forecast report

2) Bottom-up

3 steps of Bottom-up forecasting process

Determining sales potential for individual item Planning total sales & stock level by adding Making a sales forecast report

If item proportion in assortment plan is positively correlated BOTTOM-UPapproach is used.

If item proportion in assortment plan is negatively

Correlated TOP-DOWNapproach is used.

Assortment Planning

TYPES OF PLAN

UNIT PLAN- It most often refers to qualitative decision.

DOLLAR PLAN- It is quantitative result of assortment planning.

Actual buying and rearrangement plan with vendors

Retail buyer looks for new product. Vendor evaluation on following criteria1) Quality of goods2) Good delivery3) Product fashion-ability4) Fair price5)

Styling

6) Reputation7) Selling history8) Steady source of supply.


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Assortment planning process

It is perceived gap or discrepancy between current state and desired state ofcompany /store.

Two Major problem with which this step begins.

1) Change in desired state for a store.2) Change in current store assortment Internal source of Information:

- Store records, merchandise plan reports, sales people opinion.

External Source of Informationa) Customer panel

b) Consumer magazine & trade publication

c) Vendor opinion

d) Trade associations

e) Competitors

f) Fashion forecast magazine

g) Reporting bureaus.

Qualitative EvaluationA. Important aspect in evaluation is desired solution to a problem, establishing

criteria of evaluation.

B. Product specific criteria.1. Quality2. Color


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3. Position on the fashion cycle4. Styling5. Distinctiveness

Quantitative EvaluationTheir components are following:

1) Initial markup for period2) Planned net sales3) Planned BOM(Beginning of month)4) Planned ending inventory (EOM)5) Planned reduction6) Planned purchases at retail.Forecasting product selection and sales.

Forecasting Style Selection Forecasting Color Selection Forecasting Size Selection


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AWritten Report

In

Marketing Management 3

Retail Management

Submitted to:

Ms. Melody Hate

Submitted by:

Flores, Miguel Sebastian C.

Pinlac, Riva Bianca M.

Vigo, Jenny Lyn T.

Villamor, Abby Pauline C.

Ybanez, Lutgardo jr. P.

product assortment strategies: written report

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