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MERCHANDISING
Fashion Industry- Levels of
Merchandising
• Retail Organization Merchandising
Marketing function
Focuses on broadly defining a company’s market and
characteristics. It pinpoints new opportunities for growth
through self analysis and market research and promotes
company’s image and products.
Merchandising function
is more specific concerning itself with the development,
execution and delivery of the product line with its close
ties with the market it serves. Merchandising is not only
able to adjust to market variations rapidly but is capable
of actually anticipating and helping to create market
changes.
Merchandiser
Merchandiser is a person who get converted
inspiration into design , use technology to
conceptualize and address the planning ,
production, promotion and distribution of
products in the fashion industry to meet the
consumer needs and demands
Merchandising - involves 6 rights
• Right Merchandise
Right Merchandise
Retailers must fill their shelves with the
merchandise that customer wants.
Right Place
The location of the merchandise is of prime
importance since it decides the accessibility.
Right Time
Much merchandise is seasonal in nature
and must be on hand when it is most needed.
Right Quantity
A profitable balance between volume of sales and amount
of inventory is the desired goal.
Right Price
Merchandiser must arrive at a price that is high enough to give
the store profit and yet low enough to meet the competition and
customers expectations.
Right Promotion
Right balance between the investment and
the appeal created for the customers
THE CARDINAL SIN OF
FASHION MERCHANDISING IS
TO BE OUT OF TREND
MAIN PRINCIPLES AND DYNAMICS
OF FASHION
The constant in fashion is change
Changes in fashion are gradual and
evolutionary rather than revolutionary.
Fashion is cyclical
Customers make fashion
Acceptance level of fashion vary
Fashion depends on place and reflects
lifestyle
INTERPRETING
CONSUMER DEMAND
Elements of Customer Demand
TARGET MARKET
BUYING MOTIVATIONS
Identifying Target Market
Demographic
Market Psychographic
Behavioral
Segmentation
Geographic
Demographic Segmentation
Mainly grouped on the basis of:-
• Population
• Age
• Income
• Sex
• Occupation
• Education
Geographic Segmentation
Mainly grouped on the basis of:-
• Cities
• States
• Regions
Climate plays an important role
Psychographic Segmentation
Grouped on the basis of the lifestyle-
– Social activities
– Interests
– leisure pursuits
– needs and wants
•Durability •Imitation
•Dependability •Emulation
•Comfort •Prestige
•Economy of Operation •Pride of Appearance
•Price •Distinctiveness
FASHION PURCHASES
SPECIFIC SELECTION FACTORS
Silhouette- Degree to which an item is considered
moderate or extreme in form in relation to the currently
popular shape or form of such products.
Material/Fabric-Quality of fabric
The Specialty Store, Discount Store are also few of the other formats
Major Divisions & Responsibilities
• Merchandising division- buying, merchandise planning and
control, selling, fashion coordination
Board of Directors
President
STAFF STAFF
Legal counsel research department
Vice President and General Manager Other advisory services
Merchandising Sales Promotion Finance and Operating Division Personnel Division Branch stores
division Division Control Division Store Personnel Director Executive in charge
GMM Sales Promotion Treasurer & Superintendent of branches
Manager Controller
Hard Line
Divisional Merchandise Manager (DMM)
Buyers
Assistant Buyers
Trainees
Qualities of a Fashion Buyer
• Dedication • Product Knowledge
• Enthusiasm • Decision-making skill
• Awareness • Mathematical ability
• Stamina • Communication skills
• Foresight • Negotiation skills
• Creativity • Managerial skills
Work Area of a Fashion Buyer
• Liaising with suppliers (immediate vendor)
• Liaising with internal departments
Buying Colleagues
Quality Control/Tech Design
Buyer
Finance Fabric technology
• Planning
• Buying
• Selling
Planning
• Based on 2 factors
-How much the store expects to sell?
-How much inventory is needed to achieve that sales goal?
DISADVANTAGES-
• Adjustment to local conditions is difficult
• Cooperation may be lacking
• An enthusiastic selling force may be lacking
The warehouse and requisition plan
• The central buyer arranges for the initial
assortment and has the merchandise shipped
to the individual stores. Used for staple goods.
DISADVANTAGES-
• There is little control over the composition of the
merchandise selection.
• Poor warehouse control may lead to an imbalance in
store inventory.
The price agreement plan
• Central buyer working with vendors and manufacturers will
agree on the retail price, color, size, style and assortment of
staple types of merchandise as well as the terms of shipping.
DISADVANTAGES-
• Problems arise with tardy deliveries and with
high transportation cost.
THE PLANNING &
CONTROL FUNCTIONS
• Cost of goods sold is the amount the buyer has paid for the merchandise
that the store has held for that same time period.
• Gross margin is the margin of dollars between what the merchandise cost
and what it was sold for.
• Profit-the amount of money that is left over after all of the merchandise that
is offered for sale has been sold and all of the expenses of running the
business have been paid.
Earning a profit
$ %
Net sales – cost of 70,000 100
goods sold – 42,000 – 60
40
= gross margin - 28,000
expenses - 24,000 –34.3
The buyers then using the planning form and his knowledge of market
conditions, trends, and demand cycles, prepare figures on anticipated
sales, stocks, markdowns, and purchases for his department for the
upcoming season.
The plan made by the buyer is then reviewed by his divisional
merchandise manager.
All the plans are reviewed by both, the store’s controller and
the general manager or president.
To estimate the amount of stock that will be needed to support the planned
monthly sales .
The planning must be such that the desired seasonal stock turnover may
be realized , markdowns minimized, and a steady flow of new,
interesting merchandise assured throughout the month.
Variations in monthly stock goals
The monthly stock-sales ratio uses the no. of months that would be
required to dispose of a BOM inventory at the planned rate of sales for the
month.It also directly relates stock requirements to the planned sales.
Stock-sales ratio = $ BOM stock / $ Planned Sales for month
(In general the rate of stock turnover is higher in women’s apparel than in men’s
clothing or home furnishings. It is also higher in departments featuring lower
price ranges than in those featuring higher price ranges. )
What is Average Inventory
How to calculate average inventory for
February to July Season,
The planned markup should be aimed at achieving the goal figure indicated
on the dollar merchandise plan; no less or no higher.
Gross margin:
Terms of sale:
The combination of allowable discounts on purchases and
the time allowed for taking such discounts is referred to
as terms of sales.
Stock shortages:
Budget Planning
Comparative Shopping
Directional Shopping
Purchase by customer
Trips depend upon the buyer’s product range & travel budget
Makes note on key shapes, details, colors and fabric for ref.
Style no. Style Supplier & Lab dip/strike Trim approval Fitting
Description Country of Origin off approval Sample
approval
Size set Bulk fabric & Pre production Bulk Ex factory Due in
approval trim approval sample approval production warehouse
MANAGING MERCHANDISE
ASSORTMENT
MERCHANDISE ASSORTMENT
•It refers to a collection of varied types of related merchandise
that are intended for the same general use.
• After one has established broad classifications on the basis of END USE
and non substitutability, one continues to set up sub classifications.
• For merchandise planning and control purposes, each classification and sub
classification is assigned a permanent identification code, usually a number.
The code of classification consists of a fixed range of consecutive
numbers. each sub classification is assigned a specific range of
numbers within the wider range assigned to the broad classification.
• All price lines within departments price range are represented in the
assortment plan
The best selling price lines are appropriately represented with the
widest variety of types, colours, materials and sizes.
Duplication of merchandise has been minimized, if not prevented.
“DOES THE SYSTEM REFLECT
THE WAY IN WHICH THE
CUSTOMERS BUY
MERCHANDISE?”
TAILORING THE
CLASSIFICATION SYSTEM
• If majority of your Customers ask for merchandise by COLOUR , FABRIC,
and SIZE you can put the store brand merchandise together with that of a
number of different DESIGNERS within the same SUB CLASSIFICTAIONS.
• IF
– EXAMPLE: if customers look for blue wool pants in size 10,then you
make classification of all pants together and under it sub classification of
all wool pants.
– CONCLUSION: DNKY, CK etc would be in the same sub classification.
• HOWEVER
– EXAMPLE: If customers look for Calvin Klein pants in size 10.
– CONCLUSION: All CK pants would be in one SUB classification. And
DKNY pants into another ,and all other pants into another.
APPAREL
SOURCING
Suppliers of Fashion Goods
Better quality
Lower cost
Specification buying
Foreign Buying Problems
Size discrepancy
Monetary problems
Time involved
Other conditions
Other Problems
• Language Barriers
• Political unrest
Methods Of Buying Foreign Merchandise
• Buyer can actually see the merchandise with the styling and
uniqueness.