Developing Merchandise Plans

Venera Turaeva
Ruslan mamadaliev
 Chapter Objectives
þ To demonstrate the importance of a sound merchandising
philosophy
þ
þ To study various buying organization formats and the
processes they use
þ
þ To outline the considerations in devising merchandise
plans: forecasts, innovativeness, assortment, brands,
timing, and allocation
þ
þ To discuss category management and merchandising
software
 Retail Marketing Mix


While many elements may make up a firm’s retail
marketing mix, the essential elements may include:
 Store location,
 merchandise assortments
 Store ambience,
 customer service,
 price,
 Communication with customers

 Definition

 Merchandising consists of activities involved in acquiring

particular goods and or services and making them available at the
places, times, and prices and in the quantity that enable a retailer
to reach its goal
Merchandising=product + customer

Product: good care in buying it, it doesn’t come back

Customer: good care of your customers, they do come back

 Merchandising Philosophy
 Sets the guiding principles for all the merchandise
decisions that a retailer makes
 Should reflect
 Target market desires
 Retailer’s institutional type
 Market-place positioning
 Defined value chain
 Supplier capabilities
 Costs
 Competitors
 Product trends
 Scope of Responsibility

Full array of merchandising functions

 Buying and selling
 Selection, pricing, display, customer transactions

Focus on buying function only

Harry and David’s Merchandising Philosophy
Nike’s Own Store Merchandising Philosophy
Attributes and functions of buying organization
 Level of Formality
Formal buying organization:
 Informal buying organization:


 Distinct task + department  Not a distinct task, one person

 responsible for both
 Control over merchandise merchandising and other
retail tasks


 Mostly used by big larger
 Responsibility and authority
firms
are not always clear-cut

 Used by informal
organizations

 Degree of Centralization
Centralized: Decentralized:
 all purchase decisions come  purchase decisions made
from one office locally or geographically
Advantages: Advantages:

 Integration of efforts  Adaptability local conditions

 Strict control  Quick order processing
 consistent image  Improved personal morale
 Staff support
Disadvantages:

 Volume discount
 Disjointed planning
Disadvantages:
  Inconsistent image
 Inflexibility  Limited controls
 Time delays  Little staff support
 Poor morale at local stores  Loss of volume discounts
 Excessive uniformity 


 Staffing
Buyer: responsible for selecting the merchandise to be carried by a
retailer and setting a strategy to market that merchandise, plans
proper merchandise assortments, styling, sizes, and quantities.
Sales manager: typically supervises the on-floor selling and

operational activities for a specific retail department.


 Organizational Breadth:
General: one person responsible for all buying
Specialized: different personnel responsible for different product

categories, ex: dep.store having separate buyer for girls’, juniors’,

mothers’ clothes
 Personnel resources:
Resident buying office: merchandise offices that provide valuable

data for retailers

Cooperative buying: several retailers buy cooperatively to get

discount and compete with large retailers

 Functions performed:
Buying: buying & selling of the product

Merchandising: buying product


Devising Merchandise Plans
 Forecasts
 Forecasts are projections of expected retail sales for given
periods
 Components:
 Overall company projections
 Product category projections
 Item-by-item projections
 Store-by-store projections (if a chain)
 Types of Merchandise

Staple merchandise
Assortment merchandise
Fashion merchandise
Seasonal merchandise
Fad merchandise
 Staple Merchandise

 Regular products carried by a retailer

 Department store staple examples
 Jeans
 Glassware
 Watches
 Grocery store staple examples
 Milk
 Bread
 Canned soup



 Assortment Merchandise

 Apparel, furniture, auto, and other products for which the

retailer must carry a variety of products in order to give
customers a proper selection
 Decisions on Assortment
 Product lines, styles, designs, and colors are
projected
 Model stock plan: popular size and colors

 Fashion and Seasonal Merchandise
 Fashion Merchandise: Products that may have cyclical sales due to
changing tastes and life-styles
Ex: hot colors

 Seasonal Merchandise: Products that sell well over nonconsecutive

time periods
Ex: ski, bikini
 Fad Merchandise

 High sales are generated for a short time. It is hard to forecast

whether such products will reach specific sales targets and how
long they will be popular.

 Innovativeness

An innovative retailer has :



1. A great opportunity- distinctiveness (by being 1st in the market)

2. A great risk-possible misreading customers and being stuck with
large inventories


 Therefore, should assess the growth of the potential for each new
good/service they carry.
 One tool to assess this potential is the product life cycle, which
shows the expected behavior of a good/service over its life
R&D at Wendy’s
Product Life Cycle