Podcast
Questions and Answers
What is a major factor that buyers need to consider when deciding on the variety and assortment of products?
What is a major factor that buyers need to consider when deciding on the variety and assortment of products?
What is a benefit of offering large assortments to customers?
What is a benefit of offering large assortments to customers?
What is typically included in an assortment plan?
What is typically included in an assortment plan?
What type of stores have more space available and can accommodate more SKUs?
What type of stores have more space available and can accommodate more SKUs?
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What is product availability defined as?
What is product availability defined as?
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What is the consequence of higher product availability?
What is the consequence of higher product availability?
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What is the key consideration for buyers to increase inventory turnover in a category?
What is the key consideration for buyers to increase inventory turnover in a category?
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What is the first strategic decision that needs to be made in the merchandise management process?
What is the first strategic decision that needs to be made in the merchandise management process?
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Who is responsible for developing and producing national brands?
Who is responsible for developing and producing national brands?
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What is the term used to describe products developed by retailers?
What is the term used to describe products developed by retailers?
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What do retailers typically do when developing private-label products?
What do retailers typically do when developing private-label products?
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What is the purpose of an umbrella or family brand used by some vendors?
What is the purpose of an umbrella or family brand used by some vendors?
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What type of private brand is developed by a national brand vendor in conjunction with a retailer and sold exclusively by the retailer?
What type of private brand is developed by a national brand vendor in conjunction with a retailer and sold exclusively by the retailer?
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What is one of the advantages of private labels for retailers?
What is one of the advantages of private labels for retailers?
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Why might a retailer prefer to sell private label merchandise?
Why might a retailer prefer to sell private label merchandise?
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What is a disadvantage of private labels for retailers?
What is a disadvantage of private labels for retailers?
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What is the next step in the merchandise management process after analyzing performance?
What is the next step in the merchandise management process after analyzing performance?
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What is a characteristic of copycat brands?
What is a characteristic of copycat brands?
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What is the primary goal of merchandise management?
What is the primary goal of merchandise management?
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Who manages a merchandise group?
Who manages a merchandise group?
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What is a merchandise category?
What is a merchandise category?
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What is the role of a buyer in merchandise management?
What is the role of a buyer in merchandise management?
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What is the smallest unit available for inventory control?
What is the smallest unit available for inventory control?
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What is the basic unit of analysis for making merchandising management decisions?
What is the basic unit of analysis for making merchandising management decisions?
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What percentage of SKUs do A items represent?
What percentage of SKUs do A items represent?
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What is the purpose of the multiattribute method?
What is the purpose of the multiattribute method?
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How are importance weights for each issue determined?
How are importance weights for each issue determined?
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What is the scale used to determine the importance of each issue?
What is the scale used to determine the importance of each issue?
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How are the importance and performance scores combined?
How are the importance and performance scores combined?
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What is the final step in the multiattribute method?
What is the final step in the multiattribute method?
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Study Notes
Retailing Management
- Determining variety and assortment in retailing involves considering physical characteristics of the store and the effects of assortment size on buying behavior.
Effects of Assortment Size on Buying Behavior
- Offering large assortments provides several benefits to customers, including:
- Increasing the number of SKUs that customers can purchase
- Providing a more informative and stimulating shopping experience
- Offering more variety
Setting Inventory and Product Availability Levels
- Assortment plans typically include the inventory levels of each SKU stocked in the store
- A model stock plan is a summary of the typical store inventory support for a merchandise category
- Retailers typically classify stores on the A, B, and C system, with C stores stocking the basic assortment and A and B stores having more space and accommodating more SKUs
Product Availability
- Product availability defines the percentage of demand for a particular SKU that is satisfied
- Buyers need to recognize regional differences and arrange for merchandise to be shipped to the appropriate regions to increase inventory turnover in the category
Buying Merchandise
- The first strategic decision in the merchandise management process is the type of merchandise to buy for the category: well-known national brands or private-label brands
National Brands
- National brands are products designed, produced, and marketed by a vendor and sold to many different retailers
- Vendors are responsible for developing the merchandise, producing it with consistent quality, and undertaking an advertising program to establish an appealing image for the brand
Private-Label Brands
- Private-label brands are products developed by retailers
- Retailers develop the design and specifications for their private-label products and then contract with manufacturers to produce those products
- In some cases, national brand vendors work with a retailer to develop a special version of its standard merchandise offering to be sold exclusively by the retailer
Categories of Private Brands
- Comparable to, even superior to, manufacturer’s brand quality, with modest price savings
- Imitate the manufacturer’s brand in appearance and packaging, perceived as lower quality, offered at a lower price
- Exclusive Co-brands developed by a national brand vendor, often in conjunction with a retailer, and sold exclusively by the retailer
- Premium or Copycat brands
National (Manufacturer) Labels
- Disadvantages:
- Lower margins
- Vulnerable to competitive pressures
- Limit retailer’s flexibility
- Advantages:
- Help retailers build their image and traffic flow
- Reduce selling and promotional expenses
- More desired by customers
- Customers patronize retailers selling the branded merchandise
- Push some of the financial risk onto the vendor
Private Labels
- Advantages:
- Unique merchandise not available at competitive outlets
- Exclusivity boosts store loyalty
- Difficult for customers to compare price with competitors
- Higher margins
- Disadvantages:
- Require significant investments in design, global manufacturing sourcing
- Need to develop expertise in developing and promoting brand
- Unable to sell excess merchandise
- Typically less desirable for customers
Analyze Merchandise Performance
- The next step in the merchandise management process is to analyze the performance of the process and make adjustments as necessary
Merchandise Management
- Merchandise management is 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 company’s financial goals
- Buyers need to be in touch with and anticipate what customers will want to buy
Buying Organization
- Merchandise Group Department Classification
- Each merchandise group is managed by a general merchandise manager (GMM)
- Departments are managed by a divisional merchandise manager (DMM)
Merchandise Category – The Planning Unit
- The merchandise category is the basic unit of analysis for making merchandising management decisions
- A merchandise category is an assortment of items that customers see as substitutes for one another
ABC Analysis
- A items: 5% of SKUs, represent 70% of sales
- B items: 10% of SKUs, represent 20% of sales
- C items: 65% of SKUs, represent 10% of sales
- D items: 20% of SKUs, represent 10% of sales
Multiattribute Method for Evaluating Vendors
- The multiattribute method for evaluating vendors uses a weighted average score for each vendor
- The score is based on the importance of various issues and the vendor’s performance on those issues
- A buyer can evaluate vendors by using five steps:
- Develop a list of issues to consider in the decision
- Determine importance weights for each issue
- Make judgments about each individual brand's performance on each issue
- Combine the importance and performance scores by multiplying the importance for each issue by the performance for each brand
- Determine the vendor’s overall rating by summing the product for each brand for all issues to compute an overall rating
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Description
Learn about the merchandise management process in retailing, including the role of retail buyers and the importance of offering the right products at the right time and place while meeting financial goals.
