RETAIL.docx

**MERCHANDISE MANAGEMENT** Process by which a retailer offers the correct quantity of the right merchandise in the right place at the right time and meets the company's financial goals. **Types of Merchandise** **Staple Merchandise** Predictable Demand History of Past Sales Relatively A...

**MERCHANDISE MANAGEMENT** Process by which a retailer offers the correct quantity of the right merchandise in the right place at the right time and meets the company's financial goals. **Types of Merchandise** **Staple Merchandise** Predictable Demand History of Past Sales Relatively Accurate Forecasts **Factors Affecting Sales Projections** **CONTROLLABLE** Promotions Store Locations Merchandise Placement Cannibalization **Merchandise Planning Process** - Forecast Category Sale - Develop an assortment plan - Determine appropriate inventory level and product availability - Develop a plan for managing Inventory - Buy Merchandise - Monitor and Evaluate Performance and make adjustment **(FDDDBM)** **Forecast Category Sales** -is a way to classify a sales opportunity based on how confident the sales **Assortment Planning** -is the process of selecting the collection of products that will be on offer in particular areas (localisation) and during specified periods (seasonality). **Optimal inventory levels** -are the ideal quantities of products that you should have in a fulfillment center(s) at any given time. **PRODUCT AVAILABILITY** The percentage of demand for a particular SKU that is satisfied **Inventory planning** is the process of determining the optimal quantity and timing of inventory for the purpose of aligning it with sales and production capacity. **Cycle (base) stock** Inventory that goes up and down due to the replenishment process **Backup (buffer, safety) stock** Inventory needed to avoid stockout **Three types of analyses related to the monitoring and adjustment step are:** Sell through analysis ABC analysis of assortments Multi-attribute analysis of vendors **Sell-through Analysis** compares actual and planned sales to determine whether more merchandise is needed to satisfy demand **ABC analysis** -identifies the performance of individual SKUs in the assortment plan. **Rank** orders merchandise by some performance measure determine **Multi-Attribute Method** -for evaluating vendors uses a weighted average score for each vendor. **Brand alternatives** **NATIONAL BRANDS** known as manufacturer brands, designed, produced and marketed the product to retailers. **PRIVATE LABEL BRANDS** ALSO CALLED STORE BRANDS, HOUSE BRANDS OR OWN BRANDS. **Categories of Private label brands** There are four types of private label brands. **PREMIUM BRANDS** offer consumer a private label comparable to manufacturers quality with little price savings. **COPYCAT BRANDS** imitate the manufacturers brand in appearance and packaging but in low quality with lower price. **EXCLUSIVE BRANDS** developed by a national brand often added with a retailer and sold by that particular retailer. **GENERIC BRANDS** targets a price sensitive segments by offering non-frills products at discount price. **Negotiation issues: (PATEAT)** Prices and gross margins Additional mark-up Terms of purchase Exclusivity Advertising allowance Transportation **Tips for effective negotiation (CBSIILKDD)** Choose a good place to negotiate Be aware of real deadlines Separate the people from problems Insist on objective information Invent option for mutual gain Let them do talking Know how far to go Don't burn bridges Don't assume **STRATEGIC RELATIONSHIP** emerges when a retailers and vendors committed to build long term relationship, investing opportunities profitable for both parties. **Legal and ethical issues to Buying merchandise** **Terms and condition of purchase** the law passed on terms and condition that vendors can not offer different to different retailers for same quality and features products. **Commercial Bribery** is illegal in merchandising to influence the buying decision of retailers by offering something valuable. **Chargeback** deducting owe money by retailers to vendors when the time of payment missed. It is unethical in merchandising. **Buybacks** is system that gives favors to vendors by buying back and sniffing space allowance rather than competitors **Counterfeit merchandise** includes goods made without the permission of the owner of a trademark or a copyright. **Copyright** is an intellectual property. **Gray-Market Merchandise** Gray-Market goods, also known as parallel imports, involve the flow ofmerchandise channels, usually across the international borders. **Diverted merchandise** It is similar to gray-market merchandise except there need not be distribution across international borders. **Black Market Merchandise** It occurs when consumer goods are scarce, such as water or gasoline after a natural disaster. **Retail price** -is what consumers pay for the finished product. **Pricing strategies** **Cost-plus pricing** -is also known as mark-up pricing, is the easiest way to determine the price of a product. **Competitive pricing** It refers to using competitors' pricing data as a benchmark and purposely pricing your products below theirs. **Value-based pricing** **-**also known as **price-to-value**, refers to setting a price based on how much the customer believes a product or service is worth. **Price skimming** -is when an e-commerce business charges the highest initial price that customers will pay. **Discount pricing** -Discounting is a top pricing method for retailers across all sectors, with one survey finding that 28% of shoppers usually seek out coupons before buying online. **Penetration pricing** -A penetration pricing strategy is useful for new brands trying to break into a market. That's because this strategy introduces a new product at a low price in an effort to gain market share, then increases the price over time. **Keystone pricing** -Keystone pricing is a product pricing strategy in which you mark up retail price by simply doubling the wholesale cost paid for a product. **Manufacturer suggested retail price** The manufacturer suggested retail price (MSRP) is the price a manufacturer recommends retailers use when selling a product. **Dynamic pricing** Dynamic pricing is when a company continuously adjusts its prices based on different factors, such as competitor pricing, supply, and consumer demand. The goal is to increase profit margins for the business. **Multiple pricing** This tactic is also known as product bundlin. **Psychological pricing** Psychological pricing, or charm pricing, leverages prices to influence a consumer's spending behavior **Loss-leader pricing** this strategy, retailers attract customers with a desirable discounted product and then encourage them to buy additional items. **Premium pricing** With premium pricing, brands benchmark their competition then price products higher to give the impression of being more luxurious, prestigious, or exclusive. **Premium pricing:** Gucci **Value-based pricing strategy:** Fashion Nova **Penetration pricing strategy:** Netflix **Competitive pricing strategy:** Costco