Lecture 5 Range Planning

Range Planning Lecture 5  You tube Forecasting range planning https://www.youtube.com/watch?v=nNWFn1rcNG8 Introduction To explore how a retailer creates a product offer that consists of the products that reflect the needs, want...

Range Planning Lecture 5  You tube Forecasting range planning https://www.youtube.com/watch?v=nNWFn1rcNG8 Introduction To explore how a retailer creates a product offer that consists of the products that reflect the needs, wants, and aspirations of the target market  The range plan A range plan is an overview of your collection with all of the design and financial parameters set out. The plan outlines the specifics of your collection; from how many styles you will have, to what fabrics and colourways will be used  White board exercise What are the benefits of a range plan  Your range plan is a valuable Benefits of a range plan tool that gives you visibility of the next seasons’ range, and planned margin performance, BEFORE you commit your orders to your suppliers It also has a positive effect on sales as you’ll be presenting a range that is cohesive, offering choice, and at price points that your customers are comfortable with  Essential for determining the product mix The range plan Contains complete detail of all styles, required lead times for each style and how many phases within each range Overall styling direction and theme will be determined early on Within a season, phases are timed for each collection, which allows new colour statements and products to be introduced  The range plan The team of designers, buyers and merchandisers will determine the total number of styles required per This includes: category of product the proportion of tops to bottoms or daywear versus evening wear the proportion of fashion versus classic versus basics (core) the size range the type of fabric and numbers of colours per style Range planning process Fashion retailers are now increasing the number of collections available during a typical season The model in fashion retailing has shifted from seasonal purchasing to shorter, rapid bursts of new products  Range planning process To determine the product mix, the buyers and merchandisers will review with the designer teams: – the previous season’s sales history (good/bad sellers), – emerging trends – the performance of their competition The range plan “A chart containing the finalised details of each product within a range for a particular season” ( Helen Goworek, Fashion Buying) The range planning process usually involves a collaboration of the designer, buyer and merchandiser to determine the product mix EXAMPLE OF WOMENS RANGE PLAN: Season: Spring/summer, 2018, high summer, Product area: jerseywear Reference Size Cost Selling Number Product Description Supplier Colourways Fabric Quality Range Price SS091 Short-sleeved T-shirt with VS Garments Raspberry 97% cotton, 3% lycra 8-20 £4.07 £12 gathered neckline Turkey Mango jersey SS092 Strappy vest VS Garments Raspberry 100% cotton 1 x 1 rib 8-16 £2.58 £8 Turkey Mango, Sage SS093 Long-sleeved round neck Quality Style Mango, Sage 100% cotton needle-cut 8-20 £5.89 £18 top with embroidered logo Ltd, China interlock SS094 V-neck fitted cardigan with Quality Style Raspberry 1 x 1 rib 8-20 £6.45 £20 trimmed neckline Ltd, China SS095 Lightweight hooded fleece Quality Style Raspberry 100% polyester SML £6.34 £20 with zip and embroidered Ltd, China Sage fleece logo SS096 Shorts with drawstring Afyon Clothing Raspberry 98% cotton, 2& lycra 8 – 16 £4.96 £15 waist and embroidered Sri Lanka single jersey logo on pocket SS097 Trouser with rib waistband Afyon Clothing Mango 100% cotton interlock 8 – 20 £6.73 £20 Sri Lanka waistband 1 x 1 rib  Merchandise planning Merchandise planners have to gauge daily, weekly and seasonal demand This is a challenge because of fashion and apparel’s: Unpredictability Seasonality Product complexity  Risk and range size Although more unusual colours, prints, and styles may have been trend forecasted as the season’s newest ‘in’ look , the majority of fashion customers err on the cautious side not wanting to stand out from the crowd Reducing levels of riskier merchandise The fashion press love to features the more leading and extreme fashion styles but seasoned fashion buyers tend to be more cautious However, even the most conservative fashion buyers buy enough of the riskier fashion pieces, in order to ensure that their department balance gives the right overall first impression  The right balance Although there are international clothing standards, there is great deal of variation of garment sizes between different retailers and brands Vanity sizing Most customers want something in their size, available and fits well Range width and Buyers work endlessly with merchandisers and store space depth planners to get the right number of lines allocated for each different size or group of shop(s) Department stores have thousands of individual fashion lines stocked A small boutique will have a few hundred  Breadth(Width) of Product Mix ---Depth of Product Mix---- D-Diesel Clothing Accessories Spare Parts Shades Writing tools Time Frames Footwear Fragrances Series I Series 2 Series 3 Series 4 Series 5 DZ7021 DZ1502 etc (13 variations) Narrow and Deep Square Broad and product specialist Market specialist shallow eg Tie Rack offers co-ordinated Full-line variety assortment store. Limited choice within wide assortment eg Dept Depth Stores Depth Depth Width Width Width How much to Stocking all sizes and colours all stock? of the time is a fashion ideal, but is rarely the case Fringe large and small sizes are only carried in small quantities because the statistical demand odds for them are generally lower than the median consumer sizes No fashion retailer can 90% very rarely offer 100% availabiti ty may colour, size or line be set as availability a KPI  You tube https://www.youtube.com/watch?v=S9PuTgkVCaE Planning sales phasing Phasing is the breaking down of a variable into smaller amounts which add up to the whole Buyers, will also ensure within a season, phases are timed for each collection, which allows new colour statements and products to be introduced  Sales phasing It may be appropriate to phase in your sales as last year with some amendments to allow for: – Movements in public holidays such as Easter – New section/department/store openings – Section/department/store closures – Section/department/store refurbishment – Promotions can make a significant impact on planned sales phasing  Monthly financial sales phasings of a typical fashion retail business – womens wear (%) January 10.4 Feb 6.6 March 7.8 April 7.2 May 7.9 June 8.9 July 8.5 August 8.2 Sept 6.9 Oct 7.5 Nov 7.8 Dec 12.3 100  Sales phasing Seasonal sales variation – A/W sales usually more than S/S Departments with seasonal sales peaks – Nightwear/underwear peak in Nov/Dec – Swimwear during May/June – T-shirts in summer Fundamental sales ratios – Tops to bottoms (2:1) EXERCISE Break out group How can buyer improve stock turnover WHAT ARE THE REASONS FOR SLOW MOVING Improve slow MERCHANDISE moving merchandise How can buyer improve stock turnover? Slow turning merchandise can be due to several reasons: Trying to carry too wide an assortment Wrong merchandise Merchandise too late Merchandise too expensive Store may not be promoting stock effectively  What external and internal factors could influence EXERCISE fashion sales phasing ( when you send stock to the stores) Planned factors Unplanned factors  Key factors influencing fashion sales phasings External factors Reason Unplanned Hot or cold unseasonable weather Customers generally buy for immediate use Heavy snow or rain Customer flow reduced Unplanned local or national events Diverts customer interest Sudden increase in competition Other businesses take sales away National or local strikes Possible disruption of transportation or services Competitors regular sales & events May have better/worse offers Competitors ranges May launch earlier, better ranges Planned Holiday periods Diverts customers away from shops Natural seasonal demand for eg swimwear in May & June key garments Time of day most sales taken between 11 and 4 Days of week 40% of all fashion sales taken on Fri/Sat Annual Summer + Winter sales High spending by consumers on bargains  Key factors influencing fashion sales phasings Internal factors Reason Planned Increased use of sales promotion Various promotional methods can stimulate tools short term sales Staffing levels Correct level of sales staff needed at key times Better ranges, prices and prod’s Depends upon skill of buying and merchandising team  Alternative ways of sub-dividing product ranges End use Price Brand Classic Core and non-core Fashion and fads  Fashion retail planning levels Planning level Description Line or style level By individual garment – all sizes and colour option Sub category A logical grouping – eg long skirts Category A consolidation of all sub-categories – eg skirts Department A grouping of related categories – eg shorts, trousers, jeans and skirts might simply be described as ‘bottoms’ Business All ladies’ departments and all men’s departments = TOTAL BUSINESS  At the start of a season, buyers and merchandisers are effectively controlling: Clearing and marking down Last season slow lines Delivering, monitoring and Current season reacting to sales Planning samples, writing Future season orders and planning delivery phasing  The product mix Basics (aka core items) – Are best-selling, high volume items that are available all year round, regardless of the season (eg hosiery, t- shirts, lingerie) – Tend to be mass market, high volume lines – Tend to have a higher margin than fashion items and a low product development cost – Require redesigning and continual seasonal updates such as new fabric, improved fit, colour or new trimmings to coordinate with latest fashion looks  The range plan and initial allocation Typical range plan – also showing initial allocation Quantities of a line, by units Line Turnover of store A B C D E Total Very large 24 24 18 18 12 96 Large 18 18 12 12 9 69 Medium 12 12 9 9 42 Small 6 6 12  Compiling a range plan Number of garments to be included Proportion of different types of garment Specific garment styles to be included Fabrics and colour-ways to be offered in each style Cost prices for each style Selling prices to be offered across the range Which manufacturers to use for each style Order quantities per style  Generating the right balance EXERCISE What factors contribute to the right range balance Good range balance means: Good overall first impression upon entry Clearly visible, relevant and fashionable colour, design, and/or style offer Good relevant selection of brands – especially important for branded merchandise retailers Good value and clear pricing (not necessarily the cheapest) Stock availability in all sizes, colours, designs and fits  Challenges Today’s consumers are used to instant gratification They expect endless choice Buyers need to think carefully about lines that might easily become satisfactory replacements for the customer if their first choice is no longer available  Perfection is never possible, but a well-balanced range overall can greatly assist in switching consumers to another similar best-selling lines in the range  The importance of planning Retail fashion merchandise planning is mainly concerned with the numerical control and management of the range from initial conception to delivery to the shop  EXERCISE Why would you not want to plan too far in advance What issues could you encounter  PLANNING IN ADVANCE If you plan so far in advance you may miss New emerging trends New colours can emerge as more important the closer it gets to the trading season New shapes  Starting the planning process for a season Generally started 6 months to a year ahead of the start of the season When starting planning a new season, it is worth looking back at what happened the previous season  The importance of the merchandiser in planning based on a balance of previous sales history combined with forward sales/trend predictions the need to react, recommend and make changes is key  Setting sales/budget targets ‘top-down’ is when targets are proposed from a higher level and are given to the buyers/merchandisers to achieve ‘bottom up’ is when buyers,merchandisers construct their own targets by determining the budgets for their own individual responsibility areas which are then rolled up  In a top-down approach, the total budget is planned and then divided into individual item categories based on their historical fraction of sales. The bottom-up approach involves a separate forecasting model that is developed for each item budget then the budget of each item is added into a total budget for final forecasting results Sales planning Sales and stock level re-forecasting occurs throughout the season to accommodate changing trading conditions as the best and worst sellers become apparent  Stockturns/Week cover In retailing, we invest money in stock and aim to turn it back into cash as quickly as possible. The number of times we can can do this within a planning period (eg a year), is our rate of stockturn  STOCK TURN Stock turn (also known as Weeks Cover is an efficiency ratio. Good fashion businesses turn their stock over quickly, this is called high stock turn. This weeks cover refers to the number of weeks that your stock would last until it sold out. The fewer weeks of stock = the faster the Stock Turn = efficient buying and selling = higher profit. Stockturn weeks cover Stockturn = Annual sales value Average monthly stock value Eg £200,000 = 5.5 times a year stock turn £36,133 Retailers refer to stock turn as ‘weeks’ stock cover To do this, you simply divide the stock turn by 52 Eg 52 = 9.4 weeks cover 5.5 In other words, 9.4 weeks is how long current stock will last into the future based upon current rates of sale. Usual expected weeks’ stock cover by type of fashion retailer Type of fashion business Approx annual stock turn Weeks’ cover Haute couture 2.0 26 Exclusive designer 2.5 20 Up-market branded store 2.7 18 Independent retailer 3.0 17 Dept store 4.0 12 Fashion multiple 6.0 8 Value discount store 8.0 6  Failing to achieve planned stock turn The danger of seasonal stock carryover The problem of displaying last year’s styles The problem of range fatigue The problem of blocked buying Last years styles The problem of displaying last year’s styles – Fashion stock displayed a year later can do great damage to the customer’s perception of a fashion business, causing customer confusion as to what is good and bad stock  Range fatigue The problem of range fatigue – If retailer fails to turn stock, the range will look tired and fragmented. This creates a poor visual impression  Blocked buying The problem of blocked buying – Slow stock turn can lead to lack of money to re-invest in new stock , capture new trends