Merchandise Management PDF

Merchandise Management Prepared By: Ralch A. Cuaresma What is Merchandise Management Merchandise management is the process that every retailer uses to plan, control, handle, acquisition, and do analysis on their retail store’s inventory. It is the process through which a ret...

Merchandise Management Prepared By: Ralch A. Cuaresma What is Merchandise Management Merchandise management is the process that every retailer uses to plan, control, handle, acquisition, and do analysis on their retail store’s inventory. It is the process through which a retailer decides which items they should keep in their store, how much of the item they should have available to meet customer demand, where the products should be put on display in the store to boost sales, and how to price these items to achieve maximum sales and profits. Merchandise Management Analysis Merchandis e Planning Manageme Control nt Acquisition Handling  Plan -A management plan is a formal planning tool that aims to design the future operations of the facility. It is a written document that outlines: the aims and objectives of the facility — what are we trying to achieve? the strategies used to meet the objectives Control - A process of interlocking activities that uses properly designed policies and procedures which are preventive, detective, corrective and continuous monitoring. Analysis - a detailed examination of anything complex in order to understand its nature or to determine its essential features : a thorough study. doing a careful analysis of the problem. Acquisition – A process in which business acquire products from other brands and manufacturers. Handling - A process by which something is handled in a commercial transaction. especially : the packaging and shipping of an object or material (as to a consumer) : the manner in which something is treated. Retail Buying Organizations Merchandise Buying – Involves sourcing goods from vendors and wholesale best possible cost to achieve maximum profitability. Merchandise Planning - a systematic approach to planning, buying, and selling merchandise based upon the market demands. Merchandise Operations - The transactional activities involved in running a merchandising business, including purchasing goods, selling products, collecting payments and paying vendors (it supports the merchandise planning and buying) What is Merchandise Buying System Merchandise buying system- Involves retailers finding and purchasing goods from manufacturers to sell them on behalf of their business. Why Merchandise Buying System is Needed? - to maximize sales and prevent excessive inventory which will lead to unprofitable markdowns. Most retailers rely on an Open-To-Buy system to control fashion and seasonal merchandise. Open-To-Buy system - Is an inventory management strategy that helps retailers calculate how many products they need to buy. The purpose of Open-To-Buy system - is a purchasing budget for future inventory orders that a retailer creates for a specific period. It helps a retailer stock the right amount of the right products at the right time by showing the difference between how much inventory is needed and how much is available. Benefits of OTB Reach Optimal Inventory Levels by Having the Right Amount of Stock Available. Improve Inventory Flexibility. Gain Better Financial Control  Merchandise Buying System: May Include BRAND SELECTION Importance of brand to retailer depends on category of retailer and its market niche. Largest categories of retail market & popular brands Food Electronics Home Improvement Variety/drug Apparel Some brands grant exclusive distribution rights Brand in assortment create credibility for retailer Brand offer variety of other benefits to retailers  Merchandise Buying System: May Include SOURCING DECISIONS Process of findings goods or services Key Issues when making sourcing decisions Company Cost Logistics Government Regulations Sourcing Sourcing is art and science: larger organizations have staff who focus on providing sourcing services for company Software applications developed to support sourcing process  Merchandise Buying System: May Include NEGOTIATIONS A strategic discussion that resolves an issue in a way that both parties find acceptable. Compromise is normally the basis of negotiation. Negotiations can take place between buyers and sellers, an employer and prospective employee, Follows A procedure Plan: gather as much information as possible, setting goals Discuss: Set scene, identify key issues Propose: clear solution Bargain: Discuss proposal Agree: reach agreement Implement: communicate outcome as necessary Merchandise Buying System: May Include Building Partner Relationships Benefits of individual connections Information, advice, introductions referrals Strong relationships are foundation of effective supply chain Even if retailer and vendor aren’t in formal arrangement, strong partnership will create Retailers: ensure they have correct product Vendors: source of market information Strong relationships benefits vendors and suppliers Merchandise Planning a systematic approach to planning, buying, Method and selling of The Product merchandise Sourcing Mix based upon the market demands. MERCHANDI SE It balances STRATEGY between the expectations of The the target Quality Range and customers and Assortme the strategy of nt Mix the firm.  Merchandise Strategy Product Mix - the total number of product lines and individual products or services offered by a company. Additionally referred to as product assortment or product portfolio. Product mixes vary from company to company. Some have multiple product lines with lots of products in each line. The Range and Assortment Mix - Used when retailers aim to offer a lot of different product lines or categories. Quality - The degree of excellence of something, often a high degree of it: Our company guarantees the quality of our merchandise. [ U ] Quality often refers to how good or bad something is Method of Sourcing - is the stage of evaluating new relations with suppliers in the act of buying goods or services from an external source.  Past performance reporting (Post Season Analysis) Post seasonal review paints a picture of the previous season performance , in a way it outlines the variance between what the business intended to achieve and the actual achieved. It give the teams direction on areas look forward in future planning, for example buying right, pricing right and placing the product in the right areas and timing in terms of inputs flowing. Trend Forecasting (Pre-Season Planning) the process of researching and formulating predictions on consumers future buying habits. By identifying the source, tracing the evolution, and recognizing patterns of trends, forecasters are able to provide designers and brands with a 'vision' of the future. (E.g. Fashion Trend) Inventory Management (In-season Adjusting and reallocation) - the process of ordering, storing, using, and selling a company's inventory. Target Segment Analysis ( Customer Demand and Behaviour) - A target market analysis is an assessment of how your product or service fits into a specific market and where it will gain the most traction with customers. Target market analyses help businesses establish strategies for effective marketing and sales techniques. Merchandise Operations Transactional activities involved in running a merchandising business, including purchasing goods, selling products, collecting payments and paying vendors. Types of Merchandise operations  Retail - A retail company is a company that sells products directly to customers. Wholesale - is a company that buys items in bulk from manufacturers and resells them to retailers or other wholesalers. Types of Merchandise Staple/basic merchandise - items that are regularly purchased, displayed and sold by the retailers. Fashion Merchandise - The presentation of a clothing item Seasonal Merchandise - products and stocks according to the seasonal trends or fashions prevailing in the market. Fad Merchandise - Fads are often seen as sudden, quick-spreading, and short-lived. (E.g. some popular fads throughout history are toys such as yo-yos, hula Note: hoops, andisfad Merchandise dances an ‘asset’ such Itas to a retailer. the makes is what Macarena, floss and a retail establishment the twist.) exists. Merchandise is the heart of the business and many important aspects of business revolve around it, hence, the retailer must manage carefully its merchandise. Merchandise Operations may Include: Merchandise Allocations It helps determine how to distribute merchandise to individuals store units for maximum sales/minimal markdowns Plan purchases from ground up based on ideal store allocation Strategic, tactical considerations & math Allocation influenced by competitive strategy where retailer is attempting to show wide assortments Commercial software applications were developed. Summary: Merchandise is an asset to a retailer. Therefore, it is crucial to carefully plan for the merchandise management because a wrong decision may harm the business. It requires an in-depth understanding of direct sales operations, buying strategies, merchandise procurement and supply chains. Merchandise management activities include; selecting vendors for sourcing, analysing products, developing pricing strategies, and managing merchandise from concept to consumer.