RM71003 Category Management & Merchandising Learner's Guide_Version 2 (2023).pdf

E-COMMERCE & RETAIL LEARNER’S GUIDE for Category Management & Merchandising (RM71003) Work-Study Diploma RM71003: Category Management & Merchandising Table of Co Learning Documents in this Learner’s Guide.............................................................................. 1 Structure of Le...

E-COMMERCE & RETAIL LEARNER’S GUIDE for Category Management & Merchandising (RM71003) Work-Study Diploma RM71003: Category Management & Merchandising Table of Co Learning Documents in this Learner’s Guide.............................................................................. 1 Structure of Learner’s Guide...................................................................................................... 2 Perform Category Management Strategy & Merchandising........................................................ 3 C1 Review Product Category Performance................................................................................ 4 Work Situation (PLAN)........................................................................................................... 4 Professional Attributes (PLAN)............................................................................................... 4 C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System (EXPLORE & PRACTISE)....................... 5 Training Notes for C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System.......................... 6 C1.1.1 Compile Sales Report.......................................................................................... 6 C1.1.2 Verify the Date Period of Report..........................................................................10 C1.1.3 Compare Performance with Sales Targets..........................................................22 C1.1.4 Compare Performance with Past Periods............................................................27 Worksheet for C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System.........................28 Task Sheet for C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System.........................29 Summary for C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System.........................33 C1.2: Suggest Recommendations Based on Findings Developed from Performance Review (EXPLORE & PRACTISE).....................................................................................................34 Training Notes for C1.2: Suggest Recommendations Based on Findings Developed from Performance Review.........................................................................................................35 C1.2.1 Identify Areas for Further Analysis......................................................................35 C1.2.2 Compile Other Types of Reports Relevant to the Areas of Interest.....................38 C1.2.3 Identify Cause of Performance............................................................................41 C1.2.4 Make Recommendations to Improve Future Performance...................................43 Worksheet for C1.2: Suggest Recommendations Based on Findings Developed from Performance Review.........................................................................................................44 RM71003: Category Management & Merchandising Task Sheet for C1.2: Suggest Recommendations Based on Findings Developed from Performance Review.........................................................................................................45 Summary for C1.2: Suggest Recommendations Based on Findings Developed from Performance Review.........................................................................................................48 Task Sheet for C1: Review Product Category Performance (PERFORM).............................49 Summary for C1: Review Product Category Performance (PERFORM)................................50 C2: Perform Category Management and Merchandising...........................................................51 Work Situation (PLAN)..........................................................................................................51 Professional Attributes (PLAN)..............................................................................................52 C2.1: Obtain new/ promotional items planned as shared by Purchasing Department (EXPLORE & PRACTISE).......................................................................................................................52 Training Notes for C2.1: Obtain new/ promotional items planned as shared by Purchasing Department.......................................................................................................................53 Worksheet for C2.1: Obtain new/ promotional items planned as shared by Purchasing Department.......................................................................................................................60 Summary for C2.1: Obtain new/ promotional items planned as shared by Purchasing Department.......................................................................................................................61 C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders (EXPLORE & PRACTISE)........................................62 Training Notes for C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders.............................................63 Category Leader Items...................................................................................................63 Normal retail selling prices of items................................................................................64 Price is the sum of money customers are willing to exchange for the benefits of having or using the product of service............................................................................................64 Worksheet for C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders.............................................67 Summary for C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders.............................................69 C2.3: Negotiate on additional promotional space needed, based on rates pre-determined at store (EXPLORE & PRACTISE)............................................................................................70 Training Notes for C2.3: Negotiate additional promotional space needed, based on rates predetermined at store...........................................................................................................71 Worksheet for C2.3: Negotiate additional promotional space needed, based on rates predetermined at store...........................................................................................................85 RM71003: Category Management & Merchandising Summary for C2.3: Negotiate additional promotional space needed, based on rates predetermined at store...........................................................................................................87 C2.4: Order stocks in for delivery based on promotion and delivery dates (EXPLORE & PRACTISE)...........................................................................................................................88 Training Notes for C2.4: Order stocks in for delivery based on promotion and delivery dates...........................................................................................................................................89 Worksheet for C2.4: Order stocks in for delivery based on promotion and delivery dates..94 Summary for C2.4: Order stocks in for delivery based on promotion and delivery dates...95 C2.5: Plan implementation of planograms at store based on planograms approved by purchasing department (EXPLORE & PRACTISE)................................................................96 Training Notes for C2.5: Plan implementation of planograms at store based on planograms approved by purchasing department.................................................................................97 Worksheet for C2.5: Plan implementation of planograms at store based on planogram approved by purchasing department...............................................................................107 Summary for C2.5: Plan implementation of planograms at store based on planograms approved by purchasing department...............................................................................110 C2.6: Clear existing promotional space to get ready for set up of upcoming promotions following stores’ operational guidelines (EXPLORE & PRACTISE)....................................................111 Training Notes for C2.6: Clear existing promotional space to get ready for set up of upcoming promotions following stores’ operational guidelines.........................................................112 Worksheets for C2.6: Clear existing promotional space to get ready for set up of upcoming promotions following stores’ operational guidelines.........................................................115 Summary for C2.6: Clear existing promotional space to get ready for set up of upcoming promotions following stores’ operational guidelines.........................................................116 C2.7: Set up display for new/ promotional items based on operational display guidelines in store (EXPLORE & PRACTISE)...................................................................................................117 Training Notes for C2.7: Set up display for new/ promotional items based on operational display guidelines in store...............................................................................................118 Worksheets for C2.7: Set up display for new/ promotional items based on operational display guidelines in store...........................................................................................................126 Summary notes for C2.7: Set up display for new/ promotional items based on operational display guidelines in store...............................................................................................127 C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices (EXPLORE & PRACTISE)...................................................128 Training Notes for C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices......................................................................129 RM71003: Category Management & Merchandising Worksheets for C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices......................................................................136 Summary notes for C2.8: Check scanned pricing on the morning of the..........................137 new/ promotion before store opens according to advertised prices.................................137 Task Sheet for C2: Implement trade market promotions and shelf management strategies.........................................................................................................................................138 Tools, Equipment and Materials......................................................................................140 Scenario..........................................................................................................................141 Instructions......................................................................................................................142 References.............................................................................................................................146 RM71003: Category Management & Merchandising Learning Documents in this Learner’s Guide There are three learning documents in this Learner’s Guide as shown in the table below. Document Description Training Notes A compilation of the knowledge and information (facts, concepts, principles and other relevant information) for you to perform the activities of the workplace task Worksheet A worksheet consists of exercises that will help reinforce your learning and to check your understanding on the knowledge needed to perform the task Task Sheet A task sheet is a type of practical exercise and contains instructions to guide you carry out a single operation or a smaller task which is part of the workplace task To learn each task, you have to read the training notes and complete the worksheet to ensure that you have acquired the knowledge required. Prepare yourself ahead to perform the task by reading the task sheet. In the college, your trainer will demonstrate how to carry out the task, after which you will practise the task by following the instructions given in the task sheet. Your trainer will give you feedback accordingly. Page 1 RM71003: Category Management & Merchandising Structure of Learner’s Guide This learner’s guide consists of all the competencies required for the area of competencies. Each competency comprises of a work situation and a few subtasks. The learning documents within each subtask consist of the training notes, worksheets and task sheets. The structure of this learner’s guide is shown in the figure below. Category Management & Merchandising C1: Review Product Category Performance Subtask C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company's System C2: Implement Trade Marketing Promotions and Shelf Management Strategies Subtask C1.2: Suggest Recommendations Based on Findings Developed from Performance Review Training Notes Training Notes Worksheets Worksheets Task Sheets Task Sheets Page 2 RM71003: Category Management & Merchandising Perform Category Management Strategy & Merchandising This area of competencies focuses on skills, knowledge and professional attributes to perform market analysis, understand market dynamics, perform spend & demand analysis, develop category management strategy and shelf & space planning to achieve effective use of resources. Perform Category Management Strategy & Merchandising C1: Review Product Category Performance C2: Implement Trade Marketing Promotions and Shelf Management Strategies Page 3 RM71003: Category Management & Merchandising C1 Review Product Category Performance Work Situation (PLAN) As a Retail Executive of a store, reviewing performances are typically done on a weekly and monthly basis. Weekly A weekly task is to analyse sales data of products within the category sold in the past week. At the end of every week, you are required to compile the weekly sales data and identify the products that sold well and those that sold poorly within the category. Once products are identified, studies and discussions with the retail assistants and product merchandisers will have to be done to identify the reasons behind their performances and how they can be done better and if they should be picked for future promotions. Discussions with the Team Leaders/Supervisors will be held to discuss the reasons behind the performances on what was done well and what could be done better. Monthly At the end of every month, a monthly report will need to be produced and compiled to identify the top sales performers and the bottom performers within the category. Trend lines will have to be drawn for the identified products and discussions and decisions will have to be made in deciding if they should continue to be featured on shelves. Sales reports will have to be reported and presented to the store managers on what was done well and what could be done better. Perform Category Management Strategy & Merchandising C1: Review Product Category Performance C2: Implement Trade Marketing Promotions and Shelf Management Strategies Professional Attributes (PLAN) In the competency, you are required to demonstrate the following professional attributes: 1. Make decisions based on analysis and interpretation of sales data. 2. Demonstrate digital fluency in data analysis and accessing of data. Page 4 RM71003: Category Management & Merchandising C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System (EXPLORE & PRACTISE) C1: Review Product Category Performance C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company's System C1.2: Suggest Recommendations Based on Findings Developed from Performance Review C1.1.1 Compile sales report C1.1.2 Verify the date period of report C1.1.3 Compare performance with sales targets C1.1.4 Compare performance with past periods Page 5 RM71003: Category Management & Merchandising Training Notes for C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System C1.1.1 Compile Sales Report The components of a sales report are as follows: Relevant Key Performance Indicators (KPIs) (determined by nature or type of sales report) Sales volume Net sales (this is a dollar figure, whereas sales volume is simply the number of sales made) Gross sales (net sales minus the cost of sales) Percent of KPI change compared to the previous reporting period Page 6 RM71003: Category Management & Merchandising A sales report is an analytical tool that provides insights into the performance of various sales activities within a company. In this section, we will cover key components of a sales report. 1. Relevant KPIs KPI stands for key performance indicator, a quantifiable measure of performance over time for a specific objective. KPIs provide targets for teams to shoot for, milestones to gauge progress, and insights that help people across the organization make better decisions. Every business unit has unique key performance indicators that help them track progress. For purpose of this module, we shall look at sales or retail related KPIs. Sales KPIs are the metrics to evaluate the team's performance against the sales and organizational goals. By measuring the right sales KPIs, an organization can optimize its sales process and ensure that its sales teams are prioritizing the right activities for greatest success. Below are some common KPIs that are used and are not exhaustive. Types of KPI Sales Growth Description Setting sales growth as a KPI allows an organisation to track the growth of sales in different categories within a store, between stores or between sales personnel. How do you calculate sales growth? Sales Growth = (S2 – S1)/S1 * 100 where S2 is the sales for the current period S1 is the sales for the prior period E.g. The sales growth of a health and personal care store may see its cosmetics category having high positive growth, while that of the health supplements category seeing negative sales growth. This can be a sign to reassess the product distribution in the store. Page 7 RM71003: Category Management & Merchandising Types of KPI Sales Target Description Tracking the percentage of sales each category is meeting, compared to its sales target, allows an organisation to know if the team is doing what they should, if they need help, or if the whole strategy of the team should be changed or adjusted. Sales Target Achievement = Actual Sales/Sales Target Sales Volume Sales volume refers to the number of units a company sells during a specific reporting period. This period can be a month, a quarter, or a year depending on what level of sales volume to be analysed Average Revenue Per Unit (ARPU) ARPU stands for average revenue per unit, the unit part of the acronym stand for the customer. This indicates the average customer’s revenue from sales. ARPU = Total monthly revenue / Total number of customers If the ARPU is low, strategies such as promotional bundles, upselling or cross-selling may be implemented to increase ARPU. Incremental Sales By Campaign This shows the number of sales generated by each marketing activity performed. Incremental Sales = New sales generated during campaign – Baseline sales Tracking this KPI enables an organisation to determine the campaigns and marketing strategies that bring the best results. Opportunity-ToWin Rate This sales KPI tells us how effective a sales team or sales personnel closes accounts. E.g. In an electronic store, Opportunity-to-win Rate = Number of customers who buy Number of customers that enters the store x 100 This KPI allows us to track the effectiveness of sales personnel. Looking at each sales personnel’s opportunity-to-win ratio enables the company to identify areas of improvement and act accordingly. Page 8 RM71003: Category Management & Merchandising 2. Gross Sales Gross sales refers to the grand total of all sales transactions over a given time period. This does not include the cost-of-sales or deductions (like returns or allowance). To calculate a company's gross sales, add up the total sales revenue for a specified period of time - monthly, quarterly, or annually. Gross sales serves as the basis for measuring top-line revenue within a certain timeframe. It would be impossible to calculate important revenue metrics, such as net sales and gross profit margins, without gross sales. 3. Net Sales Net sales is total revenue, less the cost of sales returns, sales allowances, and sales discounts. A sales return is recorded whenever goods are returned by a customer. A sales allowance is recorded when a customer complains about the condition of received goods and negotiates for a reduced price. A sales discount a reduction in the price of a product or service that is offered by the seller, in exchange for early payment by the buyer. For example, a "2% 10/Net 30" terms, allows a 2% discount for paying within 10 days of the invoice date, or paying in 30 days. 4. Percent of KPI Change Compared to the Previous Reporting Period Outcome measure is often expressed as a percentage increase, change, or results from an outcome. An example of this would be percentage increase in revenue compared to last year. E.g. Store A generated sales of $1 million for January 2021. It generated sales of $1.1 million for January 2022. The percentage increase in revenue is 10%. Page 9 RM71003: Category Management & Merchandising C1.1.2 Verify the Date Period of Report A sales report is an analytical tool that provides insights into the performance of various sales activities within a company. Sales teams use these reports to find trends and patterns to improve their service and ensure sales growth. They give a snapshot of the company’s exercise at a specific moment in time to assess the situation and determine the best decision to make and the type of action to undertake. They can be of various forms: Daily sales reports Weekly sales reports Monthly sales reports Annual sales reports Sales Report By Period Description Daily Sales Reports A daily sales report can track KPIs, such as a sales personnel's daily sales performance and leads generated or stores daily revenue throughout the week. Weekly Sales Reports A weekly sales report can track KPIs, such as the entire sales teams, store’s weekly sales performance, item category deals closed or revenue earned. Monthly Sales Reports A monthly sales report can provide a longer term overview of the metrics tracked in either a daily or weekly sales report. This also gives an overview of the consumer’s behaviour throughout the month. Annual Sales Reports An annual sales report is an especially lengthy, detailed version of a monthly sales report. It may be the most useful for determining a subsequent year's sales quotas. It can also help you address sales management. This is usually analysis to set the KPI for the next year, when analysis is done with the previous annual sales reports. E.g. Annual sales reports of 2018 to 2022 are analysed for trends and performance of a store. Target for the store is set for the KPIs for 2023. Page 10 RM71003: Category Management & Merchandising Type of Charts Used for Sales Report Sales reports should not just be lists of numbers. Charts and other helpful images will help the audience make sense of the figures. Using the right type of chart will allow the audience to have an easier time seeing the trend and analyse the data. For example, an annual report might call for a line chart to show revenues month over month. They can be of various forms: Column Chart Line Chart Pie Chart Bar Chart Scatter Chart Bubble Chart Combination Chart Chart Type Column Chart Description Column chart uses vertical bars to represent data. It is good for showing comparisons between data sets. E.g. Compare the sales of different stores, sales of different sales personnel, or across periods. Line Chart Line chart is ideal for showing trends. The data points are connected with lines, making it easy to see whether values are increasing or decreasing over time. Able to highlight abnormalities within and across data series. Page 11 RM71003: Category Management & Merchandising Chart Type Pie Chart Description Pie chart makes it easy to compare proportions. Each value is shown as a slice of the pie, so it is easy to see which values make up the percentage of a whole. E.g. Use this chart to see which category contributes most to your store or company’s revenue or gross profit. Bar Chart Bar chart works like column chart, but uses horizontal bars instead of vertical bars. Ideal when your category names are long Scatter Chart Scatter chart is useful for understanding if two different data points may be related. E.g. A coffee shop could track sales of iced coffee vs. the temperature outside to see if there is any relationship between sales and temperature. A "line of best fit" can also be added (also called a "trend line") on the scatter chart to help us make predictions that are based on past data. Bubble Chart Bubble charts tells the story of 3dimensional data. It allows visuals to quantify the share of category by comparing the size of each bubble in the chart. Bubble chart is similar to scatter chart that magnify the points based on its % share. E.g. A bubble chart is created using quarterly sales of store. Page 12 RM71003: Category Management & Merchandising Chart Type Combination Chart Description Combination chart combines features of a column chart and line chart. It allows different variables to be placed to allow a more comprehensive view of data. E.g. The month of May has the lowest sales, but has the highest profit due to the low cost incurred. Putting Target Visual into Charts Target visual placed into the charts allows quick sensing of how well the company or team is doing just by looking at the different reports. E.g. The company hits and exceeds targets for most months in the first half of the year, especially on the month of May, but did poorly in April and June. Page 13 RM71003: Category Management & Merchandising Advantages and Disadvantages of Charts In order to determine the type of chart suitable for the given data, it is important to understand the advantages and disadvantages of the different type of charts. Chart Type Column Chart Advantages Disadvantages Shows comparisons between data sets. Requires additional written or verbal explanation. Easy to read and understand. Easily manipulated using scales to provide false impression. Can be used to compare data sets over time. Fails to reveal assumptions, causes and Easily identify magnitude of effects. values in each category. Not suitable if there are Able to display a wide large number of categories. variety of data such as percentages, averages and totals. Line Chart Shows the increase or decrease in trends over different intervals of time. Easy to read and understand. Can be used to compare data sets over time. Easily identify small changes as line segments connect every 2 data points. Able to highlight abnormalities within and across data series. Plotting too many lines over the chart makes it cluttered and confusing to read. Only ideal for representing data that have numerical values and total figures. Easily manipulated using scales to provide false impression. Not suitable if there are large number of categories. Page 14 RM71003: Category Management & Merchandising Chart Type Pie Chart Advantages Disadvantages Shows relative proportions of multiple classes of data. Do not easily reveal exact values. Summarizes a large data set in visual form. Easily manipulated using scales to provide false impression. Easy to read and understand. Fails to reveal assumptions, causes and Permits visual check of the effects. reasonableness or accuracy Many pie charts may be of calculations. needed to show changes over time. Bar Chart Shows comparisons between data sets. Requires additional written or verbal explanation. Easy to read and understand. Easily manipulated using scales to provide false impression. Can be used to compare data sets over time. Fails to reveal assumptions, causes and Easily identify magnitude of effects. values in each category. Not suitable if there are Able to display a wide large number of categories. variety of data such as percentages, averages and totals. Scatter Chart Shows relationship between 2 variables. Does not show relationship for more than 2 variables. Best method to show nonlinear pattern. Fails to reveal exact extent of correlation. Range of data flow, like the maximum and minimum value, can be determined. Fails to reveal quantitative measure of relationship between 2 variables. Patterns are easy to observe. Page 15 RM71003: Category Management & Merchandising Chart Type Bubble Chart Advantages Disadvantages Shows relationship between 3 variables. Difficult to understand when bubbles overlap. Shows data in 3-dimension to widen the scope of analysis. Hard to depict zero or negative values. Range of data flow, like the maximum and minimum value, can be determined. Hard to ascertain exact values using circle sizes. Patterns are easy to observe. Combination Chart Shows relationship Displays only 1 dimension between different data sets. at a time. Data Cleaning Data cleaning is an important process to complete before creating chart. Data cleaning is the process of ensuring data is correct, consistent and usable. You can clean data by identifying errors or corruptions, correcting or deleting them, or manually processing data as needed to prevent the same errors from occurring. Most aspects of data cleaning can be done through the use of software tools, but a portion of it must be done manually. Although this can make data cleaning an overwhelming task, it is an essential part of managing company data. Page 16 RM71003: Category Management & Merchandising Create Charts Companies can create charts through the use of software tools. However, when software tools are unavailable, a simple way to create charts is to use Excel. In this example, we look at how a Bar Chart can be created using Excel. (i) Highlight the data that you would like to use for the bar chart. In this example, we have selected the range A1:C5. (ii) Select the Insert tab in the toolbar at the top of the screen. Click on the Bar Chart button in the Charts group and then select a chart from the drop down menu. In this example, we have selected the first bar chart (called Clustered Bar) in the 2-D Column section. Page 17 RM71003: Category Management & Merchandising (iii) Now you will see the bar chart appear in your spreadsheet with horizontal bars to represent both the shelf life and restock time for each product. The shelf life (in days) is displayed as orange horizontal bars and the restock time (in days) is displayed as blue horizontal bars. You can see the axis values on the bottom of the graph for these horizontal bars. Once chart is created, we will need to edit/format the chart as follows: Page 18 RM71003: Category Management & Merchandising Format tab: Edit title: Click on "Chart Title" at the top of the graph object. You should see the title become editable. Enter the text that you would like to see as the title. In this example, we have entered "Product Life (in Days)" as the title for the bar chart. Page 19 RM71003: Category Management & Merchandising Add Axis (vertical/horizontal) title: Under Design tab, click Add Chart Element. Hover your cursor at Axis Titles and select Primary Vertical if you want to add a Vertical Axis title. Type the new Axis Title (example: Product) in the formula bar and hit Enter. Add Data Label/Table: You may add Data Label and Table in similar manner as adding Axis. Page 20 RM71003: Category Management & Merchandising Move Chart: You can save the chart in the same worksheet as part of your data worksheet or in a new worksheet. Under Design tab, click on Move Chart. Select New sheet and type the name of the new sheet. Page 21 RM71003: Category Management & Merchandising C1.1.3 Compare Performance with Sales Targets Now that you know what KPIs are and how to prepare a sales report, the next step is to compare the performance outcome (ie actual performance) against the targets that were set. In this way, we will know whether or not we have achieved the targets Measuring and tracking the team’s ongoing performance is the best indicator to consistently allow the management to manage and deliver on the objectives. Comparing actual performance with targets for sales-related KPIs typically results in: 1. Actual Performance vs Sales Growth Targets Sales Growth Target Actual Sales Period1 (S1) Actual Sales Period2 (S2) 20% $100,000 $130,000 Sales Growth Achievement (S2-S1)/S2 x 100 = 30,000/100,000 x 100 = 30% Therefore, target over-achieved 2. Actual Performance vs Sales Target Sales Target Actual Sales Sales Target Achievement Actual/Target $100,000 $90,000 = 90,000/100,000 = 90% Therefore, under-achieved target Page 22 RM71003: Category Management & Merchandising 3. Actual Performance vs ARPU Targets ARPU* Target Actual Sales Customers ARPU Target Achievement *Average Sales Per Customer Actual Sales/ Customers $150 $40,000 200 = $40,000/200 = $200 Therefore, target over-achieved 4. Actual Performance vs Incremental Sales by Campaign Regular Sales without any campaign Current Sales with campaign Target Incremental Sales from Campaign $200,000 $230,000 $50,000 Actual Incremental Sales from campaign Target Achievement Current Sales – Actual/Target Regular Sales =$30,000/$50,000 x 100 = $30,000 = 60% Under achieved target 5. Actual Performance vs Opportunity to Win rate Target Opportunity to Win Rate 20% Daily Store Traffic (number of shoppers who enter the store) 200 Daily Customers who purchased 40 Actual Opportunity to Win Rate Customers who purchased / Store Traffic = 40 / 200 x 100 = 20% Target achieved Page 23 RM71003: Category Management & Merchandising Here are some supporting information that will help us in our performance review: Sales forecast Conversion report Sales call report Sales funnel report Upsell and cross-sell report Performance Report Sales Forecast Conversion Report Description Sales forecast predicts the number of sales the team will make in a given period. It can be used to anticipate seasonal slowdowns or plan for issues that might affect business. Conversion report looks at the conversion of leads to customers. A standard conversion tracking report includes information about contacts, leads generated and qualified, and wins, with period-to-period change rates indicated as well. More common for e-commerce, corporate or channel sales team. Sales Call Report Sales call report includes calls placed to leads, prospects and customers to encourage purchases. One can gain insights into the sales personnel's performance and the leads' qualities. More common practice for corporate or channel sales team. Page 24 RM71003: Category Management & Merchandising Performance Report Description Sales Funnel Report Sales funnel report shows how close a lead is to buying the product or service. It helps the company to understand how to best nurture leads and, ultimately, convert them into customers. By comparing back-to-back sales funnel reports, this allows the team to identify weaknesses in the sales pipeline. Awareness Number of people who become aware of your company’s products/services. Interest Number of people who become interested in your company’s products/services. Decision This stage of the sales funnel is when the prospect is ready to buy. The prospect is evaluating which alternative brands fulfils his requirement. Action Finally, the prospect decides to buy from your company. Your company has successfully closed the sale and converted the prospect into a customer. Shape of sales funnel allows the team to see which aspect of sales funnelling needs improvement. E.g. A sales funnel with high awareness, interest, and decision but with low action may signal that the sales personnel may need more training to close a deal. Whereas a sales funnel with high awareness, interest but with sudden low decision level may signal a poor product range. Page 25 RM71003: Category Management & Merchandising Performance Report Description Upsell and Cross-sell Report approaches. Upsell and cross-sell report details the number and value of items upsold or cross-sold to customers. The team can review this report to identify future upselling and cross-selling opportunities or flag certain products and services as especially suited for these sales Tracking upselling data may be difficult but cross-selling data can be tracked using a Cross-Selling Grid that record main purchase with side purchases inside a single receipt or invoice. It is fascinating when you start to measure the cross-selling (penetration rates) of the products and services, and particularly if you measure by sales person. All sales people have favourite products. The grid / matrix is a great way of identifying skills gaps in knowledge and ability and understanding which sales rep are best at cross-selling which products and services. Page 26 RM71003: Category Management & Merchandising C1.1.4 Compare Performance with Past Periods Besides comparing actual performance against targets, it is also common to compare actual performance against past periods. This can be useful to show trends of the company’s sales or any potential business issues. The example below shows the revenue of a minimart over 4 years. It shows that year 2022 has better sales, year-on-year compared to 2021 and 2019. It is also clear that generally April has lower sales and May has higher sales over the years 2019, 2021 and 2022. The revenue of 2020 is different from the other years, probably due to COVID situation. The average line is a commonly used as a point of reference. The average data is calculated from the sales of all the months of the 4 years. Revenue 1000000 800000 600000 400000 200000 0 Jan 2022 Feb 2021 Mar 2020 Apr 2019 May Jun Average Page 27 RM71003: Category Management & Merchandising Worksheet for C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System 1. What is the term used to refer to the number of units sold in a specific reporting period? Form factor. 2. What is the purpose of placing target visuals inside a chart? To conduct heat away from the CPU. 3. How does the ARPU serve as a KPI? The heat sink draws heat away from the CPU. The fan moves the heat away from the heat sink. 4. Judy is the new Retail Executive of a fashion retailer, Style On. One of her job responsibilities is to report monthly sales report to her management. i. List FOUR types of charts she can use. General safety, electrical safety, fire safety, and electrostatic discharge. ii. Explain the function of ONE type of chart listed in 4i. It protects computer equipment when grounded to a computer chassis. 5. What is the function of the sales funnel report? It protects computer equipment by preventing static electricity from accumulating on The hardware or on the technician. 6. Calculate the Opportunity-to-Win Ratio for a store if 2,400 customers visited the store and only 300 customers made a purchase. It protects computer equipment by preventing static electricity from accumulating on Page 28 RM71003: Category Management & Merchandising Task Sheet for C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System In these tasks, you are required to integrate what you had done in your previous practices for the following task elements: 1. Identify the type of chart suitable for your report. Set up the chart using excel spreadsheet for the following data. Gross Sales of 4 Branches Month Jan Feb Mar 2. Ion Orchard $420,000 $430,443 $304,530 Jurong Point $360,213 $321,140 $223,230 Tampines Mall $310,200 $240,220 $123,112 HDB Hub $340,213 $331,140 $322,123 Set up a combination chart to compare sales volume with gross profit using excel spreadsheet for the following data. Data from Bread Walk - Changi Point Outlet Category Sales Volume Gross Profit Bread 4123 $23,423.00 Cake 1231 $17,393.00 Biscuit 2123 $1,234.00 Drink 2342 $12,392.00 Page 29 RM71003: Category Management & Merchandising 3. Pair up with a partner and complete a Cross-Selling Grid using the template below. It will be good if you can use an authentic example from your current work experience. Cross-Selling Grid Cross purchase Main purchase Page 30 RM71003: Category Management & Merchandising 4. Pair up with a partner and brainstorm strategies to improve the outcome of each stage of the funnel pipeline. Strategies to Improve the Outcome Awareness Interest Decision Action Page 31 RM71003: Category Management & Merchandising 5. Pair up with a partner and come up with 2 Key Performance Indicators (KPIs) that are not listed in the notes and are relevant to your area of work. E.g. Survey on customer satisfaction can also be an example of a KPI. Provide with 50 words write-up to justify for each of your identified KPI. KPI relevant to your area of work Area of concerns (E.g. Fashion, Convenience Store) ______________________________ KPI Justification - Reason and relevance in identifying this as a KPI KPI relevant to your partner’s area of work Area of concerns (E.g. Fashion, Convenience Store) ______________________________ Page 32 RM71003: Category Management & Merchandising Summary for C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System You have completed your learning of Subtask C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System as shown below: C1: Review Product Category Performance C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company's System C1.2: Suggest Recommendations Based on Findings Developed from Performance Review C1.1.1 Compile sales report C1.1.2 Verify the date period of report C1.1.3 Compare performance with sales targets C1.1.4 Compare performance with past periods You have learned and practised the following: How to compile sales report How to verify the date period of report How to compare performance with sales targets How to compare performance with past periods With the completion of Subtask C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company’s System, you are ready to go on to Subtask C1.2: Suggest Recommendations Based on Findings Developed from Performance Review. Page 33 RM71003: Category Management & Merchandising C1.2: Suggest Recommendations Based on Findings Developed from Performance Review (EXPLORE & PRACTISE) C1: Review Product Category Performance C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company's System C1.2: Suggest Recommendations Based on Findings Developed from Performance Review C1.2.1 Identify areas for further analysis C1.2.2 Compile other types of reports relevant to the areas of interest C1.2.3 Identify cause of performance C1.2.4 Make recommendations to improve future performance Page 34 RM71003: Category Management & Merchandising Training Notes for C1.2: Suggest Recommendations Based on Findings Developed from Performance Review In the earlier unit, we learned how to prepare a sales report and compare sales results with targets. Several factors could be responsible for performance not meeting targets. In this unit, we will learn how to identify areas requiring further analysis in order to understand the reasons behind over or underperformance and how to make constructive recommendations to improve sales in the future. C1.2.1 Identify Areas for Further Analysis Retailers today are changing at high speed to become more consumer centric and to operate more efficiently. To achieve these ambitious goals, retailers need to fundamentally rethink their operating models. Finding the right way to organize, steer and employ will be the key success factors over the next five years. Based on findings developed from performance review, a company can identify areas for further analysis through scanning its operating environment. Page 35 RM71003: Category Management & Merchandising New Retail Operating Model of the Future The New Retail Operating Model of the Future: How retailers need to adapt their operating model to become future-ready 1 Retail means change. Hardly any other sector is experiencing changes as strongly as today’s retail industry, which has undergone a significant transformation over the past decade and continues to evolve quickly. External market trends such as emerging new technologies, changing customer behaviours, increasing competitive pressure, and the non-traditional expectations of the Generation Z/Millennial generation workforce are demanding that retailers rethink their way of working. Many players in the market have spent the last decade redefining their (digital) strategy and focused heavily on changing their business model by focusing on the customer experience and technology. The drive for change starts with the detection of relevant trends and is followed by adaptations in strategies and business models that need to be translated into the operating model, the basic frame for bringing a strategy into action. Many retailers have never considered the need to adapt their strategy or business models. In this context, it makes little sense, or at least not enough sense, to adapt an operating model to suit ad hoc topics. Change needs to be tackled starting with a strategy, followed by adaptations in business models and, finally, the operating model. The focus of the present study lies on the operating model and assumes that retailers adapt their strategies and business models on the basis of relevant trends. Given all of these changes, retailers must ask themselves about their future plans for operating as the environment changes, and how their organization will need to change its operations. Trends can be classified into four categories: technologies, customers, workforce, and market. Technologies Customers Workforce Market https://www2.deloitte.com/content/dam/Deloitte/de/Documents/consumerbusiness/Study_Retail%20Operating%20Model%20of%20the%20Future.pdf 1 Page 36 RM71003: Category Management & Merchandising Retailers must ask themselves four key questions: 1. How do I need to set up my organization and processes to become more customer centric and agile? 2. Are my current steering mechanisms the right ones to navigate through changing market environment models? 3. What are the needed employee skill sets, going forward, and how do I become attractive to top talent? 4. What is the linkage of the three issues above and how can they be implemented? Discussion: With a partner, discuss the four questions from the article. Share your answers and insights with the class. Q1 _________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ Q2 _________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ Q3 _________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ Q4 _________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ Page 37 RM71003: Category Management & Merchandising C1.2.2 Compile Other Types of Reports Relevant to the Areas of Interest Data collection is a systematic approach to accurately collect information from various sources to provide insights and answers, such as testing a hypothesis or evaluating an outcome. It is an important process to guide every element of a company’s marketing and brand strategy. Reports that help to determine the consumer behaviour are important for a business model to adapt and pre-empt future changes and trends. Importance of collecting consumer data Data collection methods Customer profiling Importance of Collecting Consumer Data Data Provides a Perhaps the biggest reason why so many companies collect consumer Deeper data is that it helps them to get a much better understanding of the way Understanding their consumers behave online, define their overall demographics, and of Your Market identify the ways in which they can improve the overall customer experience. Data makes it much easier for the company to understand what customers want from the company, the specific products/services they're looking for, and even how they prefer to interact with the brand. When a company know more about their customers, the business can tweak to better fit the consumers’ needs. Improvement can also be made in the communication with the target market, optimizing website to improve the user experience, and much more. Data Collection Data collection can be through different means. Data can be collected Improves Your through the IP addresses, email addresses, and even potentially phone numbers of the people who have interacted with the brand in some way. Consumer Database This means companies can reach out to the consumers about future opportunities, improve the lead generation strategy, and better gauge the actual level of interest a consumer has in the company based on the way they act on the company’s website or respond to advertisements in another way. This will allow company to spend more time, energy, and marketing money on quality leads. The company will also have the information they need to be able to send to customers SMS marketing updates, email newsletters, special offers, and much more. Page 38 RM71003: Category Management & Merchandising Consumer Data A company's overall digital marketing strategy is more important than ever Improves Your in this online era. Marketing For a brand or company to outrank a competitors, optimization in the Strategies marketing strategy is very important which can only be achieve through collecting data and using it to inform everything about the way a company should market its products/services to consumers. Data will be able to tell the company which of its marketing campaigns and tactics has the best results, so that it can create more effective and targeted advertisements in the future. Data can also help a company get a better insight into the overall customer path/journey on the website. This way, necessary improvements to improve the user experience can be done. It Allows For Roughly 63% of consumers say that they expect personalization from the Greater companies they work with when it comes to marketing and product Personalization suggestions, order confirmations, and any sort of communication between themselves and the business. Collecting data allows a company to meet consumer expectations in regard to personalized communications and suggestions. Data Collection Methods 1. Surveys – Gather customer feedback via SMS/text, face to face, google doc. 2. Social listening – Monitor what is being said about your company or a given topic in social media such as Facebook, Twitter, LinkedIn or blogs 3. Observations – Study customer’s behaviour when they shop in store or online. 4. Website trackers – Track website visitor’s movement around site and see what attracts interest. 5. Focus group - Gather opinions from a group of 6-8 customers on key topics. Page 39 RM71003: Category Management & Merchandising Customer Profiling Marketers can create detailed portraits of customers using internal company data of their purchase habits, preferences, and lifestyle, and cite external data sources to learn about attributes and social trends. 1. 2. 3. 4. Psychographic view - Personality: E.g. outspoken, likes to stand out from the crowd - Attitude: E.g. Positive outlook and enjoys the good things in life Behavioural view - Purchase habit: E.g. Buys in bulk to be thrifty, responds to discount - Degree of loyalty: E.g. Faithful to a brand, but open to better offers Geographic view - Continent: E.g. Asia - City: E.g. Singapore - Climate: E.g. Like to go to cold countries for tour Demographic view - Age group: E.g. 40 to 45 - Status: E.g. Married with children - Occupation and Salary: E.g. $7,000 to $10,000 Discussion: With a partner, discuss and list 3 things to help increase the sales of a fashion retail store, based on the customer profiling listed above. 1. ___________________________________ 2. ___________________________________ 3. ___________________________________ Page 40 RM71003: Category Management & Merchandising C1.2.3 Identify Cause of Performance Based on findings developed from performance review, a company concludes whether the sales performance is good or bad. When sales performance does not meet target KPI(s), the company is under-performing. When sales performance meets or exceeds target KPI(s), the company is (over)-performing. It is important to find out the cause of performance. This can be done by reviewing the 7Ps. 7Ps Product The goods and services a company sells are its product. A product can be defined in terms of features, design, size, packaging, service type, return policies, and warranties, all of which aim to meet the customer’s needs. Product positioning map can be created to compare the product you have with the competitors. Price Price is crucial variable of the marketing mix as it generates revenue while product, promotion and place yield costs. Pricing may also be the marketer’s most potent tool because even minor tweaks affect returns. Place Knowing where customers shop, where a product is sold, and how efficiently goods can be delivered to the consumer – called “place” in marketing terms – are essential to sales success. - Selling direct to consumers - Selling through retailers - Selling through wholesalers and retailers - Selling through agent Page 41 RM71003: Category Management & Merchandising Promotion Promotion is necessary for generating interest in and sales of a product or service. It involves communicating to customers and influencers, such as peer groups. People Does the business employ the right people to deliver optimum services to customers? Training and development are essential to make sure employees are competent to give the optimum experience to consumers. Process Are effective systems in place for handling orders and dealing with customers’ queries and complaints? Physical Environment Does the design and layout of the business premises appeal to target consumers? E.g. If the business main customers are parents with infants/toddlers, it needs to make sure the aisles are big enough for prams to move through. Page 42 RM71003: Category Management & Merchandising C1.2.4 Make Recommendations to Improve Future Performance With the generation of reports, analysis of data and identifying the cause of performance, the eventual step is to make recommendations using the information gathered for business development. Business Development The overall aim of sales and marketing teams is to generate customer contact and convert it into revenue. This is the core of business development and it involves a continual process of drawing in potential customers, enticing them to purchase, and keeping them engaged. During this process, marketers and sales people use a range of strategies and channels to attract customers and to earn their long term commitment to a brand and product. How business work – A Graphic Guide to Business Success Page 43 RM71003: Category Management & Merchandising Worksheet for C1.2: Suggest Recommendations Based on Findings Developed from Performance Review 1. What is the term used to refer to the goods and services a company sells? Form factor. 2. What is the purpose of collecting customer’s data? To conduct heat away from the CPU. To conduct heat away from the CPU. The heat sink draws heat away from the CPU. The fan moves the heat away from the heat sink. 3. Glam & Beauty, a Cosmetic company, is reviewing its annual sales performance. List the 7 Ps that affect its sales performance. General safety, electrical safety, fire safety, and electrostatic discharge. It protects computer equipment when grounded to a computer chassis. 4. Cherish Chocolates, a Confectionery company, has launched a new range of chocolates 3 months ago. Name TWO methods data can be collected from consumers during its quarterly sales review. It protects computer equipment by preventing static electricity from accumulating on The hardware or on the technician. 5. Suggest how looking into the Physical Environment of the retail store helps in consumer retention. It protects computer equipment by preventing static electricity from accumulating on Page 44 RM71003: Category Management & Merchandising Task Sheet for C1.2: Suggest Recommendations Based on Findings Developed from Performance Review In this task, you are required to integrate what you had done in your previous practices for the following task elements: 1. Create an online google form that allows your company to conduct survey for potential customers 2. Create an online google form that allows your customers to feedback on your product and services. Instructions 1. You will pair up and fill in the table below with the questions that you would want to include into the survey and feedback form. Include the rationale and justification in your questions. Survey form (Industry target _______________) Questions Rationale and Justifications 1 2 3 4 5 6 Page 45 RM71003: Category Management & Merchandising 7 8 9 10 11 12 Feedback form (Industry target _______________) Questions Rationale and Justifications 1 2 3 4 Page 46 RM71003: Category Management & Merchandising 5 6 7 8 9 10 11 12 2. Setup your google form for your survey and feedback using the questions listed by you. Share your google form and survey with your class. Page 47 RM71003: Category Management & Merchandising Summary for C1.2: Suggest Recommendations Based on Findings Developed from Performance Review You have completed your learning of Subtask C1.2: Suggest Recommendations Based on Findings Developed from Performance Review as shown below: C1: Review Product Category Performance C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company's System C1.2: Suggest Recommendations Based on Findings Developed from Performance Review C1.2.1 Identify areas for further analysis C1.2.2 Compile other types of reports relevant to the areas of interest C1.2.3 Identify cause of performance C1.2.4 Make recommendation s to improve future performance You have learned and practised the following: How to identify areas for further analysis How to compile other types of reports relevant to the areas of interest How to identify cause of performance How to make recommendations to improve future performance With the completion of Subtask C1.2: Suggest Recommendations Based on Findings Developed from Performance Review, you are ready to practise the Competence C1: Review Product Category Performance. Page 48 RM71003: Category Management & Merchandising Task Sheet for C1: Review Product Category Performance (PERFORM) You have completed the following: C1.1: How to assess the performance of store sales according to the different merchandising levels using sales reports from the company's system C1.2: How to suggest recommendations based on findings developed from performance review You are now ready to put all the subtasks together and practise the Competency: Review Product Category Performance. C1: Review Product Category Performance C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company's System C1.2: Suggest Recommendations Based on Findings Developed from Performance Review You will be assessed based on the performance criteria for each subtask as follows: Subtask Description Task Element 1.1 Assess the performance of store sales according to the different merchandising levels using sales reports from the company's system Compile sales report Verify the date period of report Compare performance with sales targets Compare performance with past periods 1.2 Suggest recommendations based on findings developed from performance review Identify areas for further analysis Compile other types of reports relevant to the areas of interest Identify cause of performance Make recommendations to improve future performance Page 49 RM71003: Category Management & Merchandising Summary for C1: Review Product Category Performance (PERFORM) You have learned and practised the competence of Review Product Category Performance as follows: C1: Review Product Category Performance C1.1: Assess the Performance of Store Sales According to the Different Merchandising Levels Using Sales Reports from the Company's System C1.2: Suggest Recommendations Based on Findings Developed from Performance Review You have learned and practised the following: How to assess the performance of store sales according to the different merchandising levels using sales reports from the company's system How to suggest recommendations based on findings developed from performance review With the completion of Competency C1: Review Product Category Performance, you are ready to go on to Competency C2: Implement Trade Marketing Promotions and Shelf Management Strategies. Page 50 RM71003: Category Management & Merchandising C2: Perform Category Management and Merchandising Work Situation (PLAN) You are a store retail assistant and a weekly task is to prepare products for the upcoming promotions. You will receive a list of items that will be on promotion in advance and be informed to place orders for the items with either the warehouse or the suppliers. An analysis of past similar promotions will be done to forecast the sales performance of the upcoming promotions. Store personnel will decide with other department’s personnel and the Store Managers which items will require additional display and discussions will be made with the product merchandisers to negotiate for additional display space. Past promotional data for the items may be used for analysis on the potential sales forecast of the item on offer. Pricing mechanism, time period and competitive items on promotion will impact the forecast. Certain space within the stores can be designated for star promotions to draw in crowds. On confirmation, store retail assistants will order in required stock quantities for promotional items based on the amount of space allocated. Existing promotional space will have to be cleared before promotional stocks arrive. Store space will have to be allocated for the additional volume of stocks to be sold during promotion. Team Leaders will prepare and put up on the day before the start of the promotion. On the morning of the promotion, store retail assistants have to scan all items to ensure that the promotional prices are loaded into the system. Any premiums or free gifts will have to be prepared at the cashiers’ counter should they need to be collected. Perform Category Management and Merchandising C1: Review Product Category Performance C2: Implement Trade Market Promotions and shelf Management Strategies Page 51 RM71003: Category Management & Merchandising Professional Attributes (PLAN) In the competency, you are required to demonstrate the following professional attributes: 1. Coordinate with suppliers on stocks required and removal. 2. Negotiate with suppliers on space and promotional set up. 3. Prioritise things that need to be done and make plans accordingly. C2.1: Obtain new/ promotional items planned as shared by Purchasing Department (EXPLORE & PRACTISE) C2: Implement trade market promotions and shelf management strategies Subtask C2.1: Obtain new/ promotional items planned as shared by purchasing department Verify that the items are carried in the stores. Subtask C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. Subtask C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. Subtask C2.4: Order stocks in for delivery based on promotion and delivery dates. Subtask C2.5: Plan implementatio n of planograms at store based on planogram approved by purchasing department. Subtask C2.6: Clear existing promotional space to get ready for set up of upcoming promotion following stores’ operational guidelines. Subtask C2.7: Set up display for new/ promotional items based on operational display guidelines in store. Check on past similar promotions and forecast potential sales of upcoming promotions Page 52 Subtask C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices. RM71003: Category Management & Merchandising Training Notes for C2.1: Obtain new/ promotional items planned as shared by Purchasing Department Sales promotion is one of the most important promotion strategies deployed by retailers. It refers to communication strategies designed to act as a direct inducement, an added value, or incentive for the product to customers. It is traditionally designed for immediate (short-term) increase in product sales. Promotions are typically held chain-wide or store-wide and are usually planned and driven by the purchasing department and hence, it is important for the operational staff within the store to be aligned with the promotional mechanics. Initial details of promotions will be shared with stores 3-4 weeks before the start of the promotion. At this point, stores will have to check against their inventories to check if the items featured in the upcoming promotion are currently being sold at the store. If the items are not being carried, retail assistants will have to allocate space for the items. For items that are currently sold in the store, retail assistants and team leaders can check on sales data from previous promotions held, to develop a more accurate forecast of the potential sales data for the upcoming promotion. More details on factors to consider while ordering will be discussed in C2.4. Page 53 RM71003: Category Management & Merchandising Below, we’ll take a look at the types of promotions typically employed by retailers. Types of Promotion It typically involves activities that may shape buying patterns, attract new customers, or increase sales. Some common types of sales promotions used by retailers include the below. 2 Promotion Types What are they? Star Promotions Usually single item, significant price discount, used as loss leader to draw traffic into store. Theme Promotions Usually involves a set of related products. Weekly Promotions Products with a price off discount lasting for 1 week. Products changes every week. Monthly Promotions Products with a price off discount lasting for 1 month. Products changes every month. In-Store Promotions Promotions found exclusive to selected retail outlets. Contests Purchasing a participating product will allow customers to have a chance to win prizes from the contest. Demonstrations and Sampling Typically used for newly launch products to allow for customers to learn about its use Premiums Free gifts given with every purchase of participating products. A list of items on promotions will be provided typically by the purchasing department of the company to the stores 4-8 weeks before the start of the promotion to prepare. 2 Retail Management Second Edition Oxford University Press, ITE Library. Page 536 Page 54 RM71003: Category Management & Merchandising Star Promotions Used primarily to draw in traffic to the store, items on star promotions typically enjoy significant pricing discounts in a bid to attract customers to visit the store to purchase. Fig 2.1.1 3 Retailers like supermarkets typically choose products that are frequently used or very popular among customers. For these items, customers typically will be very familiar with their everyday prices and hence will immediately recognize the big discount and make a beeline to the store to purchase. 3 Straits Times 30th Dec 2021 Page 55 RM71003: Category Management & Merchandising Theme Promotions Participating products within the same theme promotion are typically related and used together for a specific purpose. Common theme promotions include seasonal promotions and festive promotions. Fig 2.1.2 4 4 Straits Times 30th Dec 2021 Page 56 RM71003: Category Management & Merchandising Weekly Promotions Typically employed by supermarket retailers, weekly promotions are products featured with pricing discounts for a period of 1 week, of which participating products will be refreshed for the following week. Convenience stores and supermarket chains typically advertise these items in papers weekly and will feature products from every category. Fig 2.1.35 Monthly Promotions Products participating in monthly promotions are changed on a monthly basis and these promotions typically have a minimal pricing discount. These promotions are typically not advertised and can be seen in-store through the display within the store. They encourage impulse purchase at the point of sales. 5 Straits Times 30th Dec 2021 Page 57 RM71003: Category Management & Merchandising In-Store Promotions Participating products in this type of promotion typically have pricing discounts or other types of promotions only in selected stores. These promotions are at times used by stores to clear slower moving stocks and are initiated by the store managers as oppose to being initiated by the purchasing department. Hence, a similar item can be having an in-store promotion in 1 retail store and not the other, even if they are from the same company. These promotions are not advertised and can be seen at the store through price card displays. Contests Customers who purchased participating products will be able to take part in contests where they will have a chance to win cash prizes. With a chance to win prizes, retailers hope customers will increase their purchases with the stores. Fig 2.1.4 6 6 Straits Times 30th Dec 2021 Page 58 RM71003: Category Management & Merchandising Demonstrations and Samplings Typically used in new product launches, demonstrations and samplings will be put up in stores to allow customers to understand the use of the products and to try it for themselves. Promoters are typically deployed by the brand owners to assist with the activity. Fig 2.1.5 7 Fig 2.1.68 Premiums and give-aways Premiums are prizes, gifts, or other special offers received when a consumer purchase a product. Participating products typically retain their normal prices and consumers will receive the free gift for every purchase. Premiums can be redeemed either by showing a proof of purchase, or it could be attached to the packaged of the product on purchase, e.g. toys in cereal boxes. With each type of promotion, a different display strategy might have to be employed by you and we’ll be exploring that further in the next unit. 7 https://marigold.com.sg/highlights/new-products.html 8 http://www.ideagraph.com.sg/Services-TacticalCampaignsActivations.html Page 59 RM71003: Category Management & Merchandising Worksheet for C2.1: Obtain new/ promotional items planned as shared by Purchasing Department 1. List 5 common types of promotions employed by retailers. 2. Nestlei will be launching a new milo product with a revised formulae mix. What type of promotion will be most suitable for its launch? Why? 3. Decathlonie, a sports apparel store, will be opening its latest store in Ang Mo Kio. Store director Abbas Jordan wants a promotion that will guarantee traffic to the new store on its opening day. Propose a potential product and type of promotion that is likely to allow Abbas to fulfil its goal of having a big crowd on launch day? Page 60 RM71003: Category Management & Merchandising Summary for C2.1: Obtain new/ promotional items planned as shared by Purchasing Department You have completed your learning of Subtask C2.1: Obtain new/ promotional items planned as shared by Purchasing Department as shown below: C2: Implement trade market promotions and shelf management strategies Subtask C2.1: Obtain new/ promotional items planned as shared by purchasing department Verify that the items are carried in the stores. Subtask C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. Subtask C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. Subtask C2.4: Order stocks in for delivery based on promotion and delivery dates. Subtask C2.5: Plan implementatio n of planograms at store based on planogram approved by purchasing department. Subtask C2.6: Clear existing promotional space to get ready for set up of upcoming promotion following stores’ operational guidelines. Subtask C2.7: Set up display for new/ promotional items based on operational display guidelines in store. Check on past similar promotions and forecast potential sales of upcoming promotions You have learned and practised the following: How to verify that the items are carried in the stores. How to check on past similar promotions and forecast potential sales of upcoming promotions. With the completion of Subtask C2.1: Obtain new/ promotional items as shared by Purchasing Department, you are ready to go on to Subtask C2.2: Decide on items that require additional promotional space based on discussion with store manager and other department managers. Page 61 Subtask C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices. RM71003: Category Management & Merchandising C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders (EXPLORE & PRACTISE) C2: Implement trade market promotions and shelf management strategies Subtask C2.1: Obtain new/ promotional items planned as shared by purchasing department Subtask C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. Subtask C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. Subtask C2.4: Order stocks in for delivery based on promotion and delivery dates. Subtask C2.5: Plan implementati on of planograms at store based on planogram approved by purchasing department. Subtask C2.6: Clear existing promotional space to get ready for set up of upcoming promotion following stores’ operational guidelines. Subtask C2.7: Set up display for new/ promotional items based on operational display guidelines in store. Subtask C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices. Category leader items Normal retail selling prices of items Page 62 RM71003: Category Management & Merchandising Training Notes for C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. Upon receiving the promotional list on the upcoming offers, retail store assistants and team leaders must examine each item and identify the mode of display and promotional mechanics for each. These activities and displays might require additional space and given the limited space in a retail shop, discussions will be made in order to allocate the limited space to each department for their promotional set ups. Category Leader Items A category 9 is a basic unit of analysis for making merchandising decisions an assortment of items that customers see as reasonable substitutes for one another. E.g. Coca Cola is a brand name for a cola drink and the product category of which is belongs is soft drinks. Similar brands offering fizzy cola soft drinks are commonly placed together in a shelving. Another example will be in a sports apparel store, running shoes are placed together with multiple brands displayed for consumers to choose from. Category management is the process of managing a retail business with the objective of maximizing the sales and profits of a category rather than the performance of individual brands or models. 9 Retail Management Second Edition, Oxford Higher Education Page 449. Page 63 RM71003: Category Management & Merchandising In Fig 2.2.1, the products are placed in categories to facilitate customers’ browsing. An assortment of is provided to allow customers to enjoy the convenience of shopping through the options without having to walk around the whole store. Fig 2.2.110 A category leader is the leading brand that is driving the sales of the category. Typically within each category of products, there will be a particular brand that has a higher market share than the other brands. When these brands for the category have promotions, sales will likely increase more than if other brands were to be on promotion. Distributors/suppliers of these brands might have higher budget for in-store promotional activities and will require more space for display. Normal retail selling prices of items Price is the sum of money customers are willing to exchange for the benefits of having or using the product of service. Types of factors that affect pricing include: 10 Internal factors o Marketing Objectives – e.g. whether product is targeted at the high/low income group. o Marketing-mix strategy – costs involved in distribution and promotion. o Other costs – e.g. cost of production, administrative costs o Profit and Loss policy https://www.rapit.com/ideation.htm Page 64 RM71003: Category Management & Merchandising External factors o Nature of demand – directly correlates with the prices set. o Pricing of competitive products o Environmental factors – e.g. economy performance and government regulations. Generally, there are 2 pricing strategies adopted by retailers. Every-day-low-pricing (EDLP) 11 Commonly employed in supermarkets and grocery stores, prices are generally set between the normal selling price and the promotional prices. This pricing strategy is typically used on basic replenishment supplies in supermarkets, giving customers the confidence that these items are priced competitively at all times. These items are typically fast moving and sold in volume as their profit margins will likely be lower as compared to products that are not employing this strategy. Fig 2.2.2 12 Fig 2.2.3 13 11 Retail Management second edition, Oxford Higher Education Page 480. 12 https://www.businessinsider.com/walmart-low-price-strategy-tips-2019-4 13 https://tpm360.com.au/blog/2017/04/26/rise-everyday-low-pricing-slippery-slope/ Page 65 RM71003: Category Management & Merchandising High-Low Pricing Retailers employing this strategy typically set their normal selling prices higher than competitors’ and uses promotions and offer prices to promote sales. High-Low Pricings are frequently employed in lifestyle retailers such as Samsung, Nike, Lululemon and Red Bull. Fig 2.2.4 and Fig 2.2.5 shows the benefits associated with the 2 types of pricing strategies that we have discussed. Fig 2.2.4 Fig 2.2.5 Upon understanding the type of product categories and the type of selling strategy that are employed, retail store personnel will be able to decide on the type of promotional mechanics and hence identify the space required for the promotion and display. Page 66 RM71003: Category Management & Merchandising Worksheet for C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. 1. In product merchandising, what is a “category”? 2. List the internal factors that retailers consider when setting prices? 3. List the external factors that retailers consider when setting prices? 4. What are the 2 types of pricing strategies that retailers employ? Page 67 RM71003: Category Management & Merchandising 5. Adidas, a lifestyle brand, is opening their very first outlet in the city of Lima, Peru. Which pricing strategy would you recommend for Adidas to price their products and why? Page 68 RM71003: Category Management & Merchandising Summary for C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. C2: Implement trade market promotions and shelf management strategies Subtask C2.1: Obtain new/ promotional items planned as shared by purchasing department Subtask C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. Subtask C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. Subtask C2.4: Order stocks in for delivery based on promotion and delivery dates. Subtask C2.5: Plan implementati on of planograms at store based on planogram approved by purchasing department. Category leader items Subtask C2.6: Clear existing promotional space to get ready for set up of upcoming promotion following stores’ operational guidelines. Subtask C2.7: Set up display for new/ promotional items based on operational display guidelines in store. Subtask C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices. Normal retail selling prices of items You have learned and practised the following: How to verify if the items are category leaders How to check if the pricing and promotions are attractive based on their normal retail selling prices. With the completion of Subtask C2.2: Decide on items that require additional promotional space based on discussion with store manager and other department managers, you are ready to go on to Subtask C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. Page 69 RM71003: Category Management & Merchandising C2.3: Negotiate on additional promotional space needed, based on rates pre-determined at store (EXPLORE & PRACTISE). C2: Implement trade market promotions and shelf management strategies Subtask C2.1: Obtain new/ promotional items planned as shared by purchasing department Subtask C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. Subtask C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. Types of ptomotional spaces Subtask C2.4: Order stocks in for delivery based on promotion and delivery dates. Subtask C2.5: Plan implementati on of planograms at store based on planogram approved by purchasing department. Subtask C2.6: Clear existing promotional space to get ready for set up of upcoming promotion following stores’ operational guidelines. Subtask C2.7: Set up display for new/ promotional items based on operational display guidelines in store. Subtask C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices. Types of promotional set ups Types of promotional activities Page 70 RM71003: Category Management & Merchandising Training Notes for C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. Once the promotional space has been identified and agreed with the store management team for the promotion, store retail assistances and department team leaders will have to engage with the suppliers. Both parties will work together to negotiate certain terms for the promotional display and activities. Types of promotional space To understand it better, let’s take a look at some store layout 14 types used by retailers. The types that we’ll be exploring include 14 Forced-Path Store Layout Grid Store Layout Straight Store Layout Angular Store Layout Geometric Store Layout Mixed Store Layout Free Flow Store Layout Boutique Store Layout https://www.smartsheet.com/store-layout Page 71 RM71003: Category Management & Merchandising 1. Forced-Path Store Layout Fig. 2.3.1 a. Directs customers on a pre-determined route. b. Customers exposed to all of the merchandise offered. c. Might annoy customers who are there for a specific purpose d. Could overwhelm customers by rushing them to move as all customers are moving in one direction together. Page 72 RM71003: Category Management & Merchandising 2. Grid Store Layout Fig 2.3.2 a. Familiar and repetitive display pattern. b. Allows customers to move quickly using standard fixtures and displays c. Uniform and comfortable presentation of products d. Simplifies inventory control. e. Lack of aesthetics and design. f. Popular with grocery and hardware retailers. Page 73 RM71003: Category Management & Merchandising 3. Straight Store Layout Fig 2.3.3 a. Efficient and simple to plan b. Allow customers to be pulled toward featured merchandise c. Typically used in liquor store and convenience stores. Page 74 RM71003: Category Management & Merchandising 4. Angular Store Layout Fig 2.3.4 a. Relies on curved wall, corners, fixtures and merchandise displays to manage customer flow. b. Create perception of higher quality merchandise. c. Useful in creating a unique perception. d. Sacrifices efficient floor space use. Page 75 RM71003: Category Management & Merchandising 5. Geometric Store Layout Fig 2.3.5 a. Target trendy millennials and Generation Z demographics. b. Offers artistic expression and function. Page 76 RM71003: Category Management & Merchandising 6. Mixed Store Layout Fig 2.3.6 a. Uses design elements from multiple layouts b. Creates a dynamic flow through a range of departments. c. Maximum flexibility to display a wide range of merchandise from basic to high margin ones. d. Typically employed by department stores and large supermarkets or hypermarkets. Page 77 RM71003: Category Management & Merchandising 7. Free Flow Store Layout Fig 2.3.7 a. Allows customers to have liberty and freedom to interact with merchandise and self-navigate. b. Customers feel less rushed and more comfortable. c. Risk confusing customers and disrupt customer flow. Page 78 RM71003: Category Management & Merchandising 8. Boutique Store Layout Fig 2.3.8 a. Merchandise separated by category. b. Encourages a more intimate interaction by customers with the merchandise. c. Aims to stimulate customer curiosity. d. Inefficient space management Page 79 RM71003: Category Management & Merchandising Retail stores are generally divided into 4 zones. Platinum Zone First area of the store where customer first enter Golden Zone Second as customer walk through the store. Silver Zone Third towards the back of the store. Bronze Zone Area at the back of the store. Fig 2.3.9 provides an illustration of the zones in a typical retail store. Fig 2.3.9 Page 80 RM71003: Category Management & Merchandising Certain types of retailers like supermarkets or sports apparel stores may charge a “rental fee” to suppliers to use the space for additional merchandise display and promotional activities. These fees are negotiated at the store level. The fees are negotiated and agreed between the retailer and the supplier based on the below consideration: Types of set up, Types of promotional activities, Location of the promotion display/setup, Size of space needed. Types of promotional set up includes: Bulk Stacks, Gondola End Caps, Side Stands Theme Displays Pop up stores Promo area Atrium sales Bulk Stacks Typically island displays are set up along the walking lanes so that customers can access it from 4 different directions. Products are mass displayed to create an overwhelming effect in hope of creating purchase impulse to customers that are walking past. Gondola End Caps These additional facings are commonly found at the end of shelving and faces the walking lanes. Products and promotional materials are used to design the section, creating an attractive and enticing display. Page 81 RM71003: Category Management & Merchandising Side Stands These stands are typically fabricated by suppliers and used specially to display the merchandise from the suppliers. These stands are commonly placed at the corners of the store or the sides of the gondola ends. Theme Displays These displays are typically employed during specific times of the year, in celebration of specific occasions or holidays to capture the spirit to spur consumer purchases. Thematic displays and effective use of colour and promotional materials are commonly employed and used together with the merchandise to create an attractive display of the merchandise. Pop up Store Increasingly within malls, pop-up stores can be found along the walkways for brands and retailers to capture customers. Kiosks are typically rented out by mall owners/operators to either existing tenants or retailers looking to test bed the sale of their products without committing themselves to a long term rental agreement. For retailers, there are many advantages to taking up Pop up stores. Some of them are: Savings on costs, 15 As compared to taking up full sized retail store, the rental fee for pop up stores can be as low as 20% as compared to the conventional stores. With rental being one of the 2 biggest costs involve in every retail operations, savings on 1 will definitely be advantageous. Taking on lesser risks, Pop up store rentals typically are on a shorter term lease and hence, will expose the retailers to much lesser risks should things do not turn out as expected. Lease agreements for pop up stores can start from 1 month, depending on the mall operators, and are typically much shorter than a conventional rental agreement of a full retail store space. Testing market for product, Pop up stores provide opportunities to expose new products and test the reception of these products among customers. Sales people are typically employed to explain and showcase the features and benefits of the products to customers who walk past. 15 https://www.smallbusiness.wa.gov.au/blog/benefits-pop-shops Page 82 RM71003: Category Management & Merchandising Testing location, Before committing to a long term lease, pop up stores can be a good way to test if the mall is a good location for the retailer to set up long term. By using a pop up store, retailers can understand the customer base of the area better and determine its’ suitability to set up shop. Creating brand awareness, By taking up more pop up stores, retailers can showcase their brands more and widen the awareness to potential customers. With appropriate displays of marketing materials and merchandise displays, these pop up stores can serve as a great promotional mechanism when placed in the middle of a high traffic walkway within the mall. Generating urgency, Given the short-term nature of pop up stores, customers are often more willing to buy instantly as they know that the product will only be available at this location for short period of time. Increasing revenue stream, For online and e-commerce retailers, taking up a pop up stores will help in generating additional ways to sell their merchandise and hence increasing their revenue streams. Promo area For retailers with larger shop spaces, store managers can create promotional areas and designate them to display only on items that are feature for promotion. To maintain such a space, retailers should note that, Constant refresh is a must, Prices and promotions of merchandise should be attractive, Promotional activities such as samples and demonstrations should be included, Housekeeping of the area must be upkept at all times. As time goes by, customers will come to expect deals in this promo area and retailers can use this as an additional resource to generate more sales and clear inventory if needed. Page 83 RM71003: Category Management & Merchandising Atrium sales Mall owners and operators will typically set aside a space to allow retailers to rent and create activities to generate buzz for customers. Primarily driven by malls operators, these spaces will have their calendar of events pre-planned and retailers will be invited to take up space during specific periods of time throughout the year. Atrium sales are usually thematic and are driven primarily by festivals and holidays. Most of the invited retailers are usually already mall tenants and will usually get preferential rates to participate in these atrium sales. As these atrium sites are located in high traffic areas of the malls, retailers taking part can expect a big jump in sales should their promotions are attractive to consumers. To go along displays, some retailers will request for additional promotional activities, on top of the displays, to supplement the promotion. Some of these activities include: Sample hand=outs, In-Store games, Celebrity endorsement and signings events, Product launches, Promoters, Display competitions and Product Demonstrations. Once all these factors are discussed, negotiated and agreed between the retailer and the supplier, can the plans be put into action in time for the promotion to begin. Page 84 RM71003: Category Management & Merchandising Worksheet for C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. 1. Explain the features of a Forced-Path Layout. 2. Which store layout is most commonly used by convenience stores such as Cheers and Seven-Eleven? 3. Love Bolito, a Singapore fashion apparel brand would like to design its stores to appeal to trendy millennia. Explain the type of layout you would recommend them to use. Page 85 RM71003: Category Management & Merchandising 4. Which zone in a retail store would typically be the most eye-catching and hence command the most premium in terms of “rental fees”? 5. In supermarkets, what kind of products could be placed at the bronze zones? 6. Biathlon, a sports apparel shop, would like to display their promotional item in the middle of the store and be accessible by all 4 directions of customer flow. Which type of promotional set up will be most suitable? Page 86 RM71003: Category Management & Merchandising Summary for C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. C2: Implement trade market promotions and shelf management strategies Subtask C2.1: Obtain new/ promotional items planned as shared by purchasing department Subtask C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. Subtask C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. Subtask C2.4: Order stocks in for delivery based on promotion and delivery dates. Types of ptomotional spaces Subtask C2.5: Plan implementati on of planograms at store based on planogram approved by purchasing department. Subtask C2.6: Clear existing promotional space to get ready for set up of upcoming promotion following stores’ operational guidelines. Subtask C2.7: Set up display for new/ promotional items based on operational display guidelines in store. Subtask C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices. Types of promotional set ups Types of promotional activities You have learned and practised the following: How to decide on the location of the promotional display within the store. How to agree on the theme and size of the display. With the completion of Subtask C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. you are ready to go on to Subtask C2.4: Order stocks in for delivery based on promotion and delivery dates. Page 87 RM71003: Category Management & Merchandising C2.4: Order stocks in for delivery based on promotion and delivery dates (EXPLORE & PRACTISE). C2: Implement trade market promotions and shelf management strategies Subtask C2.1: Obtain new/ promotional items planned as shared by purchasing department Subtask C2.2: Decide on items that require additional promotional space based on discussions with the store manager and other team leaders. Subtask C2.3: Negotiate additional promotional space needed, based on rates pre-determined at store. Subtask C2.4: Order stocks in for delivery based on promotion and delivery dates. Ordering process of warehouse sstocks Subtask C2.5: Plan implementati on of planograms at store based on planogram approved by purchasing department. Subtask C2.6: Clear existing promotional space to get ready for set up of upcoming promotion following stores’ operational guidelines. Subtask C2.7: Set up display for new/ promotional items based on operational display guidelines in store. Subtask C2.8: Check scanned pricing on the morning of the new/ promotion before store opens according to advertised prices. Ordering process of direct delivery stocks Page 88 RM71003: Category Management & Merchandising Training Notes for C2.4: Order stocks in for delivery based on promotion and delivery dates. Placing orders for merchandise in the right quantities at the right time is the most fundamental and crucial aspect of every promotional set up. Something as basic as this can make or break a promotional set up’s success. Here, we’ll take a look at some of the pointers to ensure that this crucial task is performed well. Factors affecting ordering. Before the next order is put through for stock replenishments, a few factors have to be considered to prevent out of stocks and over stock situations. Below, we take a look at some of these factors and how they will aid retailers plan their ordering. 1. Current stock status. A quick check within the system on the amount left in store will be vital. The system stocks should closely matched the physical stocks found in both the display shelving on the shop floor as well as stored in the store rooms. Frequently, stocks are placed in the back room and out of sight to most and are easily missed. 2. Sales forecast (normal and promotional) Forecasting sales of the products will give retailers a target to meet and match the stocks in order to achiev