Merchandising Planning

1. Retail
Merchandise
Planning
By-
Shahbaaz Ahmed
PGFB1345

2. Introduction-
• Merchandise Management-
Activities involved in acquiring particular goods and services and making them available at
the places, times, prices and quantities that enable a retailer to reach its goals.
• Termed as the analysis, planning, acquisition, handling and control of merchandise
investment of retail operation

3. ANALYSIS-
• Needs & wants of the target audience
PLANNING
• For future sale of merchandise
ACQUISITION
• Procurement from distributors and mfgs
HANDLING
• Merchandise available at required store at right time and right condition
CONTROL
• Amount of money spent on buying

4. Factors Affecting the Merchandising Function

5. Role of Merchandising Manager
• Planning :
Policy formulation, forecasting sales for budget period, estimate consumer demand and
impact of changes occurring in retail environment
• Directing:
Guiding and training of buyers
• Co-ordinating:
Coordinate buying effort of many buyers and fit into stores image
• Controlling:
Assessing buyers performance

6. Divisional
Merchandise
manager
Buyer
Associate buyer
Assistant buyer

7. Planning process-
• Analysis of consumers needs and wants, consumer buying process, sale of high selling
products,interaction with sales staff ,analysis of external sources of information
• Steps:
1. Developing a sales forecast
2. Determining a merchandise requirements
3. Merchandise Control- The Open to Buy
4. Assortment Planning

8. 1. Developing a sales forecast-
• Forecasting involves what a consumers may do under a given set of conditions
• Determines the inventory need for the product or category
• Typically answer : How much, new products, price?
• Process:
o Reviewing past sales.
o Analysing the economic conditions.
o Analysing the sales potential
o The marketing strategy of the competitors.
o Creating the forecast.

9. 2. Determining a merchandise
requirements
• Planning at Merchandise takes place at two levels:
1. The creation of merchandise budget
2. The assortment plan
• There are two methods of developing the merchandise plan
1. Top down planning
2. Bottom up planning

10. Merchandise Budget & Inventory
Planning-
• Sales plan- product to be sold
• Stock Support plan- stock needed to achieve sales
• Planned reductions- for weak products
• Planned purchase level-Quantity to be procured
• Gross margins (of each department)
Methods of Inventory planning-
• The Basic Stock Method
• The Percentage Variation Method
• The Stock / Sales Ratio Method
• Stock turn over Rate

11. The Basic Stock Method
• Basic Stock = Avg.stk for the season – Avg monthly sales for the season
• BOM(Beginning of month) Stock = Planned Monthly Sales + Basic Stock.
The Percentage Variation Method-
• Used when the stock turnover rate is more than 6 times/year
• BOM stock = Avg stock for the season x ½ [1+planned sales for the month / Average Monthly Sales ]
The Stock / Sales Ratio Method-
• Stock to Sales Ratio = Value of Inventory / Actual sales
• Planned BOM Inventory = Stock – Sales Ratio x Planned Sales
Stock turn over Rate-
• Planned Sales (for a period)/ Planned average Inventory (for the period)

12. 3. Merchandise Control- Open to Buy
• Depends on the sales for the month & reductions, merchandise buying can be adjusted.
• Maintains relation between stock and sales
• Limits overbuying & under buying
• Prevents loss of sales due to unavailability of required stock
• Open to Buy = Planned EOM Stock – Projected EOM Stock

13. 4. Assortment Planning
• Selection of merchandise a retailer carries.
• Quality of the merchandise- expensive/moderately priced/inexpensive items
• Width of assortment: number of distinct goods and services (product lines) a retailer carries
• Depth of assortment: Refers to variety in any one goods /service category (product line) a retailer
carries
• Store brands or National Brands

14. Depth & Breadth of merchandise
DEPARTMENT
PRODUCT LINE
BREADTH
DEPTH
STYLES COLOURS SIZES
ZODIAC VAN HEUSEN LOUIS PHILLIPPE ARROW
SHIRTS TROUSERS ACCESSORIES
MENSWEAR

15. RETAIL ASSORTMENT STRATEGIES
• Wide & Deep : (many product lines & large variety in each)
• Wide & Shallow : (many product lines & limited variety in each)
• Narrow &Deep: (few product lines & large variety in each)
• Narrow &Shallow: (few product lines & few variety in each)

16. Thank you