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Merchandise Management Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

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Page 1: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Merchandise ManagementMerchandise Management

Merchandise

Buying

PlanningMerchandiseAssortments

Merchandise

management

Pricing

Merchandise Selling

Page 2: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

What is merchandisingWhat is merchandising

Merchandising can be termed as the Merchandising can be termed as the

planning ,buying and the sellingplanning ,buying and the selling of of

merchandise\products merchandise\products

Page 3: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Merchandising Merchandising

Is one of the most challenging function Is one of the most challenging function

““goods well bought are half goods well bought are half sold”sold”

Page 4: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Merchandise managementMerchandise management

Termed as the analysis, Termed as the analysis, planning, acquisition, handling planning, acquisition, handling and control of the merchandise and control of the merchandise investments of a retail investments of a retail operationoperation

Page 5: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Analysis --- retailers must be able to Analysis --- retailers must be able to correctly identify their customers i.e correctly identify their customers i.e consumers needs, desires.consumers needs, desires.

Planning --- merchandise that has to be Planning --- merchandise that has to be sold in the future must be bought now!sold in the future must be bought now!

Acquisition --- merchandise has to be Acquisition --- merchandise has to be procured from others-either from procured from others-either from distributors or manufacturersdistributors or manufacturers

Page 6: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Handling --- seeing that the merchandise Handling --- seeing that the merchandise is where it is needed and is in the proper is where it is needed and is in the proper condition to be sold.condition to be sold.

Control --- is required to control the Control --- is required to control the amount of money spent on buying.amount of money spent on buying.

Page 7: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Buying Buying MerchandiseMerchandise

Page 8: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Definition by American Marketing Definition by American Marketing AssociationAssociation

“ “ The planning involved in The planning involved in marketing the marketing the right merchandiseright merchandise at the at the right placeright place at the at the right timeright time in the in the right quantitiesright quantities at at right right price”price”

Page 9: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Merchandising is said to be Merchandising is said to be core of retail.core of retail.

it is it is day-to-day business of all retailersday-to-day business of all retailers..

As inventory is sold ,new stock needs to As inventory is sold ,new stock needs to be purchased ,displayed and sold.be purchased ,displayed and sold.

Merchandise Management is a key driver Merchandise Management is a key driver

of retailing successof retailing success

Page 10: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Planning Planning MerchandiseMerchandise

Page 11: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

definitiondefinition

can be defined as the can be defined as the planning andplanning and control of merchandise inventorycontrol of merchandise inventory of of the retail firm ,in a manner which the retail firm ,in a manner which balances between the expectations of balances between the expectations of the target customer and the strategy the target customer and the strategy of the firm.of the firm.

Page 12: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Things to be considered while Things to be considered while buying merchandisebuying merchandise

What to buyWhat to buy

How much to buyHow much to buy

From whom to buyFrom whom to buy

When to buyWhen to buy

Page 13: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Merchandise HierarchyMerchandise Hierarchy

Page 14: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

DivisionDivision Apparel Apparel DepartmentDepartment Men’s ,Ladies, Kids Men’s ,Ladies, Kids CategoryCategory Shirts, Trousers , SuitsShirts, Trousers , Suits

Sub CategorySub Category Full Sleeve, Half Sleeve Full Sleeve, Half Sleeve BrandBrand Arrow, V. Arrow, V. Heusen,Heusen,

PoloPolo StyleStyle Button down collar, Button down collar,

cut away collarcut away collar

OptionsOptions Size(4),Design(3), Size(4),Design(3), colour(5),Pricecolour(5),Price

Page 15: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Merchandise Hierarchy in a Merchandise Hierarchy in a supermarketsupermarket

Division: FoodDivision: Food

Department: Packaged FoodDepartment: Packaged Food

Category: SaucesCategory: Sauces

Brand: Maggi, KissanBrand: Maggi, Kissan

Options: 250gms,500gms,1kgOptions: 250gms,500gms,1kg

Page 16: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Merchandise SourcingMerchandise Sourcing

The term sourcing means finding or The term sourcing means finding or seeking out products from different places, seeking out products from different places, manufacturers or suppliers .manufacturers or suppliers .

Is the key element of retail. Is the key element of retail.

it influences the availably of stock , the it influences the availably of stock , the margins earned by the retailer .margins earned by the retailer .

Page 17: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Decision depends on the type of Decision depends on the type of retail organization, product and retail organization, product and

target customertarget customer

Product like high fashion Product like high fashion garments ,exclusive garments ,exclusive watches ,perfumes ,cosmetics etc may be watches ,perfumes ,cosmetics etc may be obtained from the international market.obtained from the international market.

Page 18: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Methods of procuring Methods of procuring merchandisemerchandise

Page 19: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

1. Identifying the sources of supply1. Identifying the sources of supply

Have to decide whether the merchandise Have to decide whether the merchandise can be sourced from domestic or regional can be sourced from domestic or regional markets of from international markets ?markets of from international markets ?

Page 20: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

2. Contacting and evaluating the 2. Contacting and evaluating the sources of supplysources of supply

Wholesale Market CenterWholesale Market Center

Characterized by a collection of large number of Characterized by a collection of large number of suppliers.suppliers.

Selling similar products.Selling similar products. For e.g.For e.g.

Manish Market, Crawford Market in MumbaiManish Market, Crawford Market in Mumbai

Khan Market in DelhiKhan Market in Delhi

Page 21: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Trade ShowsTrade Shows

Also known as merchandise showAlso known as merchandise show

Permanent tenants of the wholesale Permanent tenants of the wholesale market centers and vendors leasing market centers and vendors leasing temporary space participation.temporary space participation.

For. E.g. For. E.g. Ustav held in PuneUstav held in Pune

Page 22: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Meeting Vendors at Your CompanyMeeting Vendors at Your Company

A representative of the supplier visit the A representative of the supplier visit the office, meet the buyer and showcase a office, meet the buyer and showcase a collection of merchandise.collection of merchandise.

Termed as Termed as vendor initiated contactvendor initiated contact..

Page 23: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

The criteria for selecting a potential The criteria for selecting a potential vendorvendor

The target market for whom the The target market for whom the merchandise is being purchased.merchandise is being purchased.

The merchandise and prices offered The merchandise and prices offered

Terms and services offered the vendorTerms and services offered the vendor

Vendors reputation and reliabilityVendors reputation and reliability

Page 24: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

3. Negotiating with Vendors3. Negotiating with Vendors

Two-way Two-way communication communication designed to reach designed to reach an agreement an agreement when two parties when two parties have shared have shared interests.interests.

Page 25: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

The retail buyer needs to The retail buyer needs to negotiate the negotiate the price, delivery dates, the discounts, the price, delivery dates, the discounts, the shipping terms and possibilities of returns.shipping terms and possibilities of returns.

How to plan negotiations?How to plan negotiations?

Consider prior historyConsider prior history

Be aware of deadlines Be aware of deadlines

Page 26: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Types Of Discounts that are made Types Of Discounts that are made available to the buyer available to the buyer

Trade (Functional) DiscountsTrade (Functional) Discounts

Referred to as volume discounts or booking Referred to as volume discounts or booking

discountsdiscounts

Quantity DiscountsQuantity Discounts

For purchasing certain quantity over a For purchasing certain quantity over a

specific period of timespecific period of time

Page 27: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

DiscountsDiscounts

Seasonal discountsSeasonal discounts

Discount offered as an incentive to retailers to Discount offered as an incentive to retailers to

order merchandise in advance of the normal order merchandise in advance of the normal

buying seasonbuying season

Cash discountsCash discounts

Prompt payment for goods often ranks for a Prompt payment for goods often ranks for a

cash discountcash discount

Thirty to sixty days credit is usualThirty to sixty days credit is usual

Page 28: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

4. Establishing Vendor Relations4. Establishing Vendor Relations

Retailer and vendor committed to maintaining Retailer and vendor committed to maintaining relationships relationships over the long-term and investing in over the long-term and investing in mutually beneficial opportunitiesmutually beneficial opportunities

Page 29: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Building Blocks for Strategic Partnerships

Mutual Trust

trust helps vendors and buyers to share ideas, clarify goals and problems

Page 30: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Open Communications

In order to share information ,develop In order to share information ,develop sales forecasts together and coordinate sales forecasts together and coordinate deliveries.deliveries.

For e.g.. Wal-Mart and P&GFor e.g.. Wal-Mart and P&G

Page 31: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Common Goals

Vendors and buyers must have common goals for a successful relationship to develop

Page 32: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

5. Analyzing vendor Performance5. Analyzing vendor Performance

vendor performance is based on the vendor performance is based on the following criteriafollowing criteria

The The total order placed on the vendor in a total order placed on the vendor in a yearyear

Participation of the vendor in Participation of the vendor in various various schemes and promotionsschemes and promotions

Page 33: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

The total returns to the vendor, the The total returns to the vendor, the quality quality of the merchandiseof the merchandise

Cash discounts offeredCash discounts offered by the vendor by the vendor

The The sales performance of the sales performance of the merchandisemerchandise

Page 34: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Role and responsibilities of buyerRole and responsibilities of buyer

1)1) Planning and selecting merchandise Planning and selecting merchandise assortments, keep a stock of the assortments, keep a stock of the assortmentassortment

Should know the current market trends Should know the current market trends and economic developments.and economic developments.

Should know the needs and wants of the Should know the needs and wants of the target consumer.target consumer.

Page 35: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

2)2) Vendor selection, development and Vendor selection, development and managementmanagement

Should negotiate with vendors for Should negotiate with vendors for favorable terms and service.favorable terms and service.

3)3) Pricing the merchandise to achieve the Pricing the merchandise to achieve the required targetsrequired targets

Page 36: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

4)4) Inventory management-Inventory management-

Should control inventory i.e. not only Should control inventory i.e. not only procurement but also check the procurement but also check the availability of the product in the store.availability of the product in the store.

Suggest Suggest markdowns for slow moving markdowns for slow moving goods.goods.

Page 37: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

5)5) Be a good judge of qualityBe a good judge of quality

6)6) Be up to date in their knowledge so that Be up to date in their knowledge so that they can pick up ideas for new and they can pick up ideas for new and profitable lines. (textiles, toys, fashion profitable lines. (textiles, toys, fashion goods)goods)

Page 38: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Merchandise Branding Merchandise Branding StrategiesStrategies

Manufacturer (National) BrandsManufacturer (National) Brands Designed, produced, and marketed by a Designed, produced, and marketed by a

vendor and sold by many retailersvendor and sold by many retailers

Private-Label (Store) BrandsPrivate-Label (Store) Brands Developed by retailer and only sold in Developed by retailer and only sold in

retailer’s outletsretailer’s outlets

Carries the retailers name such as Carries the retailers name such as Westside ,food world ,Big Bazaar, Chitale Westside ,food world ,Big Bazaar, Chitale Bandhu, Haldiram Bandhu, Haldiram

Page 39: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Private label goods are more successful Private label goods are more successful where the number of competing products where the number of competing products is loweris lower

For e.g.For e.g. Number of brands in India, in shampoos Number of brands in India, in shampoos

and soaps is fairly largeand soaps is fairly large

Products like atta, salt, sugar, cereals and Products like atta, salt, sugar, cereals and pulses have very few branded products.pulses have very few branded products.

Page 40: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Private LabelsPrivate Labels

AdvantagesAdvantages

Unique merchandise not Unique merchandise not

available at competitive available at competitive

outletsoutlets

Difficult for customers to Difficult for customers to

compare price with compare price with

competitorscompetitors

Higher marginsHigher margins

DisadvantagesDisadvantages

Need to develop Need to develop

expertise in developing expertise in developing

and promoting brandand promoting brand

Unable to sell excess Unable to sell excess

merchandisemerchandise

Typically less desirable Typically less desirable

for customersfor customers

Page 41: Merchandise Management Merchandise Buying Planning Merchandise Assortments Merchandise management Pricing Merchandise Selling

Manufacturer (National) LabelsManufacturer (National) Labels

AdvantagesAdvantages

More desired by More desired by

customerscustomers

Resell excessive Resell excessive

merchandisemerchandise

Don’t need skills and Don’t need skills and

people to develop and people to develop and

promote merchandisepromote merchandise

DisadvantagesDisadvantages Lower marginsLower margins

Vulnerable to Vulnerable to competitive pressurescompetitive pressures