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Chapter 14

Chapter 14. RETAIL MANAGEMENT: A STRATEGIC APPROACH , 10th Edition. Developing Merchandise Plans. BERMAN EVANS. Chapter Objectives. To demonstrate the importance of a sound merchandising philosophy To study various buying organization formats and the processes they use

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Chapter 14

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  1. Chapter 14 RETAIL MANAGEMENT: A STRATEGIC APPROACH, 10th Edition Developing Merchandise Plans BERMAN EVANS

  2. Chapter Objectives • To demonstrate the importance of a sound merchandising philosophy • To study various buying organization formats and the processes they use • To outline the considerations in devising merchandise plans: forecasts, innovativeness, assortment, brands, timing, and allocation • To discuss category management and merchandising software

  3. Merchandising Activities involved in acquiring particular goods and/or services and making them available at the places, times, and prices and in the quantity that enable a retailer to reach its goals

  4. Merchandising Philosophy • Sets the guiding principles for all the merchandise decisions that a retailer makes • Should reflect • Target market desires • Retailer’s institutional type • Market-place positioning • Defined value chain • Supplier capabilities • Costs • Competitors • Product trends

  5. Scope of Merchandising Responsibility • Full array of merchandising functions • Buying and selling • Selection, pricing, display, customer transactions OR • Focus on buying function only

  6. Figure 14-1: Nike’s Own Store Merchandising Philosophy

  7. Micromerchandising Retailer adjusts shelf-space allocations to respond to customer and other differences among local markets

  8. Cross-Merchandising Retailers carry complementary goods and services to encourage shoppers to buy more

  9. Figure 14-2: Attributes and Functions of Buying Organizations

  10. Functions Performed • Merchandising view • All buying and selling functions • Assortments • Advertising pricing • Point-of-sale displays • Employee utilization • Personal selling approaches

  11. Functions Performed (cont.) • Buying view • Buyers manage buying functions • Buying • Advertising • Pricing • In-store personnel manage other tasks • Assortments • Point-of-sale displays • Employee utilization • Personal selling approaches

  12. Figure 14-4: Merchandising Versus Store Management Career Tracks

  13. Figure 14-5: Devising Merchandise Plans

  14. Forecasts • These are projections of expected retail sales for given periods • Components: • Overall company projections • Product category projections • Item-by-item projections • Store-by-store projections (if a chain)

  15. Types of Merchandise • Staple merchandise • Assortment merchandise • Fashion merchandise • Seasonal merchandise • Fad merchandise

  16. Staple Merchandise • Regular products carried by a retailer • Grocery store examples: milk, bread, canned soup • Basic stock lists specify inventory level, color, brand, style, category, size, package, etc.

  17. Assortment Merchandise • Apparel, furniture, auto, and other categories for which the retailer must carry a variety of products in order to give customers a proper selection • Decisions on Assortment • Product lines, styles, designs, and colors are projected • Model stock plan

  18. Fashion and Seasonal Merchandise • Fashion Merchandise: Products that may have cyclical sales due to changing tastes and life-styles • Seasonal Merchandise: Products that sell well over nonconsecutive time periods

  19. Table 14-1a: Factors in Planning Merchandise Innovativeness

  20. Table 14-1b: Factors in Planning Merchandise Innovativeness

  21. Table 14-1c: Factors in Planning Merchandise Innovativeness

  22. Figure 14-6: R&D at Wendy’s

  23. Figure 14-7: Traditional Product Life Cycle

  24. Structured Guidelines for Pruning Products • Select items for possible elimination on the basis of declining sales, prices, and profits, appearance of substitutes • Gather and analyze detailed financial and other data about these items • Consider nondeletion strategies such as cutting costs, revising promotion efforts, adjusting prices, and cooperating with other retailers • After making a deletion decision, do not overlook timing, parts and servicing, inventory, and holdover demand

  25. Figure 14-8: Predicting Fashion Adoption

  26. Table 14-2a: Factors in Planning Merchandise Quality

  27. Table 14-2b: Factors in Planning Merchandise Quality

  28. Table 14-2c: Factors in Planning Merchandise Quality

  29. Retail Assortment Strategies Width of assortment refers to the number of distinct goods/service categories (product lines) a retailer carries Depth of assortment refers to the variety in any one goods/service category (product line) a retailer carries An assortment can range from wide and deep (department store) to narrow and shallow (box store)

  30. Figure 14-10: Sephora’s Very Deep Assortment of Cosmetics

  31. Brands Manufacturer (national) Private (dealer or store) Generic

  32. Table 14-3: Private Brand TestMatch the Retailer with the Brand Name

  33. Figure 14-11: Wal-Mart’s New Approach to Private Brands

  34. Figure 14-12: Daffy’s Distinctive Branding Strategy

  35. Figure 14-13: Applying Category Management

  36. Merchandising Software • General Merchandise Planning Software • Forecasting Software • Innovativeness Software • Assortment Software • Allocation Software • Category Management Software

  37. Figure 14-4a: Shelf Logic Software for Category Management Planning

  38. Figure 14-4b: Shelf Logic Software for Category Management Planning

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