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Developing Effective Merchandise Plans

This chapter explores the importance of a sound merchandising philosophy and the process of devising merchandise plans, including forecasts, assortment, brands, timing, and allocation. It also discusses buying organization formats and the use of merchandising software.

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Developing Effective Merchandise Plans

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  1. Chapter 14 RETAIL MANAGEMENT: A STRATEGIC APPROACH, 9th 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 Responsibility • Full array of merchandising functions • Buying and selling • Selection, pricing, display, customer transactions • Focus on buying function only

  6. Figure 14.1 Harry and David’s 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 The Attributes and Functions of Buying Organizations

  10. Figure 14.3 At Wal-Mart: Developing an Inside Buying Organization

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

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

  13. Figure 14.4 Merchandising Versus Store Management Career Tracks

  14. Figure 14.5 Considerations in Devising Merchandise Plans

  15. Forecasts • Forecasts 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)

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

  17. Staple Merchandise • Regular products carried by a retailer • Grocery store staple examples • Milk • Bread • Canned soup • Basic stock lists specify inventory level, color, brand, style, category, size, package, etc.

  18. Assortment Merchandise • Apparel, furniture, auto, and other products 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

  19. 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

  20. Table 14.1a Factors to Bear in Mind When Planning Merchandise Innovativeness

  21. Table 14.1b Factors to Bear in Mind When Planning Merchandise Innovativeness

  22. Table 14.1c Factors to Bear in Mind When Planning Merchandise Innovativeness

  23. Figure 14.6 R&D at Wendy’s

  24. Figure 14.7 The Traditional Product Life Cycle

  25. 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

  26. Figure 14.8 A Selected Checklist for Predicting Fashion Adoption

  27. Table 14.2a Factors to Consider When Planning Merchandise Quality

  28. Table 14.2b Factors to Consider When Planning Merchandise Quality

  29. Table 14.2c Factors to Consider When Planning Merchandise Quality

  30. Figure 14.9 Retail Assortment Strategies

  31. Figure 14.10 Sephora: A Very Deep Assortment of Cosmetics

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

  33. Table 14.3 The Berman/ Evans Private Brand TestMatch the Retailer with the Brand Name

  34. Figure 14.11 Costco’s Approach to Private Brands

  35. Figure 14.12 Daffy’s Distinctive Branding Strategy

  36. Figure 14.13 Applying Category Management

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

  38. Figure 14.4a Shelf Logic: Software for Category Management Planning

  39. Figure 14.4b Shelf Logic: Software for Category Management Planning

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