Merchandise Planning

Dr. S. K. Singh
Merchandise Planning
Merchandise Mgmt decisions

Should reflect:
Target market desires
Retailer type
Market-place positioning
Supplier capabilities
Costs
Competitors
Product trends
Process of Merchandise planning
Developing the sales forecast

Determining the Merchandising requirements
(Assortment planning)

Deciding on the Merchandise control i.e.
Merchandise level

Deciding on the Merchandise allocation within a
store or/and among various stores in the retail-chain.
Forecasts
Components:
Overall company projections
Product category projections
Item-by-item projections
Store-by-store projections (if a chain)
Types of Merchandise
Staple merchandise
Assortment merchandise
Fashion merchandise
Seasonal merchandise
Fad merchandise
Factors to Bear in Mind When Planning
Merchandise Innovativeness
FACTOR RELEVANCE for PLANNING
Target market(s) Evaluate whether the target market is
conservative or innovative
Goods/ service growth
potential
Consider each new offering on the basis of
rapidity of initial sales, maximum sales potential
per time period, and length of sales life
Fashion trends Understand vertical and horizontal fashion trends,
if appropriate
Retailer image Carry goods/ services that reinforce the firms
image
-Contd. Factors to Bear in Mind When Planning
Merchandise Innovativeness
FACTOR RELEVANCE for PLANNING
Competition Lead or follow competition in the selection
of new goods/services
Customer segments Segment customers by dividing
merchandise into established-product
displays and new-product displays
Responsiveness to
consumers
Carry new offerings when requested by the
target market
Amount of
investment
Consider all possible investment for each
new good/service: product costs, new
fixtures, and additional personnel
-Contd. Factors to Bear in Mind When Planning
Merchandise Innovativeness
FACTOR RELEVANCE for PLANNING
Profitability Assess each new offering for
potential profits
Risk Be aware of the possible tarnishing
of the retailers image, investment
costs, and opportunity costs
Constrained
decision making
Restrict franchisees and chain
branches from buying certain items
Declining goods/
services
Delete older goods/services if sales
and/or profits are too low
Factors to Consider When Planning
Merchandise Quality
FACTOR RELEVANCE for PLANNING
Target market(s) Match merchandise quality to the wishes of
the desired target market(s)
Competition Sell similar quality or different quality
Retailers image Relate merchandise quality directly to the
perception that customers have of retailer
Store location Consider the impact of location on the
retailers image and the number of
competitors, which, in turn, relate to quality
-Contd. Factors to Consider When Planning
Merchandise Quality
FACTOR RELEVANCE for PLANNING
Profitability Recognize that high quality goods generally
bring greater profit per unit than lesser-
quality goods; turnover may cause total
profits to be greater for the latter
Manufacturer
versus private
brands
Understand that, for many, manufacturer
brands connote higher quality than private
brands
Customer services
offered
Know that high-quality goods require
personal selling, alterations, delivery, and so
on
Personnel Employ skilled, knowledgeable personnel for
high-quality merchandise
-Contd. Factors to Consider When Planning
Merchandise Quality
FACTOR RELEVANCE for PLANNING
Perceived goods/
service benefits
Analyze consumers. Lesser quality goods
attract customers who desire functional
product benefits; High-quality goods attract
customers who desire extended product
benefits
Constrained
decision making
Face reality. Franchises or chain store
managers have limited or no control over
products; Independent retailers that buy from
a few large wholesalers are limited to the
range of quality offered by those wholesalers
Brands
Private
(dealer or store)
Manufacturer
(national)
Generic