6 month Buying Plan

6 month Buying Plan

Nordstrom Walnut Creek: Encore Department Danielle Hughes

Department Summary and Customer Profile

Department Summary

For my six month buying plan, I decided to act as the buyer for the Encore department for Nordstrom in

Walnut Creek, California. Throughout the quarter I will build a merchandise plan for the department.

The reasoning behind choosing Nordstrom is because it is a department store that is priced moderately

to high end and it reaches out to many target markets. Nordstrom not only represents itself well in its

merchandise as well as its customer service and customer relations program. These programs are what

bring in the platinum customers that spend most of their money on the things that they need and want.

I chose the Encore department, which is the women’s plus sizes, because I did not know that Nordstrom

had an area for plus sizes, this peaked my interest to see what styles of clothing would come through

the department.

I believe that the average customer in this department is looking for something that will make them feel

good about themselves as well as purchasing quality merchandise. Their yearly income is between

$60,000 and $100,000 which supports their need for quality clothing for work as well as everyday life.

Customer Profile

While observing the merchandise in the Encore department, I was able to make some educated guess

about the average customer who would shop here.

There are several classifications of merchandise in the department. The four main classifications that I

have chosen are blouses, jeans, t-shirts and dresses.

Class 1: blouses, represents 60% of the department inventory. Class 2: jeans, represents 20% of the

inventory. Class 3: T-Shirts, represents 15% of the inventory. Class 4: dresses, represents 5% of the

inventory.

The price points range was different across the classes. The classes that had the highest price points was

jeans, with prices falling between $114 and $140, followed by dresses with price points between $118

and $160. Blouses and t-shirts had higher price points of $59 to $85 as well as a lower price point of $24,

depending on the brand.

The assortment of the sizes in the department fall towards the smaller sizes (1X, 14W, and 16W). the

size assortment leaning towards these sizes could be due to it is on the boarder for women who are on

the boarder of a regular missy size and women’s plus size. This will bring in more customers to the

department who can dress between departments. The color assortment leans more to the neutral

colors, making it easy to use the different items for work and every day.

To summarize, the customers who shop this department are upper middle class who have the salary to

support the higher-end quality of clothing. They like pieces that support bother their work and personal

life activities. It also shows that it reaches to women who may shop different areas that could cross into

this department.

Department Analysis

Class 1 Price Points $34.00 $52.00 $69.00 $85.00% to total 15% 15% 40% 30%

Sizes 1x 2x 3x 14w 16w 18w 20w 22w 24w% to total 20% 10% 5% 20% 20% 10% 5% 5% 5%

Colors White Black Blue Multi% to total 30% 40% 10% 20%

Class 2 Price Points $114.00 $120.00 $130.00 $140.00% to total 10% 20% 60% 10%

Sizes 14w 16w 18w 20w 22w 24w% to total 25% 25% 20% 10% 10% 10%

Colors Dark Wash Light Wash Black White Kakhi Red% to total 30% 15% 30% 15% 5% 5%

Lengths Long Capri Shorts% to total 85% 10% 5%

Class3 Price Points $24.00 $32.00 $49.50 $59.50% to total 50% 20% 10% 20%

Sizes 1x 2x 3x% to total 50% 25% 25%

Colors White Black Blue Orange Green Multi% to total 30% 30% 15% 5% 5% 15%

Lengths Short Sleeve Long Sleeve 3/4 Sleeve% to total 75% 5% 20%

Class 4 Price Point $118 $140 $160% to total 75% 20% 5%

Sizes 14w 16w 18w 20w 22w 24w% to total 30% 20% 20% 15% 10% 5%

Colors Black Blue Multi% to total 60% 10% 30%

Blouses 60%

Jeans: 20%

T-Shirts: 15%

Dresses: 5%

Customer Analysis

Demographic (US Census Bureau)

Population HouseholdTotal 20,037 Homeowners 46.4%Male 49.4% Renters 53.6%

Female 50.6% Family Households

51.9%

Age: 18+ 82.1% Education/Occupation

Median Age 39.8 Bachelor's Degree

37.5%

RaceGraduate or Professional

degree24.0%

White 78.4% 16+ years employed

66.6%

Asian 10.7% Income

Black/African American

2.2% $200,000 or more a year

12.6%

Hispanic or Latino

11.6%Median

household income

$79,180

Psychographics (Clarias PRIZM)

Top three segments:

Upper Crust: wealthy older without kids

The nation’s most exclusive address, upper crust is the wealthiest lifestyle in America – a haven for empty-nesting couples between the ages of 45 and 64. No segment has a higher concentration of residents earning over $100,000 a year and possessing a postgraduate degree. And none has a more opulent standard of living.

Income: Wealthy

Homeownership: Homeowners

Employment Level: Management

Education level: Graduate plus

Brite Lites, Li’l City

Not all of America’s chic sophisticates live in major metros. Brite Lites, Li’l City is a group of well-off, middle-aged couples settled in the nation’s satellite cities. Residents of these typical DINK (double income, no kids) households have college educations, well-paying and professional careers, and swank homes filled with late technology.

Income: upscale

Homeownership: Mostly Owners

Employment Level:

Management

Education level: College

Graduate

Up and Comers

Up-and-Comers is a stopover for younger, upper-mid singles before they marry, have families and establish more deskbound lifestyles. Found in second-tier cities, these mobile twenty something’s include a disproportionate number of recent college graduates who are into athletic activities, the latest technology and nightlife entertainment.

Income: Upper-Mid

Homeownership: Mix

Employment Level: WC,

Service, Mix

Education level: College

Graduate

Summary

The typical customer is middle aged or older, upper class woman who lives in the surrounding areas. Their households are without children and marital status is different throughout the segments. All segments have graduated with a college degree or higher. They drive nice cars and shop at mid to high end stores.

Segment Analysis

Customer 1: Heather

Sex: Female Age: 30-35 Ethnicity: White

Income: $50,000+ Education: Grad School Graduate

Lifestyle: Heather is a project manager for a major corporation. She lives in a condo, with her cat, not that far from the downtown area, she goes shopping mostly when she needs something new, but finds herself browsing when she is bored. She spends her weekends with friends and relaxing at home.

Customer 2: Wendy

Sex: Female Age: 60-55 Ethnicity: White

Income: $100,000+ Education: Bachelor’s Degree

Lifestyle: Wendy graduate from college in her 20’s and worked for her family company. She owns her own house, which she shares with her husband in the surrounding areas of the city. She goes shopping on a regular base to stay up with the new fashion and trends. She spends her weekends with her family and doing community outreach programs.

Customer 3: Nancy

Sex: Female Age: 27-30 Ethnicity: White

Income: $30,000-$35,000 Education: Master’s Student

Lifestyle: Nancy has recently gone back to school to receive her master’s in education. She is on a fixed income since she has returned to school but indulges on a new outfit for work every once in a while. She lives in a single bedroom apartment by herself not that far from the downtown area. She spends her weekend working and doing homework, but tries to find time to see her friends and have a social life.

Customer 4: Ashley

Sex: Female Age: 26 Ethnicity: White

Income: $35,000-$30,000 Education: Bachelor’s degree

Lifestyle: Ashley recently graduated from college and is now working an entry level job. She sets aside a part of her paycheck every month to go shopping. She lives in an apartment with two roommates. She spends her weekends out with friend and doing outdoor activities.

Merchandise Mix Modifications

Class 1: Blouses

For this class I kept the sizes and prices, but I decreased the percentage of blouses by 20% due to customers looking for sweaters and more outerwear to wear over the blouses they already have. I have changed the color assortment from blue and multi to brown and red for fall colors.

Class 2: Jeans

For this class I kept the sizes and prices, but have increased the percentage of jeans by 20% due to customers purchasing longer pants to wear in the cold. I am taking away the capris and shorts, since it will be getting colder outside, and taking away the bright colored pants and increasing the darker wash and black percentages.

Class 3: T-Shirts

I am keeping the overall t-shirt penetration percentage the same. I will be decreasing the amount of short sleeved t-shirts and increasing the percentage of long sleeve shirts. I am taking away the orange and green colors and bringing in browns and reds. These colors will go more towards the fall colors that will be favored during this season.

Class 4: Dresses

The dress section of the department will be kept the way that it is. Women will still be wearing dresses during the winter for special events and occasions, but they will not be wearing them as much during the day as they would during the spring and summer. The only change that I will be making is decreasing the amount of black dresses by 10% and bringing in red dresses.

Merchandise Mix Modification

Class 1 Price Points $34.00 $52.00 $69.00 $85.00% to total 10% 15% 40% 30%

Sizes 1x 2x 3x 14w 16w 18w 20w 22w 24w% to total 20% 10% 5% 20% 20% 10% 5% 5% 5%

Colors White Black Brown Red% to total 30% 40% 15% 15%

Class 2 Price Points $114.00 $120.00 $130.00 $140.00% to total 10% 20% 60% 10%

Sizes 14w 16w 18w 20w 22w 24w% to total 25% 25% 20% 10% 10% 10%

Colors Dark Wash Black White Kakhi% to total 40% 35% 10% 15%

Lengths Long% to total 100%

Class3 Price Points $24.00 $32.00 $49.50 $59.50% to total 50% 20% 10% 10%

Sizes 1x 2x 3x% to total 50% 25% 25%

Colors White Black Blue Brown Red Multi% to total 30% 30% 15% 5% 5% 15%

Lengths Short Sleeve Long Sleeve 3/4 Sleeve% to total 40% 40% 20%

Class 4 Price Point $118 $140 $160% to total 75% 20% 5%

Sizes 14w 16w 18w 20w 22w 24w% to total 30% 20% 20% 15% 10% 5%

Colors Black Blue Red Multi% to total 50% 10% 10% 30%

Blouses 40%

Jeans: 40%

T-Shirts: 15%

Dresses: 5%

Market Trend Analysis

Factors Opportunities ThreatsCurrent Sales 4.3%

Economic -2%

Social 2%

Political -2%

Climate 1%

Competition -3%

Fashion Trends 3%

Promotions 3%

Expansion -5%

Other -

Total 13.3% -12%

%Inc/%Dec 1.3%

Current Sales

Nordstrom is just finishing up its first quarter of the 2013 calendar and will be releasing the current sales

on May 16th. For the 2012 year, Nordstrom had a 12.1% increase over the previous year. From the way

that Nordstrom stock has been, it looks like Nordstrom has been doing very well in their first quarter.

With Nordstrom doing it three yearly sales, Women’s and Children’s Half yearly in May and November

and Anniversary Sale in July, Nordstrom looks like it will be seeing even more of an increase in sales in

the months to come.

Economic Factors

Some believe that with the signing of the bill to ward off the fiscal cliff, it has actually set the

United States back into a recession. Yet, people seem to be increasing their spending and slowly heading

back to how they would spend before the recession was taking place. Also, unemployment rates in

California have dropped to 9.4% in March. This is showing that more companies are starting to higher

again and giving people the money that they need. This helps the Nordstrom increase their sales. With

more people being employed, they need new work wardrobe and will also be purchasing new clothes in

general to show their growing confidence. The possibility of tax increases could also stop extra spending

that could also hurt Nordstrom.

Social Factors

With the confidence of the plus size women increasing due to the clothing that is being provided

for them, these women will increase their purchasing of new styles. Also with the holiday season more

events will be taking place where women will be looking for outfits that will be suitable for these events.

The biggest factor during this time will be the back to school time and the holiday time. Women

will be looking for new clothing for school or work. They will also be shopping for loved ones for holiday

gifts. This also has the potential to bring in significant others who are looking for presents for their loved

one.

Political Factors

The fiscal cliff not only affects the economic factors, it also affects the political factors. The new

congress that took office in January not only had to deal with the fiscal cliff situation, but also had to

deal with the fact that the federal debt ceiling needed to be raised again and having to deal with the still

hanging sequester from the last battle over the debt ceiling in 2011 (CNN). With the possibility of tax

increases, this could hurt Nordstrom because people could be taking less home every month and not

give them the extra money that they would use for a new pair of pants or a new outfit that they may

need for vacation.

Climate Factors

The climate for the east bay area is usually on the cooler side than the rest of the surrounding

areas. According to the Weather Prediction Center, the temperature for this area is going to be the same

as it has been in the previous years. This means that customers will need outerwear such as coats and

jackets as well as warmer clothing. Nordstrom will benefit from this because they will be prepared for

the colder weather with their selection of winter clothing. Those who live in the area and work in the

San Francisco area will also be looking for warmer clothes due to San Francisco has cooler climate than

the east bay.

Competition Factors

Macy’ is within walking distance of the Nordstrom in Walnut Creek. During this time of the year

Macy’s has its second Friends and Family promotion. During this promotion, a lot of higher price point

items can be purchased at 25% off. These are items that can also be found within the Nordstrom store.

With customers shopping at Macy’s during this event, Nordstrom will see a decrease in sales during this

week long event. Macy’s also runs promotions and one day sales on a regular basis that could also draw

more people in to look and possibly purchase items there if they can find it for a lower price than

Nordstrom.

Fashion Trends

The stereotype that plus size women lean towards darker colors and larger clothing to help hide

their figure is becoming a thing of the past. Plus size women are now embracing the fashion trends that

are being set and finding ways to fit them to their bodies. Nordstrom provides a large assortment of

different styles and trends that are taking place. With the holiday season coming and the need for

warmer clothing, Nordstrom will provide the looks that women will be looking for in clothing and

making their bodies look flattering with showing off their curves.

Promotions

Nordstrom only three sales per years, one of those sales falls in the fall/winter season. This

promotion is the women’s and children’s half yearly sale. This sale will come just at the right time for

back to school as well as the change of the season and new trends that will be available. This will boost

the store (and companies) sales during this week and a half long promotion.

Expansion

In the fall of 2013, a Nordstrom Rack will be opening at the Sun Valley Mall in Concord, CA. This

location is less than eight minutes away from Walnut Creek. With the opening of this Rack location,

more Nordstrom customers will be shopping at this location knowing that they can receive the same

brands that a full-line Nordstrom carries, but at a reduced rate. Though customers will still return to the

full-line store for certain things, the opening of the Rack could hurt sales during the holiday season and

customers shopping else were for holiday gifts.

Conclusion

Though Nordstrom has been doing well with a sales increasing, it will have some challenges to

overcome in the months to come. With the opening of a Nordstrom Rack not that far from the full- line

store as well as competition having promotions, Nordstrom is going to have to make sure that it keeps

up its customer service to keep repeat customers coming in. Economic and political factors could affect

the consumers and business negatively, but with the drop in unemployment, there could be no issues

that arise from these factors. As a Nordstrom merchandiser, we will have to stay on top of all current

issues and adapt as needed to stay where we need to be.

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Assortment Plan

TotalPlan Aug Sep Oct Nov Dec Jan Total

Beg. Month Stock 538.3 700.8 577.0 1004.9 949.3 372.2 4142.4Sales $224.3 $233.6 $174.8 $314.0 $499.6 $100.6 $1,546.9

Purchases $418.1 $142.1 $636.8 $325.4 $37.6 $189.4 $1,749.1End Month Stock 700.8 577.0 1004.9 949.3 372.2 397.1 4001.3

Plan- This Year Class: Blouses 40% $60Aug Sep Oct Nov Dec Jan Total

Beg. Month Stock 215.3 280.3 230.8 402.0 379.7 148.9 1657.0Sales $89.7 $93.4 $69.9 $125.6 $199.8 $40.2 $618.7

Purchases $167.2 $56.8 $254.7 $130.1 $15.0 $75.8 $699.6Units to Buy 2787 947 4245 2169 251 1263 11661

End Month Stock 280.3 230.8 402.0 379.7 148.9 158.9 1600.5

Plan- This Year Class: Jeans 40% $126Aug Sep Oct Nov Dec Jan Total

Beg. Month Stock 215.3 280.3 230.8 402.0 379.7 148.9 1657.0Sales $89.7 $93.4 $69.9 $125.6 $199.8 $40.2 $618.7

Purchases $167.2 $56.8 $254.7 $130.1 $15.0 $75.8 $699.6Units to Buy 1327 451 2021 1033 119 601 5553

End Month Stock 280.3 230.8 402.0 379.7 148.9 158.9 1600.5

Plan- This Year Class: T-Shirts 15% $41Aug Sep Oct Nov Dec Jan Total

Beg. Month Stock 80.7 105.1 86.5 150.7 142.4 55.8 621.4Sales $33.6 $35.0 $26.2 $47.1 $74.9 $15.1 $232.0

Purchases $62.7 $21.3 $95.5 $48.8 $5.6 $28.4 $262.4Units to Buy 1529.5 519.8 2329.6 1190.3 137.5 693.0 6399.2

End Month Stock 105.1 86.5 150.7 142.4 55.8 59.6 600.2

Plan- This Year Class: Dresses 5% $139Aug Sep Oct Nov Dec Jan Total

Beg. Month Stock 26.9 35.0 28.8 50.2 47.5 18.6 207.1Sales $11.2 $11.7 $8.7 $15.7 $25.0 $5.0 $77.3

Purchases $20.9 $7.1 $31.8 $16.3 $1.9 $9.5 $87.5Units to Buy 150 51 229 117 14 68 629

End Month Stock 35.0 28.8 50.2 47.5 18.6 19.9 200.1

Average Retail:

Average Retail:

Average Retail:

Average Retail:

Profit and Loss Statement

Retail %of Net SalesNet Sales 1546.9Markdowns 343.4 22.2%EM Disc 23.2 1.5%Shrink 30.9 2.0%Tot Ret Reduc 1944.4 25.7%

Cost Retail MU% MU CompBeg. Stock (1st mo. BOM) 215.9 538.3 59.9% 40.1%Net Purchases 666.4 1749.1 61.9% 38.1%Total Stock 882.3 2287.4 61.4% 38.6%End Stock 132.3 343.0 61.4% 38.6%

Total Stock Cost 882.3Freight 35.6 2.3%Total Cost 917.8End Stock Cost 132.3Workroom 7.7 0.5%COGs 793.3 51.3%Gross Profit 753.6 48.7%Cash Discounts 13.3 2.0%Gross Margin 766.9 49.6%

Advertising 54.1 3.5%Personnel 208.8 13.5%Merchandising 108.3 7.0%Distribution 61.9 4.0%Total Indirect 85.1 5.5%Total Expenses 518.2 33.5%Total Profit 248.7 16.1%

Works Cited

Nordstrom Sales: http://interactivedocument.labrador-company.com/Labrador/US/Nordstrom/2012AnnualReport/ Web. May2, 2013

Announced store openings and square footage growth: http://phx.corporate-ir.net/phoenix.zhtml?c=93295&p=irol-realestate Web. May 2, 2013

Climate Prediction Center: http://www.cpc.ncep.noaa.gov/products/predictions/90day/ Web. May 3, 2013

Bacote, Glenda. Fashionable Plus Size Clothing For women. http://www.fashionium.net/fashionable-plus-size-clothing-for-women.html Web. May 5, 2013

NCSL. State Unemployment Drops in March. http://www.ncsl.org/issues-research/labor/state-unemployment-update.aspx Web. May 5, 2013

CNN. Obama Signs Bill Warding Off Fiscal Cliff. http://www.cnn.com/2013/01/02/politics/fiscal-cliff Web. May 4, 2013

Gleckman, Howard. The Bottom Line: What the Fiscal Cliff Really Means for Taxes and Spending. http://www.forbes.com/sites/beltway/2013/01/03/the-bottom-line-what-the-fiscal-cliff-deal-really-means-for-taxes-and-spending/ Forbes. Web. May 4, 2013