Chapter 8Chapter 8Managing a Retailer’s Managing a Retailer’s

FinancesFinances

Nanut SitthiphongChun-Lan Yeh

Chapter 8 OverviewChapter 8 Overview

• Merchandise Budget 1. Planned sales

2. Planned BOM and EOM inventories

3. Planned retail reductions

4. Planned purchases at retail and cost

5. Planned gross margin.

Merchandise BudgetMerchandise Budget

Chapter 8 OverviewChapter 8 Overview• Retail Accounting Statement ⊙ Income Statement or Profit and Loss Statement ⊙ Balance Sheet ⊙ Statement of cash flow

• Inventory Valuation ⊙ Accounting Inventory System - The Cost Method - The Retail Method ⊙ inventory pricing systems - FIFO - LIFO

How to get the right How to get the right merchandise assortment merchandise assortment and sufficient stock to and sufficient stock to achieve planned salesachieve planned sales

• According to Retail Reporting Calendar• Using Forecasting Technology

- Peclers paris- Planalytics- Sourcing Simulator

Retail Reporting CalendarRetail Reporting Calendar

PeclersP a r i s

• Dominique Peclers established the styling agency in 1970.

• In 1998, joined the British-American group Fitch Worldwide, specialists in brand and design consulting.

• Today, international trend forecasting leader. 21 agents throughout the world.

• Peclers Paris forecasts and deciphers today the fashion moods of tomorrow, imagine the future, and give sense to the product.

PeclersP a r i s

• Service provided:

- Style and product design consultancy

- Promotion and communication consultancy

- Origination and publication of trend books

Planalytics• Weather and climate-sensitive industries, both di

rectly and indirectly, account for about one-third of the Nation’s gross domestic product, or $3.0 Trillion.

-Conrad C. Lautenbacher, Jr. Vice Admiral, U. S. Navy (Ret.) Under Secretary for oceans and Atmosphere, United States Dapartment of Commerce. –

• The benefits for retailers are more effective store-specific merchandise assortments, higher customer satisfaction levels, less safety stock at all levels of the supply chain, increased stock turns, fewer stock-outs, fewer markdowns and increased profitability.

Planalytics• Business Forecasting service to help firms

planning the merchandise budget by providing forecasting weather-driven changes in supply, demand and prices for products and services.

• Results : - Risk Management

- Improved Control of Cost

- Increased Revenue

Sourcing Simulator

• Developed by researchers at North Carolina State University, working with Textile/Clothing Technology Corp. ([TC]2) and the DAMA Project to facilitate retailers analyzes various "what if" sourcing scenarios.

Sourcing Simulator

• Benefits:

- Analyzes various "what if" sourcing scenarios on methods of supply [quick response (QR) vs. vendor-managed inventory (VMI) vs. fixed delivery times] and amounts of merchandise

- Provides financial performance measures for comparison 

• What can you manipulate in Sourcing Simulator?

- the line of apparel: number of stock keeping units (SKUs), wholesale costs, other procurement costs, inventory carrying costs, etc.

- the buyer's preseason forecast of demand: total volume, SKU mix, and seasonality pattern.

- means of merchandising: retail price, markdown schedule, etc.

- sourcing means: type of vendor, initial delivery quantity, number of in-season replenishment orders, lead time until receipt, vendor reliability, etc.

Sourcing SimulatorSourcing Simulator

THANK YOUTHANK YOU

QUESTIONS?QUESTIONS?

SourceSource

• http://findarticles.com/p/search?qt=planalytics&tb=art&qf=free

• http://www.peclersparis.com/index2.html

• http://reliability.sandia.gov/Software/Sourcing_Simulator/sourcing_simulator.html

• http://www.planalytics.com/app/corp/start.jsp

• Retailing, Dunne Lusch, 5th Edition.