RETAIL BUYING AND MERCHANDISING MANAGEMENT

PRESENTED BY,DEBASHREE BAGG,

PRATIBHA RANI,M.SABITA

Merchandising:

•It Is the art and science of how the products, features, and services are displayed, advertised, and promoted.

•Helps create the experience you want your customers to have.

•Creates selling opportunities.

• 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.

• Full array of merchandising functions– Buying and selling – Selection, pricing, display, customer transactions– Analysis, planning, acquisition, handling, and control of the

merchandise investments of a retail operation.

Harry and David’s Merchandising Philosophy

FUNDAMENTALS OF MERCHANDISING

• Merchandise ManagementProcess by which a retailer offers the correct quantity of the right merchandise in the right place at the right time and meets the company’s financial goals.

• Sense market trends• Analyze sales data• Make appropriate adjustments in

prices and inventory levels.

MERCHANDISE STRATEGIES• There are many types of strategies:

1. Planning

2. Sourcing

3. Arranging and displays

Planning: Methods of Merchandise Planning:• Gross margin Return on Inventory

(GMROI)• Basic Stock Method• Percentage Variation Method• Weeks’ supply Method• Stock to Sales Method

sourcing• Sourcing means finding or seeking out products from different places,

manufacturers and suppliers

• Sourcing influences a) availability of stock b)margins earned by retailers and c)stock- turns achieved

• It improves service,product offer and overall profitability

• – A five step process

1. Identifying the sources of supply

2. Contacting and evaluating the sources of supply

3. Negotiating with the sources of supply

4. Establishing vendor relationships

5. Analysing vendor performance

• Risk Factors in New Supplier Sourcing– Continuity of Supply

– Time and Cost to develop new sources

– Nondisclosure and Intellectual Property

– Political and geographical issues

INTRODUCTION TO BUYING MERCHANDISE

Four step process:

• Identify sources of supply• Contact sources of supply• Evaluate sources of supply• Negotiate with sources of supply

• 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

TYPES OF BUYING

• Centralized: all buying for the chain is completed from one location– Advantage: Quantity Discounts– Disadvantage: Lack of Specialized to Target Mkt.

• Decentralized: buying decisions made at the local store– Advantage: specialized to market’s needs– Disadvantage: loss of discounts• Corporate buying-voluntary chain

co-operative chain• Buying committee• Resident buying offices

ORGANISATION SOURCES OF MERCHANDISE

SUPPLIER SELECTION• You can search for the potential vendors by looking at several information sources:

– Past experiences– Interviewing with the salesperson of the supplier– Catalogs published by the vendors– Trade Directories

• Classifies suppliers according to the products they make• Includes names of company personnel, financial status, and location of

sales offices

Types of Suppliers

• Local vs. National Suppliers• Distributor vs. Direct• Foreign Sources

Factors to Consider when Selecting Suppliers

• Technical, Engineering and Operations

– Quality History

– Quality Systems

– Design Engineering capability

– Sustaining Engineering capability

– Facilities and Equipment

– Output Capacity

• Ability to ramp up and down quickly• Long term potential

– Flexibility and responsiveness

– Track record of cost reductions

– Logistics expertise

Negotiating with vendors

• Two-way communication

designed to reach an

agreement when two parties

have both shared and conflicting

interests.

Negotiation Issues• Price and gross margin

– Margin Guarantees– Slotting Allowances

• Additional markup opportunities• Purchase terms• Terms of purchase • Exclusivity• Advertising allowances• Transportation

Art for effective negotiations• Have at least many negotiators as the vendor• Choose a good place to negotiate• Be Aware of real deadlines• Separate people from problem• Insist on objective Information • Invent options for mutual gain• Let the other party do the talking• Know how far to go• Don’t burn bridges• Don’t assume

BUYING OF STAPLE MERCHANDISE AND FASHION MERCHANDISE

• Two distinct types of merchandise management systems for managing

1. Staple (Basic) Merchandise Categories• 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.

• Continuous demand over an extended time period• Predictable Demand• History of Past Sales• Relatively Accurate Forecasts• Limited number of new product introductions• Hosiery, basic casual apparel• Easy to forecast demand• Continuous replenishment

2. Fashion Merchandise CategoriesProducts that may have cyclical sales due to changing tastes and life-styles

• In demand for a relatively short period of time• Unpredictable Demand• Limited Sales History• Difficult to Forecast Sales• Continuous introductions of new products,

making existing products obsolete• Athletic shoes, laptop computers, women’s apparel

Retailers develop fashion forecasts by relying on:• Previous sales data• Personal awareness• Fashion and trend services• Vendors

ETHICAL AND LEGAL ISSUES IN BUYING MERCHANDISE

• Contractual Disputes• Chargebacks• Commercial Bribery• Slotting Allowances• Buybacks• Counterfeit Merchandise• Gray Markets and• Diverted• Merchandise• Exclusive Territories• Exclusive Dealing• Refusal to Deal• Tying Contracts• Purchase Terms and Conditions• Resale Price Maintenance

THANKYOU