Merchandise Management

1. MERCHANDISE MANAGEMENT The enchanting world of merchandising, Visual merchandising – the silent salesman, Merchandise planning – stock turns, Credit Management, Analysis of customer traffic flows and patterns, Retail Supply chain management, Importance of Warehousing, Bullwhip Effect. mdrafeekph.com

2. Merchandise Management 1. The Enchanting World of Merchandising •Merchandising = The art & science of buying, presenting, and promoting products in a retail environment. •It ensures that the right product is available at the right place, time, price, and quantity. •Includes both product selection (back-end planning) and presentation/display (front-end execution). Example: Zara uses fast fashion merchandising – rapid design, quick replenishment, and trendy displays. 2. Visual Merchandising – The Silent Salesman •Definition: Use of visual techniques to attract and influence customers inside/outside a store. •Tools: oWindow displays. oMannequins. oStore lighting, colors, signage. oPlanograms (shelf placement diagrams). •Importance: oEnhances store image. oEncourages impulse buying. oCommunicates brand identity. Example: Apple Stores → clean, minimalistic displays that promote a premium image. 3. Merchandise Planning Merchandise planning ensures the retailer maintains optimal stock levels. mdrafeekph.com

3. •Stock Turns (Inventory Turnover): oMeasures how quickly inventory is sold & replaced. oFormula: oHigh turnover = efficient use of capital; Low turnover = overstocking. •Credit Management: oImportant for B2B retail (suppliers, wholesalers). oIncludes payment terms, credit period, and risk management. oHelps balance liquidity and supplier relations. 4. Analysis of Customer Traffic Flows and Patterns •Customer Traffic Flow: How customers move inside the store. •Tools: Heat maps, CCTV analytics, footfall counters. •Uses: oIdentify hot spots (high-traffic areas for premium products). oAvoid cold zones (areas customers rarely visit). oOptimize store layout (grid, free-flow, racetrack). Example: IKEA uses racetrack design → customers follow a guided path covering most sections. mdrafeekph.com

4. 5. Retail Supply Chain Management (SCM) •Definition: Efficient coordination of sourcing, procurement, warehousing, distribution, and logistics. •Importance: oReduces stockouts and overstocking. oImproves responsiveness to customer demand. oControls costs and enhances profitability. Example: Walmart’s supply chain success relies on real-time data sharing with suppliers. 6. Importance of Warehousing •Warehouses act as hubs between suppliers and retail outlets. •Functions: oStorage of goods. oCross-docking (direct transfer from inbound to outbound trucks). oConsolidation & break-bulk. oInventory buffering to handle demand fluctuations. Example: Amazon’s “Fulfillment Centers” ensure fast deliveries by placing warehouses near large cities. 7. Bullwhip Effect •Definition: A supply chain phenomenon where small demand fluctuations at the consumer level cause huge variations in orders upstream. •Causes: oForecast errors. oOrder batching. oPrice promotions (leading to irregular demand). mdrafeekph.com

5. oLack of coordination among suppliers, distributors, retailers. •Impact: Leads to excess inventory, shortages, high costs. •Solution: oSharing real-time demand data (POS systems). oBetter forecasting. oReducing lead times. oCollaborative planning with suppliers. Example: A 5% increase in customer demand may cause a 40% increase in raw material orders due to overreaction by supply chain members. Summary •Merchandising ensures the right products are available in the right way. •Visual merchandising acts as a “silent salesman” through displays & atmospherics. •Merchandise planning focuses on inventory turnover and credit management. •Customer traffic analysis helps optimize store layouts and product placement. •Retail supply chain management + warehousing are critical for availability & efficiency. •Bullwhip effect highlights the importance of coordination in the supply chain. mdrafeekph.com