Lesson 8: Merchandising

1. Lesson 8: Merchandising

2. Objectives • Give examples of the four main categories of merchandise • Explain the importance of stock lists and inventory control on merchandising • Describe how sales are affected by the strategic placement of merchandise throughout a store – including the store entry, checkout lanes, and back of the store • Analyze the financial impact of rearranging products

3. 1. What is Merchandising? • The coordination of buying merchandise that customers want in the proper quantities and then selling that merchandise at a price that customers are willing pay • Also includes the skillful arrangement of where items are placed within a store

4. Types of Merchandise • Staples • Fashion • Seasonal • Convenience

5. Staple Merchandise • The ‘basics’ in your store • Stocked year round • Large portion of store sales • What customers need on an ongoing basis and sell well year after year • Ie: bread and eggs in a grocery store • Ie: socks and shoes in a department store

6. Fashion Merchandise • Items that are stocked for several years and have solid sales over that time period • Eventually, fashion merchandise changes and customers will switch to buying different styles • Ie: skinny jeans, Wii, Tickle Me Elmo • Does NOT have to be clothing!

7. Seasonal Merchandise • Items that sell well during particular times of the year that are stocked only for that selling period • Receive markdowns after selling season is over • Ie:

8. Convenience Merchandise • Items customers buy without thinking very much about the purchase • Or, items purchased solely for the convenience of it being there • Can be purchased often or even daily • Ie:

9. Stock Lists • Tools that retailers use to help them keep a close eye on the inventory they stock • Assist retailers with the task of maintaining correct quantities of merchandise • Itemized and detailed listings of the merchandise a store or department should have for sale • Basic stock list • Model stock list • Never-out stock list

10. 8. Basic Stock Lists • Keeps track of the staple merchandise that the store should always keep in inventory (have a regular customer demand) • Notes a min. quantity that should always be in inventory and the number of items to be reordered when needed • Studied daily

11. Model Stock List • Used to keep track of fashion merchandise • The list changes more often than basic stock list items, therefore is less detailed • Monitoring this will give valuable info about best pricing, styles, and colors of products

12. Never-out Stock List • Used for all four types of merchandise • Keeps track of best-selling merchandise • Monitored frequently to ensure that popular items are always available in sufficient quantities • The list changes frequently (new items are added and less popular ones are removed)

13. Merchandising and Sales • General rule of thumb: Plan for a ten percent increase over last year’s sales for the same time period • Must consider current business circumstances when planning and act accordingly • There must be enough merchandise for customers to choose from • There shouldn’t be TOO much merchandise, it could overwhelm the customer

14. Merchandising for Profit • Strategic placement of merchandise within the selling space is a big factor in generating sales • Staple merchandise usually has a permanent location and does NOT need to be in high traffic areas

15. Store Entrance • Has the greatest customer exposure • Has the best chance of producing a large amount of sales

16. Impulse Purchases • Small items that are purchased with little or no thought on behalf of the customer • Placed near entrance area, checkout area, and heaviest customer traffic areas • Ie: magazines, candy bars, gum

17. Related Merchandise • Items that are related to each other and that usually sell together • If a customer buys one, they will likely buy the other • Should be located near one another • Ie: razors and shaving cream, peanut butter and jelly

18. Key Math Concepts Planned Sales Increase = Last Year’s Sales X % Planned Increase New Estimated Sales = Last Year’s Sales + Answer from above Total Price Per Item Ordered = Quantity Ordered X Price Per Unit