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Chapter 14

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Chapter 14

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  1. Chapter 14 RETAIL MANAGEMENT: A STRATEGIC APPROACH 11th Edition BERMAN EVANS Developing Merchandise Plans

  2. Chapter Objectives • To demonstrate the importance of a sound merchandising philosophy • To study various buying organization formats and the processes they use • To outline the considerations in devising merchandise plans: forecasts, innovativeness, assortment, brands, timing, and allocation • To discuss category management and merchandising software Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  3. Merchandising Activities involved in acquiring particular goods/ services and making them available at the places, times, prices, and quantities that enable a retailer to reach its goals. Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  4. Merchandising Philosophy • Sets the guiding principles for all the merchandise decisions that a retailer makes • It should reflect • Target market desires • Retailer’s institutional type • Market-place positioning • Defined value chain • Supplier capabilities • Costs • Competitors • Product trends Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  5. Scope of Merchandising Responsibility • Full array of merchandising functions • Buying and selling • Selection, pricing, display, customer transactions OR • Focus on buying functiononly Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  6. Figure 14-1: Dick’s Merchandising Philosophy Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  7. Micromerchandising Retailers adjust shelf-space allocations to respond to customer differences and other differences among local markets. Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  8. Cross-Merchandising Retailers carry complementary goods and services to encourage shoppers to buy more. Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  9. Figure 14-2: Attributes and Functions of Buying Organizations Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  10. Merchandising and Store Functions Performed • Merchandising view • All buying and selling functions • Assortments • Advertising pricing • Point-of-sale displays • Employee utilization • Personal selling approaches Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  11. Merchandising and Store Functions Performed (cont.) • Buying view • Buyers manage buying functions: • Buying • Advertising • Pricing • In-store personnel manage other tasks: • Assortments • Point-of-sale displays • Employee utilization • Personal selling approaches Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  12. Figure 14-4a: Merchandising Career Track at Macy’s Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  13. Figure 14-4b: Store Management Career Track at Macy’s Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  14. Figure 14-5: Devising Merchandise Plans Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  15. Forecasts • These are projections of expected retail sales for given periods • Components: • Overall company projections • Product category projections • Item-by-item projections • Store-by-store projections (if a chain) Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  16. Types of Merchandise • Staple merchandise • Assortment merchandise • Fashion merchandise • Seasonal merchandise • Fad merchandise Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  17. Staple Merchandise • Regular products carried by a retailer • Grocery store examples: milk, bread, canned soup • Basic stock lists specify inventory level, color, brand, style, category, size, package, etc. Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  18. Assortment Merchandise • Apparel, furniture, automotive, and other categories for which the retailer must carry a variety of products in order to give customers a proper selection • Decisions on assortment • Product lines, styles, designs, and colors are projected • Model stock plan Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  19. Fashion and Seasonal Merchandise • Fashion Merchandise: Products that may have cyclical sales due to changing tastes and life-styles • Seasonal Merchandise: Products that sell well over nonconsecutive time periods Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  20. Table 14-1a: Factors in Planning Merchandise Innovativeness Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  21. Table 14-1b: Factors in Planning Merchandise Innovativeness Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  22. Table 14-1c: Factors in Planning Merchandise Innovativeness Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  23. Figure 14-6: Saks: Looking for Hot New Fashions Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  24. Figure 14-7: Traditional Product Life Cycle Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  25. Structured Guidelines for Pruning Products • Select items for possible elimination on the basis of declining sales, prices, profits, and appearance of substitutes • Gather and analyze detailed financial/ miscellaneous data about these items • Consider non-deletion strategies such as cutting costs, revising promotion efforts, adjusting prices, and cooperating with other retailers • After making a deletion decision, do not overlook timing, parts and servicing, inventory, and holdover demand Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  26. Figure 14-8: Predicting Fashion Adoption Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  27. Table 14-2a: Factors in Planning Merchandise Quality Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  28. Table 14-2b: Factors in Planning Merchandise Quality Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  29. Table 14-2c: Factors in Planning Merchandise Quality Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  30. Retail Assortment Strategies Width of assortment refers to the number of distinct goods/service categories (product lines) a retailer carries. Depth of assortment refers to the variety in any one goods/service category (product line) a retailer carries. An assortment can range from wide and deep (department store) to narrow and shallow (box store). Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  31. Figure 14-10: Ikea’s Wide and Deep Assortment Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  32. Brands Manufacturer (national) Private (dealer or store) Generic Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  33. Table 14-3: Private Brand Test Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  34. Figure 14-11: Wal-Mart and Private Brands Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  35. Figure 14-12: Sears’ Distinctive Branding Strategy Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  36. Category Management • Category management is a merchandising technique used to improve productivity. • It is a way to manage a retail business that focuses on the performance of product category results rather than individual brands. • It arranges product groupings into strategic business units to better meet consumer needs and to achieve sales and profit goals. • Retail managers make merchandising decisions that maximize the total return on the assets assigned to them. Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  37. Figure 14-13: Applying Category Management Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  38. Merchandising Software • General Merchandise Planning Software • Forecasting Software • Innovativeness Software • Assortment Software • Allocation Software • Category Management Software Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  39. Figure 14-4a: Shelf Logic Software for Category Management Planning Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  40. Figure 14-4b: Shelf Logic Software for Category Management Planning Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall

  41. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Retail Mgt. 11e (c) 2010 Pearson Education, Inc. publishing as Prentice Hall