Professional Documents
Culture Documents
CHAPTER 3
Retail
Merchandising
Retail
Merchandising
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Merchandising
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Merchandising
Retail
Merchandising
The projection of achievable sales revenue, based
on historical sales data, analysis of market
surveys and trends, and salespersons estimates
is termed as a sales forecast. Also called sales
budget.
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Forecasts are typically developed to answer
the following questions:
How much of each product will need to be
purchased?
Should new products be added to the
merchandise assortment?
What price should be charged for the
product?
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market opportunities
Analysing the changes in the marketing
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Range plans are at the level of the company
& the department level.
The aim of the range plan is to create a
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Good range planning should essentially
take care of the following:
Ensure that sufficient number of items/ options
available to the customer,
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The six-month merchandise plan is a tool that
translates the profit objectives into a framework
of merchandise planning and then control.
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Points to be kept in mind:
1. The merchandise budget should be prepared in
advance of the selling season.
2. The language of the budget should be easy to
understand.
3. Since the economy is ever changing, the
merchandise budget must be planned for a
relatively short period of time- six months is the
normal norm.
4. The budget should be flexible enough so that
changes are not impossible.
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Planned Sales
Planned Sales are the projected sales for the period that is
planned.
Planned Purchases
It represent the merchandise that is to be purchased during
any given period.
Planned purchases are calculated by using the following
formula:
Planned Purchases = Planned Sales + Planned
Reductions
+ Planned EOM- Planned BOM
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Planned Reductions
Markdowns, employee discounts and inventory shrinkage
come under the heading of planned reductions.
Planned Markdowns
Markdowns are deductions in prices and may occur
because of many reasons ranging from bad quality of
merchandise, competitive products, change in trends, etc.
Employee Discounts
The discounts given to the employees for buying the
companys products.
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Shrinkage
It is the loss of merchandise due to theft or pilferage.
Planned Markup
Markups vary depending on the type of the product, the audience
that it is targeted and the market trends.
Markup in Rupees= Selling price-Cost price
Gross Margin
It is the difference between the selling price and the cost of the
product, less reductions for markdowns, shrinkage and employee
discounts.
To determine the GM for each month, all purchases and
inventories must be converted to cost price.
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Planning End-of-Month (E.O.M.) or Beginning-of-Month
(B.O.M) inventory levels is another important element of
the six-month merchandising plan.
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The Stock-to-Sales (S/S) is a ratio of the amount of inventory on
hand at a particular date to the sales for the same period.
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In this method the buyer believes that he needs to carry
certain fixed amount of inventory in the store at all times.
It is calculated using the following formula:
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This method of inventory calculation is used in
case the stock turnover typically exceeds six
times a year.
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Retailers who need to maintain a control on the
inventories on a weekly basis may use this
method.
It can be calculated by using the following
formula:
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The purpose
2. The
planned relation between the stock and sales
can be maintained.
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Limits overbuying and under buying
Prevents loss of sales due to unavailability
of the required stock.
Maintain purchases within the budgeted
limits
Reduce markdowns, which may arise due
to excess buying.
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