Selling the right products of the right quantity Flashcards
Factors to consider when selecting products
Merchandisers help set the prices to maximise profits and manage the performance of the ranges, planning promotions and markdowns as necessary. They also oversee the delivery and distribution of stock and deal with any problems with suppliers when and as they arise. The question arises how can a retailer have the right selection of merchandise?
In this regard, a retailer must consider the following factors: Price vs. quality Store image Fashion Quantity and variety Ease of selling Compatibility New merchandise Profitability
Price vs. quality
Customers are much more informed today.
Internet, globalisations and technology have made customer more conscious of prices and qualities of products.
Its the retailers responsibility to know what quality the consumer wants and what price they are willing to pay for that.
Store image
When selecting merchandise to offer it is important to take the store image in consideration. Ensure that he image that the retailer wants to portray is not damaged by the range of products on offer.
Fashion
How fashion consciousness are the consumers? Some wants to be the first to own something others will wait for the majority before they accept it.
Quantity and variety
How much merchandise can be offered?
Behaviour of consumer might rely on the type of mercandise that is on offer.
Fashion items and other retail goods requier retailers to carry a wide assortment of merchandise in many size and colors.
Even the best merchandise policies have to be modified to fit the resources of the retailer- merchandise that is in the greatest demand should be stocked.
Ease of selling
A retailer would prefer products to sell as fast as possible with as little effort as possible.
This type of product would largely determine how easily it would sell.
Some products needs demonstration and explanation. Packaging does a lot to attract the consumer.
Compatibility
Does the merchandise suit the store? Items on display should compliment each other by being consistent in quality, price range, style and the way they will be used.
New merchandise
New merchandise increases the risk as it has not yet been proven. It may be that a product has been in the market for some time and has established itself in the market. In such case the retailer may decide to add this product to its range.
Profitability
Aim of all products on offer is to make profit. Will the suggested retail price allow for mark-up to meet profit goals. How will each product contribute to sales and offers?
Assortment Checklist
A clean storefront? Price? Store image? Fashion? Quantity and Variety? Ease of selling?
Merchandise Planning
An important goal in successful merchandising is to assist the process of achieving the planned level of buying profitability.
Fashion is slow moving stock from season to season. Staple stock can be standard stock for example underwear and socks that looks the same every season.
Define Buying Profit
“Buying profit” can be defined as the difference between the cost price paid for a garment and the retail selling price in the shop
Problems in planning
Planning in detail can be a problem for fashion retailers as any fashion range is made up of a multitude of styles.
Some styles may be part of a coordinated range of garments, which naturally are displayed and sold together, while the majority are sold as individual garments.
The importance of the merchandiser in planning
The merchandiser plays a key role in working with the buyer to achieve the right balance of products within the season’s range by using a balance of previous sales history combined with forward sales/ trend predictions
Merchandise planning is a demanding task.
Starting the planning process
The merchandise planning process generally starts six months to one year ahead of the start of a season.
The importance of historic sales patterns
Historic sales patterns look at the best and the worst sellers from a previous season and are depicted in a report format to show “lessons learned”.
A dull repeat of old formulas isn’t needed.
A fashion business must not repeat historic buying failures, although a successful history is no guarantee of future success in the fickle world of fashion.
Bottom up planning
Bottom-up planning is the analysis that begins with what was sold: how much, what kind, when and at what price. Projections are then made for the coming sales period and investment in merchandise is based on previous sales. Bottom-up planning is a daily task of every merchandise manager.
Top- Down Planning
When proposed sale target figures come downward from a higher level in the organisation.
This can be dangerous in the fashion retail industry as fashion business is made up of a multitude of changing elements; such as style, colour, garments, fabrics etc.
Interactive planning
The combination of top-down and bottom-up planning is called interactive planning. It is a teamwork approach with input from all the firm’s constituencies.
Although it is time-consuming, it is the most accurate merchandising plan.
Study Jackson (2001:94–95) on the importance of historic sales patterns and then answer the questions below:
¡ What are key sales ratios? Why do you need to use them? ¡ What is top-down and bottom-up planning?
How will an effective merchandiser go about the planning?
The effective merchandiser will analyse the previous sales history to help plan the basic sales framework for daily, weekly, monthly and seasonal sales patterns.
However, it requires quick thinking, reaction and experience to cope with all those sudden unplanned factors that tend to occur when they are least expected.
Define Stock turn and stock intake planning
Stock turn is simply a way of measuring how many times a business changes the stock that it has on offer to the customer during the course of a trading year (Jackson, 2001:100).
To measure annual stock turn there is a simple formula that can be applied by the merchandiser:
Stock turn = Stock turn = Annual sales value/ Average monthly stock value
Why is stock turn important for the retailer?
In the fashion industry it is very important for a retailer to “turn” their stock as many times as possible throughout the season or year. Without regular change and update of stock, a fashion retailer becomes stale and boring.
Why do fashion retailers refer to weekly stock cover?
How do you work it out?
The degree to which a merchandiser gets involved with the day-to-day management of stock in stores can vary. Read Jackson (2006:143–147) on the automated distribution system, replenishment to pattern, sales reactive replenishment and smoothing factors, dummy branch numbers and the dangers of automatic allocation systems.
Planning Staple Stock
Its not difficult because what have been sold in the past will probably sell again in the future.
All wholesalers and many manufacturers help retailers make lists of what individual staple goods they should have in stock.
Some will even make regular stock counts to insure that the items are recorded before inventory levels get to low. This will change as customer demand or supplier offering change. Some non-staple stock are demanded so much that they become staple stock.
The easy way to control the buying of basic stock is to re-oder at regular intervals according to a minimum and maximum quantity that has been set for each item.
Retailers need to know how much they sell weekly, how often they place orders and how long it takes for merchandise to be delivered and ready for sale.
The minimum amount is what what should be on hand to cover sales during the oder period.
The maximum stock is the amount of stock that should be on hand or ready to oder at any time
