Professional Documents
Culture Documents
Merchandise managers have control over The merchandise they buy The price at which the merchandise is sold The cost of the merchandise Merchandise managers do not have control over Operating expenses Human resources Real estate Supply chain management Information systems
For the Merchandise managers they can evaluate the performance only on the basis of Merchandise. Because they have control only over the merchandise they buy and manage and buyers have control only over gross margin. For getting to know the financial ratio which will be useful for planning and measuring merchandising performance, the return on investment resource or Gross Margin Return On Inventory Investment or GMROI is considered.
GMROI measures how much gross margin rupees are earned on every rupee or inventory investment. GMROI uses gross margin percentage and sales tostock ratio(similar to inventory turnover) GMROI=Gross Margin percentage X Sales to-stock ratio =Gross Margin X Net Sales Net Sales Average Inventory =Gross Margin Average Inventory
The average inventory in GMROI is taken as a cost because a retailers investment in inventory will be the cost of the inventory and not its retail value.GMROI combines the effects of both profits and turnover enabling the retailer to measure compare and evaluate department merchandise classifications vendor lines and items. Inventory turnover is used to evaluate how effectively managers utilize their investment in inventory.
Inventory Turnover= Net Sales Average Inventory at retail Or Inventory Turnover= Cost of Goods sold Average inventory at cost
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)
Types of Merchandise
Staple merchandise Assortment merchandise Fashion merchandise Seasonal merchandise Fad merchandise
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.
Assortment Merchandise
Apparel, furniture, auto, 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
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
Physical characteristics and layout of the store and internet site. Workout a balance between too much versus too little assortment. Work at profitable mix of products. Corporate strategy towards assortment.
Chapter 3
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Chapter 3
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CPFR PROCESS
Once
1. Front-End Agreement
Collaborative Planning
Qtr.
Seller
Order Forecast
Wk, Mo
Collaborative Forecasting
Wk, Mo
Collaborative Replenishment
9. Generate Order
CPFR BENEFITS
Improved profitability
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Confidentiality Goals & Objectives Measurement of Success Discussion of Competencies, Resources, and Systems Responsible People & Departments Information Sharing Service & Ordering Commitments Resolution of Disagreements
Store Image
Financial Obj.
Open-to-buy
Role of the Buyer Buyers plays an important role in the retail industry. they select and order merchandise to be sold. Buyers may be responsible for buying for a department, an entire store, or a chain of stores
1. Developing the merchandising strategies for the product line 2. Planning and selecting merchandise assortments 3. Vendor Selection 4. Pricing of the merchandise 5. Inventory Management
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Order Merchandise
Open to Buy
Monitors Merchandise Flow
Determines How Much Was Spent and How Much is Left to Spend
An Open-To-Buy relates directly to retail merchandise, is structured specifically to address the needs of retailers, and is a tool designed to assist retailers manage and replenish their most significant asset, their inventory investment.
Work out the merchandise inventory so that teh outlet receives the right amount of merchandise at the right time
Ensures a continuous flow of fresh merchandise into teh store every month Perform the controlling function by comparing actual performance with the OTB plan and take corrective actions whereever required Provide the organisation an opportunity to earn profits through successful merchandising and buying profits.
4.Assortment Planning:
Determine the quantity of each product. Details of color, size brand, materials
Brand Equity is important for three major reasons: 1. Brand Equity creates shareholder value 2. Brand Equity Building is a competency that can be mastered to create competitive advantage 3. Brand Equity management creates an array of growth opportunities for the business thus it helps in increasing the overall profits of the firm . There are lots of benefits of brand equity if a company can manage & build its brand equity well & realize the importance of doing so.
What is Brand Equity? In lay terms, brand equity is the value that a consumer attaches to a certain brand. Although brand equity can be measured tangibly by way of certain indicators, a large component of the concept is intangible, i.e. what perceptions and associations people have of a certain brand, and the familiarity of those brands in the mind of the consumer.
Private Labels
Advantages Disadvantages
competitors
Higher margins