Merchandise Management Essay

1457 Words Sep 14th, 2015 6 Pages
BUS4003 Retail and Channel Management
Merchandising Management in Retailing:
Vendors, retailers, customers
Dr. Kenneth K. Kwong
Department of Marketing and Management
Week 9

Merchandise Management
• Merchandise management is a process by which a retailer attempts to
– offer the right quantity of the right merchandise
– in the right place at the right time and
– meet the company’s financial goals or profit objectives

• Retailers need to be in touch with and anticipate what customers want to buy (sensitive to changes in the market trend) but are also able to analyze sales data continually and make appropriate adjustments in prices and the inventory level
Develop an assortment plan

Determine appropriate
inventory
…show more content…
high GMROI is preferable
– GMROI makes comparison of categories with different margin and turnover possible (establish a common ground)
– gross margin percentage (gross margin/net sales) is contingent on retail prices setting by buyers and the factory (wholesales) price they negotiate with vendors
– sales-to-stock ratio (net sales/average inventory at cost) is affected by the popularity of the merchandise being sourced by the buyer; a high sales-to-stock ratio implies a quick turnover

Merchandise Management
• Forecasting sales
– category life cycle (introduction, growth, maturity, decline)
– varies in category life cycle: fad, fashion, staple

Previous sales data
Personal awareness
Fashion & trend services
Vendors
Market research

Merchandise Management
• Developing an assortment plan
– is a list of the SKUs that a retailer will offer in a merchandise category
– reflect the variety and assortment that the retailer plans to offer in a merchandise category (breadth and depth)
– in the beverage category: soft drink (Coca Cola, Pepsi), beer (San Miguel,
Carlsberg), tea (Nestle, HI-C) with each has 3 different tastes & sizes
– 54 SKUs in the assortment plan (6 brands x 3 tastes x 3 sizes)
– retail strategy and brand image (the right amount of choices; less is more)
– Inventory investment (stocking more SKUs reducing inventory turnover and decreasing GMROI)
– the risk of breaking size (stocking out of a specific size/color of SKU);
discount

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