Neha Chauhan (04) Bhawna Pandwar (30) : Presented by

PRESENTED BY:
Neha Chauhan (04)

Bhawna Pandwar (30)
goods to be bought and sold.
OR
promote the sale of (goods), especially by their presentation in
retail outlets.
A basic management function involving formulation of one or more detailed
plans to achieve optimum balance of needs or demands with the
available resources.
The planning process (1) identifies the goals or objectives to be achieved,
(2) formulates strategies to achieve them,
(3) arranges or creates the means required, and
(4) implements, directs, and monitors all steps in their proper sequence.
Merchandise Planning then is "A systematic approach. It
is aimed at maximizing return on investment, through
planning sales and inventory in order to increase
profitability. It does this by maximizing sales potential
and minimizing losses from mark - downs and stock -
outs."
It is defined as planning and control of the merchandise
inventory of the retail firm, in a manner, which balances between
the expectations of the target customers and the strategy of the
firm.
Merchandise planning is beneficial to the customer and to the
retailer.
It benefits the retailer as it enhance the possibility of the right
assortment of goods, with the adequate amount of depth to be
available at the stores where it is needed.
The
product
mix
The range
Method of &
sourcing assortment
The mix
merchandise
strategy
Quality The price

Store(format) Strategy
Sourcing
Merchan
Make or
dise
buy
planning
Vendor Allocation Performa
Product
Merchan identificat of nce
Business Price
Strategy dise ion merchand monitorin
Range
strategy Negotiati ise to g&
Assortm
ons stores evaluation
ent
Placing
Space
the order
Store Operation planning

IMPLICATIONS OF
MERCHANDISE PLANINNG
Finance
Warehouse MERCHA-
Marketing
& Logistics NDISE
PLANNING
Store
Operations
Staple/ basic merchandise
Fashion merchandise
Seasonal merchandise
Fad merchandise
Assortment
Staple merchandise are those products, which are always
in demand. They may also be the basic necessities of life
like sugar, salt ,etc.
Alternately they may be the products for which there is
always a steady demand.
Depending on the type of retail model. The retailer has
to determine the staple product/s for the store.
Example of products, which may be classified as staples
are:
mens white shirts, socks, handkerchiefs, stationery, etc.
Merchandise, which has high demand for a relatively
short period of time. Buying the right quantities at the
right time is of great importance for this category of
products as the demand for the product is for a limited
time.
Seasonal products include products that sell well over
non-consecutive time periods. Examples of such products
include rainwear like umbrellas and raincoats, winter
wear, thermal clothing, etc.
Fads, in contrast to fashions, enjoy popularity for a
limited period of time and usually generates a high level
of sales for a short time.
Selection of merchandise carried by a retailer. It includes

both the breadth of product categories and the variety
within each category.
The variety of the merchandise mix refers to the number of different
lines that the retailer stocks in the store.
For example: a department store may provide a collection in mens,
womens and childrens wear. This would then be termed as the
variety offered by the store.
Number of distinct goods/ service categories(product lines) a

retailer carries. Width of merchandise may also be referred to as
Breadth of merchandise refers to the number of merchandise
brands in the merchandise line. For example, a retailer stocking
various brands of mens shirt etc.
The variety in any one-goods/ service category(product
line) with which a retailer is involved. It refers to the
average number of SKUs(stock keeping units) within each
brand of the merchandise line.
For example: if a retailer decides to stock 10 designs of
shirts in 5 different sizes and 4 colors, then it would be
the depth of the assortment.
The Merchandise
Hierarchy
It is an indicator of the manner

in which product classification is
done. Let us take an example of a
department store to understand the
concept of merchandise hierarchy-
STORE
STORE
DEPARTMENT
CHILDRENs DEPARTMENT
C
L
A
S
S
SUB-CLASS
PRICE POINT
Within the subclass the customer

will look further to find the
price that fits into the their
budget. Suppose, In the Sports
Designer subclass the choices
range from rs600 to rs3000.
STYLE
Once the appropriate price point

has been chosen, the customer will
find the style within that price
point that will satisfy their
need.
COLOUR
SIZE
STAGE 1: Developing the sales forecast
STAGE 2: Determining the Merchandise Requirements
STAGE 3: Merchandise control
STAGE 4: Assortment Planning
In the words of Peter Drucker, the trick to anticipate the future is
not to determine what is likely to happen, but what has already
happened that will create the future.
Forecasting involves predicting what the consumer may do under a

given set of conditions.
A sales forecast may be made by the merchandiser based on the
targets given by the top management or may be handed down by
the top management itself depending on the retail organization.
Forecast is typically developed to answer the following
questions:
How much of each product will need to be purchased?
Should new products be added to the merchant
assortment?
What the price should be charged for the product?
A sales forecast is usually made for a specific period of

time, this may be weeks or s season or a year.
The process of developing sales forecasts involves the
following steps:
1. Reviewing past sales
2. Analyzing the changes in the economic conditions
3. Analyzing the changes in the sales potential.
4. Analyzing the changes in the marketing strategies
of the retail organization and the competition.
5. Creating the sales forecast.
DETERMINING THE
MERCHANDISE
REQUIREMENTS
Planning is essential to provide
direction & serve as a basis of control
for any merchandise department. To
provide the right goods to the consumer
at the right time and place one needs
to plan a course of action. Planning in
merchandising is at two levels.
THE CREATION OF
the MERCHANDISE
BUDGET
THE
ASSORTMENT
PLAN
THE MERCHANDISING
BUDGET
The Sales Plan i.e. how much of each

product needs to be sold.
The Stock Support Plan.
The Planned Reductions.
The Planned Purchase levels.
The Gross Margins.

THE SIX-MONTH
MERCHANDISE PLAN
The following points need to be kept in

mind while creating this plan-
The merchandise budget should be
prepared in advance.
Easy to understand.
Budget for short period of time.
Flexible budget.
KEY ELEMENTS of Six-Month
Merchandise Plan
Planned Sales
Planned Purchases
Planned Reductions
Planned Markup
Gross Margin
B.O.M. and E.O.M. Planned Inventory Levels
The purpose of the concept of Open to Buy is twofold.
First, depending on the sales for the month and the reduction the
merchandise buying can be adjusted. Secondly, the planned relation
between the stock and sales can be maintained.
When used effectively, open to buy ensures that the buyer-
1. Limits overbuying and under buying
2. Prevents loss of sales due to unavailability of the required stock.
3. Maintain purchases within the budgeted limits.
4. Reduce markdowns, which may arise due to excess buying
Calculating the open-to-buy
The open-to-buy amount available to a buyer is
calculated using the simple formula stated below:
Open-to-buy = Planned EOM stock Projected EOM stock

ASSORTMENT PLANNING
The term ASSORTMENT can be defined as

the combination of all products made
available in a store and a set of products
offered within a product category.
Assortment planning involves determining
the quantities of each product that will be
purchased to fit into the overall merchandise
plan. Detail of colour, size, brand, materials,
etc. have to be specified.
Contd..
Let us take an example of a merchandiser

who is working towards the assortment
plan for consumer durables department for
a large retail store.
Product Line
Breadth to be offered,
Depth to be offered under each product
line
OTHER STAGES
THE RANGE PLAN
THE MODEL STOCK PLAN

Conclusion
The concept of merchandise planning
varies from retailer to retailer. The
process of planning starts with the sales
forecast for the season, then moves to
calculate the quantities that need to be
purchased in various products & then
determine the assortment plans, range
plans and the model stock plans. It helps
the buyer arrive at the quantities of the
products that need to be bought.

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Neha Chauhan (04) Bhawna Pandwar (30) : Presented by

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PRESENTED BY:

Neha Chauhan (04)

Quality The price

Store Operation planning

Selection of merchandise carried by a retailer. It includes

Number of distinct goods/ service categories(product lines) a

It is an indicator of the manner

Within the subclass the customer

Once the appropriate price point

Forecasting involves predicting what the consumer may do under a

A sales forecast is usually made for a specific period of

The Sales Plan i.e. how much of each

The Stock Support Plan.

The Planned Reductions.

The Planned Purchase levels.

The Gross Margins.

The following points need to be kept in

Open-to-buy = Planned EOM stock Projected EOM stock

The term ASSORTMENT can be defined as

Let us take an example of a merchandiser

THE RANGE PLAN

THE MODEL STOCK PLAN

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