RETAILING

6.53 MIX:
PRODUCT
RETAILING MIX
 The development of retail business brings benefits to
costumers because there are more and varied shopping
options. Besides, it will also be a threat to the retailers
because they must face an intense competition from their
competitors.

This condition requires retailers to determine the appropriate

strategy in their business, including implementing retailing
mix strategy to attract and satisfy costumers’ needs.

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Retailing Mix includes the decision variables
retailers use to satisfy customer needs and
influence their purchase decision.

Retailing mix are combination of 6P which is

consist of product, place, promotion, price,
personnel and presentation to sell product and
service to final customers.

To implement a retail market strategy,

management develops a retail mix that satisfies
the needs of its target market better than that of
its competitors

The retail mix will differ based on the store and the
type of product offered to the customer.

4
RETAILING MIX: PRODUCT
 Company that want to be success in retail business must
watch carefully about the product element, which is the
SCOPE and DEPTH of products.

SCOPE of the products means the diversity of products

that offered, DEEPNESS of the products means the
various amount of the brands in every product

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 PRODUCT
We define a product as anything that can be offered to a
market for attention, acquisition, use, or consumption that
might satisfy a want or need.

Products include more than just tangible objects, such as

cars, clothing, or smartphones.

Broadly defined, products also include services, events,

persons, places, organizations, and ideas or a mixture of
these.

Product that being sold by retailer in their store is called

merchandise

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 • What type of product do you intend to carry?

• What is the depth as well as the breadth you will

carry in your assortment?

• What is your anticipated turn as well as inventory

levels?

• Does your product meet your customer’s needs?

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MERCHANDISE MANAGEMENT

merchandise management is 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
company financial goals.

How retail managers organize the merchandise planning

process and evaluate their performance.
MERCHANDISE
CLASSIFICATION &
ORGANIZATION

A stock-keeping unit (SKU) is the smallest unit available for inventory control.
a SKU usually means a particular brand, size, color, and style—for example, a
pair of size 5, rinsed wash, blue, straight-legged Levi jeans is a SKU.
MERCHANDISE PLANNING
PROCESS

MERCHANDISE PLANNING PROCESS → forecast sales,

establish an assortment plan, determine the appropriate
service levels, allocate merchandise to stores, and monitor
the performance of the merchandise inventory control
activities.
 MERCHANDISE CATEGORIES
STAPLE/BASIC MERCHANDISE
• are those categories that are in continuous demand over an extended time period. Examples of staple
merchandise categories include most categories sold in supermarkets.
• it is relatively easy to forecast demand, and the consequences of making mistakes in forecasting are
not great.

FASHION MERCHANDISE
• are in demand only for a relatively short period of time. New products are continually introduced into
these categories, making the existing products obsolete.
• Some examples of fashion merchandise categories are athletic shoes, tablets, and smartphones.

SEASONAL MERCHANDISE
• consist of items whose sales fluctuate dramatically depending on the time of year.
• From a merchandise planning perspective, retailers buy seasonal merchandise in much the same way
that they buy fashion merchandise.
 FORECASTING CATEGORY SALES

FORECASTING STAPLE MERCHANDISE FORECASTING FASHION MERCHANDISE

The approach for forecasting sales of staple Forecasting fashion merchandise sales is particularly difficult
merchandise is to project past sales trends into the because some or all of the items in the category are new and
future, while making adjustments for any different from units offered in previous seasons or years.
anticipated factors.
Some sources of information that retailers use to develop
• Use of Historical Sales forecasts for fashion merchandise categories are
• Adjustments for Controllable (ex: the opening and
closing of stores, the price set for the merchandise in the • Previous sales data,
category, special promotions for the category, and the
• Market research,
placement of the merchandise) and Uncontrollable
Factors (ex: general economics, new product, pricing, and • Trend services, and
promotional activities by competitors, and weather • Vendors.
changes)
DEVELOP AN ASSORTMENT PLAN

The assortment plan reflects the breadth

and depth of merchandise that the retailer
plans to offer in a merchandise category.

the breadth, of a merchandise category is

the number of different merchandising
subcategories offered, and the depth, of
merchandise is the number of SKUs within a
subcategory.
DEVELOP AN ASSORTMENT PLANT

DETERMINING VARIETY AND ASSORTMENT

The process of determining the variety and

assortment for a category is called editing
the assortment.

When editing the assortment for a category, the buyer

considers the following factors:
(1) the firm’s retail strategy,
(2) the effect of assortments on GMROI (gross margin return
on inventory investment),
(3) the complementarities among categories,
(4) The effects of assortments on buying behavior, and
(5) the physical characteristics of the store
 SETTING INVENTORY AND PRODUCT
AVAILABILITY LEVELS
MODEL STOCK PLAN PRODUCT AVAILABILITY
The model stock plan is the number of each
SKU in the assortment plan that the buyer wants Product availability is defined as the percentage of the
to have available for purchase in each store. demand for a particular SKU that is satisfied.

For instance, if 100 people go into a store to

purchase a product but only 90 people can make
the purchase before the stock is depleted, the product
availability for that SKU is 90 percent.

More backup stock is needed in the model stock plan if

a retailer wants to increase product availability

Retailers typically have model stock plans for the

different store sizes in a chain
ALLOCATING MERCHANDISE TO STORES

Research indicates that these allocation

decisions have a much bigger impact on
profitability than does the decision about the
quantity of merchandise to purchase. Allocating merchandise to stores involves three
decisions:
(1) how much merchandise to allocate to each store,
(2) what type of merchandise to allocate, and
(3) when to allocate the merchandise to different
stores.
ALLOCATING MERCHANDISE TO STORES

AMOUNT OF MERCHANDISE ALLOCATION TYPE OF MERCHANDISE ALLOCATED

Retail chains typically classify each of their The geodemographics of a store’s trading area are
stores on the basis of annual sales. considered in making allocation decisions.

allocators consider the physical TIMING OF MERCHANDISE ALLOCATION

characteristics of the merchandise and the The difference timing may happen due to seasonality
depth of assortment and level of product differences and differences in consumer demand.
availability that the firm wants to portray for
the specific store. To increase inventory turnover in the category, buyers
need to recognize these regional differences and arrange
for merchandise to be shipped to the appropriate
regions when customers are ready to buy.
ANALYZING MERCHANDISE MANAGEMENT
PERFORMANCE
Three types of analyses related to the monitoring and
adjustment step are:
(1) sell-through analysis,
Aims→ To analyze the performance of the (2) ABC analysis of assortments, and
process and make adjustments, such as (3) Multi attribute analysis of vendors.
ordering more or less merchandise, lowering
prices to increase sales, allocating different
The first analysis provides an ongoing evaluation of the
assortments to specific stores, or changing
merchandise management plan compared with actual
the assortment and model stock plans.
sales.

The remaining two analyses offer approaches for

evaluating the assortment plan using the specific SKUs
in the plan and the vendors that provide the
merchandise to support the plan.
3. EVALUATING VENDOR USING 1. SELL-THROUGH ANALYSIS
MULTIATRIBUTTE ANALYSIS compares actual and planned sales to determine whether
method for evaluating vendors uses a weighted more merchandise is needed to satisfy demand or whether
average score for each vendor. The score is price reductions (markdowns) are required
based on the importance of various issues and
the vendor’s performance on those issues

2. ABC ANALYSIS
An ABC analysis identifies the performance of individual
SKUs in the assortment plan.
It is used to determine which SKUs should be in the plan and
how much backup stock and resulting product availability
are provided for each SKU in the plan.
 THANK YOU

7/1/20XX Pitch deck title 21