Retail Merchandising 1 :Retail Merchandising 1 Shri rangan


Objectives :Objectives To demonstrate the importance of a sound merchandising philosophy To outline the considerations in devising merchandise plans: forecasts, innovativeness, assortment, brands, timing, and allocation To discuss category management To study various buying organization formats and the processes they use


Retail Merchandising :Retail Merchandising Definition & the Concept of Retail Merchandising Role & Responsibilities of a Merchandiser Fashion Merchandising Merchandise Characteristics Merchandise Management- Merchandise Mix & Merchandise Budget Basics of Merchandise Accounting


RM - DEFINITION :RM - DEFINITION Retail selling effort that is the principal task of in-store sales personnel through the use of promotions designed by a manufacturer, such as unique displays, giveaways, or discount and premium offers. In this case, merchandising is the act of managing and arranging the merchandise on display in a store so as to promote its sale.


Role & Responsibility of Merchandiser :Role & Responsibility of Merchandiser Planning Directing Co-ordinating Controlling


Merchandising Versus Store Management Career Tracks :Merchandising Versus Store Management Career Tracks


Functions of Merchandisers at Shopper’s stop :Functions of Merchandisers at Shopper’s stop Inventory-turn Management Achieving Sales & Margins Plans Merchandise Availability Management, as per range plan Merchandising strategy & planning Processing of purchase orders Analysis of Data & Sales Budgeting Profitability Targets & Expense Control Vendor/Supplier relations for both, in-house products as well as for brands.


ARRANGING -MERCHANDISE :ARRANGING -MERCHANDISE


Merchandising arrangement :Merchandising arrangement MERCHANDISING ARRANGMENT……… Why making effective use of your space is so important. How to position your departments and products. How to improve store lighting. The importance of atmosphere and cleanliness in your store. How to create great displays and signage. WHAT WE WILL ACHIEVE AS A BUSINESS………. The consistently best Display standards against Competition in India A great environment that will attract & satisfy Customers Showcase to best advantage our product offer Dramatically enhance Customer Service


Managing the Merchandise :Managing the Merchandise Developing a sales forecast Determining the merchandise requirements Merchandise control Assortment planning


Developing Sales forecast :Developing Sales forecast Reviewing Past sales Analyzing the changes in Economic Conditions Analyzing the changes in the sales potential Analyzing the changes in the marketing strategies of the retail organization and the competition Creating the sales forecast


Forecasts :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)


Determining the merchandise requirements :Determining the merchandise requirements Merchandise Mix Retail communication Mix


Basics of Merchandise Accounting :Basics of Merchandise Accounting


Merchandising Accounting :Merchandising Accounting Cash Flow The Balance sheet Financial Ratios Income statements Gross- Margin-Return on Investment


Cash Flow :Cash Flow Cash In Cash Out Negative Cash flow = Cash In Cash In


Cash Flow Curve :Cash Flow Curve Oct Nov Dec Jan Feb Mar Cash In Cash out


The Balance Sheet :The Balance Sheet The Balance Sheet is a statement of an organization's Assets, Liabilities and Owners’ Equity at a Particular Point in time. Assets Liabilities Owner's Equity


Assets :Assets Assets – Owned by an organization a. Short term (or) Current Assets b. Long term


Liability :Liability Liability: Debts owed by an organization Payment on Short term Ex: Payment to supplier Payment on Long term Ex: Mortgage on Land & Building Investment on Extension, Expansion & renovation


Owner’s Equity :Owner’s Equity Owner’s Equity : Difference between asset and Liability. Relationship: Assets = Liabilities + Owner’s Equity


Income statement :Income statement


Income statement :Income statement Profit performance for a specific period of time Income statement is otherwise called Statement of earnings or Profit & loss statement Income statement: Revenue – Expenses = Net Income Profit = Expenses Revenue = Negative Net Income


Income statement contd… :Income statement contd… Income statement can be computed for an entire organization Individual Store A Group of Store Department Profit and loss is based on the revenue & expenses directly associated with each unit of business.


Income statement contd… :Income statement contd… Components : 5 major components Revenue Cost of goods sold Gross margin Expenses Net Profit Relationship among the components Net revenue – Cost of goods sold - Expenses Gross margin Net Profit


Income statement contd… :Income statement contd… Relationship among the components Net revenue – Cost of goods sold - Expenses Gross margin Net Profit Net revenue : composed of sales, Leasing or renting property or interest on accounts Net sales = Gross sales – Customer return Gross sales are used to determine the customer return rates Customer return rate = Customer returns x100 Gross sales


Income statement contd… :Income statement contd… High customer return rate is often indicates of issue related a. Customer service b. Quality c. Fit of merchandise High sales attest to the ability of an organization buyer to select assortments of goods that are appealing to the store’s target customers.


Income statement contd… :Income statement contd… Cost of goods sold (or) Cost of Merchandise sold (or) cost of sales Cost of goods sold = Billed cost of Merchandise + work room costs +shipping cost – cash Discount - Returns to vendors


Income statement contd… :Income statement contd… Shipping cost : Delivery cost for transporting goods from supplier Workroom costs: activities that prepare merchandise for sale ( steaming & pressing apparel) Return to vendors : defective or slow selling goods returned to suppliers for credit Cash discounts : Invoice concessions from suppliers for prompt payment


Income statement contd… :Income statement contd… Expenses: Payroll, rent, Utilities, advertising and interest on debt. Direct Expense: attributable to a specific unit ( store rent ) Indirect Expense: is not attributable to a specific unit. ( news paper advertisement )


Income statement contd… :Income statement contd… Gross margin : Difference between sales and cost of goods sold. Net Income : Gross Margin – Expenses Income can be increased by Increasing sales Increasing Gross Margin Decreasing cost of goods sold Any combination of above Component Percentage : Cost of goods sold = cost of goods X 100 Net sales Gross Margin = Gross Margin X 100 Net Sales Expenses = Expenses X 100 Net Sales


GMROI :GMROI


GMROI :GMROI Gross Margin Return on Investment Integrates two performance Gross Margin Turn Over To create a single measure of performance GMROI = Gross Margin X Net sales Net Sales Average Inventory GMROI = Gross Margin / average Inventory


GMROI for 3 Merchandise Categories :GMROI for 3 Merchandise Categories


Key terms :Key terms