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Retail Merchandising 1
Shri rangan
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
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
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
PlanningDirectingCo-ordinatingControlling
Merchandising Versus Store Management Career Tracks
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
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
Developing a sales forecastDetermining the merchandise
requirementsMerchandise controlAssortment planning
Developing Sales forecast
Reviewing Past salesAnalyzing the changes in Economic
ConditionsAnalyzing the changes in the sales
potentialAnalyzing the changes in the
marketing strategies of the retail organization and the competition
Creating the sales forecast
Forecasts These are projections of expected
retail sales for given periodsComponents:
Overall company projectionsProduct category projections Item-by-item projectionsStore-by-store projections (if a chain)
Determining the merchandise requirements
Merchandise MixRetail communication Mix
Basics of Merchandise Accounting
Merchandising Accounting
Cash FlowThe Balance sheetFinancial RatiosIncome statementsGross- Margin-Return on
Investment
Cash Flow
Cash In Cash Out Negative Cash flow = Cash In <
Cash OutPositive Cash flow = Cash out >
Cash In
Cash Flow Curve
The Balance Sheet
The Balance Sheet is a statement of an organization's Assets, Liabilities and Owners’ Equity at a Particular Point in time.
AssetsLiabilitiesOwner's Equity
Assets
Assets – Owned by an organizationa. Short term (or) Current
Assetsb. Long term
Liability
Liability: Debts owed by an organizationPayment on Short term
Ex: Payment to supplierPayment on Long term
Ex: Mortgage on Land & Building
Investment on Extension, Expansion & renovation
Owner’s Equity
Owner’s Equity : Difference between asset and Liability.
Relationship: Assets = Liabilities + Owner’s Equity
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 = positive Net Income
Loss = Expenses > Revenue = Negative Net Income
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…
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…
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…
High customer return rate is often indicates of issue related
a. Customer serviceb. Qualityc. 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…
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…
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…
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…
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
Particulars Category A Category BSales 300000 250000
Cost of Goods Sold
180000 100000
Gross Margin 120000 150000
Gross Margin % 40% 60%
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 InventoryGMROI = Gross Margin / average Inventory
Key terms
Assets
Balance sheet
Cash discount
Cash Flow
Component Percentage
Cost of goods sold
Current ratio
Expenses
Factor
GMROI
Gross sales
Income statement
Liability
Net Income
Net Loss
Net Sales
Return to Vendor
Owner’s Equity
Time Series Comparison
Workroom cost