Define Merchandising. Elaborate the steps in Merchandise planning.
Answers
Merchandising is the promotion of goods and/or services that are available for retail sale. Merchandising includes the determination of quantities, setting prices for goods and services, creating display designs, developing marketing strategies, and establishing discounts or coupons.
Cycles of merchandising are specific to cultures and climates. These cycles accommodate school schedules and incorporate regional and seasonal holidays as well as weather.
This may sound elementary, but some retailers still lack a formal process. It should begin "pre-season" with top-level financial goals coming from the finance organization. These goals are usually at the highest levels of the organization – at the multi-group or category level, and usually consist of top level sales and margin goals. A merchant should then take these goals and develop a high level plan – usually incorporating metrics such as sales, markdowns, receipt flow, inventory levels, margin dollars and percent, and gross margin/return on investment or GMROI. These plans should be developed through a combination of analytics including like item historical performance, macro trends for the category, and targeted customer data.
The importance of a dedicated merchandise planning organization cannot be emphasized enough. This group provides the necessary checks and balances between the art of merchandise selection and the science of merchandising analytics. Regardless of the structure of this organization, members of this team should be assigned to and physically positioned with their merchant counterparts, to encourage daily dialogue and healthy interaction. From a reporting perspective, this group should ideally sit outside the merchant ranks and report up through the finance organization, emphasizing the ability to provide an independent, objective point of view for both pre- and in-season planning.
Every item has a useful life and one of earliest lessons for any merchant is to think of their inventory as a truckload of seafood – after a certain amount of time it will start to stink! Thus, each and every item should have a shelf life and exit strategy. The exit strategy is simply a function of either sell-through goals or planogram timing. The exit strategy process should ensure that each and every item will be subject to a category-specific markdown cadence once the merchandise has reached a certain point in its lifecycle – either defined by a specific sell-through goal or planogram exit date.
Macy's has done a phenomenal job recently of creating a localized assortment for its stores, which has driven their positive results over the past several years. While developing a fully localized assortment is tremendously challenging and expensive due to the supply chain tools required, it is reasonable for retailers to identify logical store clusters by category or item classification. These clusters should be assigned based on store volume, customer attributes, and store geography as a start. As the tools and abilities become more sophisticated, more in-depth shopper demographics and competitive clusters should be designed.
The most important asset a merchant has is data – preferably data from a trusted source. Retailers should consider at least a core set of basic tools to improve their ability to plan and manage their assortment. These include:
Enterprise Planning: the tool which enables the development of top down and bottoms up category plans at the GMROI level
Enterprise Data Warehouse: the source of foundational data from which to plan and manage the business
Allocation/Assortment Planning: more advanced tools that enable the development of store and customer specific assortments
Answer:
Merchandising stands for any act of stimulating goods or services for retail sale, including marketing techniques, production design, and discount offers.
Explanation:
Merchandise planning is a systematic process of planning, buying, and selling products to maximize the return on investment (ROI) while simultaneously creating merchandise obtainable at the locations, times, costs, and quantities that the market demands.
Steps in Merchandise planning
1. Establish a Cross-Channel Merchandise Planning Process.
This may sound elemental, but some vendors even lack a formal approach. It should start "pre-season" with top-level economic goals coming from the finance organization. These purposes are usually at the most elevated levels of the institution. A merchant should then take these objectives and create a high-level plan – usually containing metrics such as sales, discounts, receipt flow, stock levels, margin dollars and percent, and gross margin/return on investment or GMROI. These plans should be developed through a combination of analytics including item chronological performance, macro trends for the type, and targeted consumer data.
2. Establish a Cross-Channel Merchandise Planning Organization.
The importance of a dedicated merchandise planning organization cannot be stressed-out sufficiently. This group supplies the required checks and balances between the art of merchandise choosing and the science of merchandising analytics. However, of the structure of this institution, members of this group should be allocated to and physically positioned with their dealer counterparts, to promote daily conversation and healthy interaction.
3. Define Exit Strategies for All Merchandise.
Every item has a proper life and one of the earliest lessons for any retailer is to judge their products as a truckload of seafood – after a certain amount of time, it will begin to stink! Thus, every item should include a shelf life and exit technique. The exit strategy is simply a process of either sell-through objectives or planogram timing.
4. Assign Logical Store Clusters
While creating a completely localized assortment is tremendously difficult and costly due to the supply chain tools needed, it is reasonable for retailers to determine logical store collections by category or item category.
5. Acquire the Proper Tools.
The most important asset a merchant has is data – preferably data from a trusted source. Retailers should consider at least a core collection of basic tools to enhance their capacity to plan and execute their assortment. These include:
- Enterprise Planning: the tool which allows the expansion of top-down and bottoms category strategies at the GMROI level
- Enterprise Data Warehouse: the source of foundational data from which to design and operate the business
- Allocation/Assortment Planning: more developed tools that enable the expansion of the store and customer-specific assortments.
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