Transcript Lesson 8 - Merchandising

VIRTUAL BUSINESS
RETAILING 3.0
LESSON 8
MERCHANDISING
 In this unit, we will explore merchandising and its
importance to store sales and profit
 We will discuss merchandise plans, types of
merchandise, and stock lists
 Then we will learn how merchandising affects sales,
 Lastly, we will review some merchandising math
 After completing this lesson you will be able to:
 Give examples of the four main categories of merchandise
 Explain the importance of stock lists and inventory control on
merchandising
 Describe how sales are affected by the strategic placement of
merchandise throughout a store—including the store entry,
checkout lanes, and back of the store
 Analyze the financial impact of rearranging products
 Calculate projected sales based on past sales data and planned
percentage increase
What Is Merchandising?
 Involves the coordination of buying merchandise
that customers want in the proper quantities & then
selling that merchandise at a price that customers
are willing to pay
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Customers want merchandise where they want to buy it
Customers will often buy products where it is convenient
Customers will occasionally overlook convenience when the
product is one that they want badly enough
 A successful retailer will stock an assortment of
merchandise types that appeal to the customers’
various buying needs
Types of Merchandise
 When planning the merchandise assortment for a
store it is important to be aware of & understand the
types of merchandise
 Merchandise of all sorts can be grouped into 4
categories or types:
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Staple
Fashion
Seasonal
Convenience
Staple Merchandise
 The basic stock of a store
 Stocked year round
 Comprises a good portion of store sales
 What customers need on an ongoing basis & tend to
sell well year after year
 Examples:
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Bread & eggs in a grocery store
Socks & shoes in a department store
Fashion Merchandise
 Items that are stocked for several years & that have
solid sales over that time period
 Example:
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Women’s capri pants – they have been selling well for several
seasons & will probably continue to sell well for several more;
eventually women will tire of them & will switch to buying a
different style
Seasonal Merchandise
 Items that sell well during particular times of the
year that are stocked only for that selling period
 Once the selling period is over, unsold seasonal
merchandise is marked down to encourage quick
sales
 Examples:
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Windshield wiper fluid in the fall & winter
Sunscreen in the spring & summer
Convenience Merchandise
 Items customer buy without thinking very much
about the purchase
 Purchased often or even on a daily basis
 Examples:
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A cup of coffee
A can of soda
Stock Lists
 Itemized & detailed listings of the merchandise a
store or department should have for sale
 A tool that retailers use to help them keep a close eye
on the inventory they stock
 Assists retailers with the task of maintaining correct
quantities of the 4 types of merchandise
 Most retailers categorize their merchandise into 3
lists:
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A basic stock list
A model stock list
A never-out stock list
Basic Stock List
 Keeps track of the staple merchandise that the store
should always keep in inventory (the items with
regular customer demand)
 Have a minimum quantity that should always be in
inventory for each item on the list
 Has the # of items to be reordered when needed
 Benefits:
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Daily study of the list will help ensure that basic items are
always in stock & that no sales are lost
Model Stock List
 Used to keep track of items of fashion merchandise
 These change more often than basic stock list items
so the list is not as detailed
 Benefits:
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Gives valuable information about best-selling price points,
styles, & colors
Never-out Stock List
 Can be used for all 4 types of merchandising
 Used to keep track of the best-selling merchandise
 Should be monitored frequently to ensure that these
popular items are always available in sufficient
quantities
 List changes often as newly popular items are added
& less popular ones are removed
Merchandising & Sales
 Merchandising can have a decisive effect on sales in
a store or department
 Most retailers plan sales for their stores based on the
sales for the same period in the previous year
 The general rule in forecasting sales is to plan for a
10% increase over last year’s sales for the same time
period
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Consider current business circumstances when planning & act
accordingly
 To meet sales goals there must be merchandise for
customers to buy
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There must be enough merchandise for customers to feel that
they are able to make a choice from an adequate selection
There must not be so much merchandise that customers are
overwhelmed or unwilling to sort through very large quantities
in order to make their merchandise selections
Merchandise for Profit
 Retail selling space is a valuable commodity that
retailers use to maximize store profits
 The strategic placement of store merchandise within
the selling space is a big factor in helping to generate
merchandise sales & subsequent profits
 Staple merchandise is generally placed in a
permanent location & does not need to be placed in
the heaviest customer traffic areas
 Customers will seek out staple items, so placing them
in a permanent location makes it easier for
customers to locate them when making return visits
to the store
Store Entrance
 Placing the most appealing merchandise near the
front entrance of the store to get customers to come
in is a basic merchandising principle
 Benefits:
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Greatest customer exposure
Best chance of producing the largest amount of sales
Impulse Purchases
 Usually small items of merchandise that are
purchased with little or no thought on the part of the
customer
 Generally placed near the customer entrance, at the
checkout area, & in areas of heaviest customer traffic
so that customers can easily see them
 Examples:
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Candy bars
Breath mints
 Point of purchase (POP) displays are sales
promotional tools that are designed to encourage
impulse purchasing & highlight special offers
 Merchandise manufacturers usually supply these
displays to retailers to promote the sale of their
merchandise
 Often used at the checkout area so that customers
can easily add the item to their purchase
Related Merchandise
 Items that are related to each other & that usually sell
together
 If a customer buys one, they will usually buy the other
 Should be placed near each other
 Adjacent placement reminds customers of a possible
need & makes it convenient for them to just pick up the
other item & buy it
 Examples:
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Razors & shaving cream
Key Math Concepts
Compute Planned Sales Increase
 Merchandising is a tool to help retailers reach their
sales goals
 Most retailers plan sales goals as a percentage
increase of the previous year’s sales for the same
time period
 To compute planned sales increase, use this formula:
Planned Sales Increase=
Quantity Ordered x Price Per Unit
Total Price Per Item
 When placing reorders from the basic stock list, the
total price per item is computed using this formula:
Total Price Per Item=
Quantity Ordered x Price Per Unit
Summary
 In this unit we learned about merchandising & the
types of merchandise stores stock
 Next we learned about stock lists & how they can
assist retailers in maintaining & monitoring stock
inventory levels
 We then discussed how merchandising affects store
sales
 Lastly, we reviewed some mathematics associated
with merchandising