Transcript Chapter 9 presentation.ppt

Chapter 9
Merchandise Buying and Handling
Eric Sanders
Ryan Snell
Merchandise Management
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Analysis: Correctly identify customers needs and
wants
Planning: Merchandise must be purchased 6-12
months in advance
Acquisition: Merchandise must be bought from
distributors or manufacturers
Handling: Assure the merchandise is where it
needs to be, and in proper shape to be sold
Control: Over large inventory investments to
ensure adequate returns on merchandise
Planning Dollar Inventory Investment
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Basic Stock Method: Basic stock level plus
variable amount based on expected sales
for period
Percentage Variation Method: Assumes the
percentage variation in monthly stock from
average stock should be half as great as the
percentage variation in monthly sales from
average sales
Planning Dollar Inventory Investment
cont…
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Weeks Supply Method: Inventory level
should be set equal to a predetermined
number of weeks supply, which corresponds
to desired rate of stock turnover
Stock to Sales Method: Inventory planned
for the beginning of the month is a ratio of
stock to sales obtained from a trade
association or retailers historical records
Inventory Planning
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Choosing the right merchandise mix
Variety: Number of lines (menswear,
women’s wear, sporting goods, etc…)
Breadth: Number of brands found in a
particular merchandise line
Depth: Number of stock-keeping units
within each brand of the merchandise line
Constraining Factors
Dollar merchandise constraints: only so much
money to spend on inventory
• Space constraints: important to fit everything in
store while maintaining a nice shopping
environment
• Turnover Constraints: Must keep merchandise in
stock, but not have merchandise left over
• Market Constraint: Must fit into the type of retailer
you wish to be: specialty store vs. variety store
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JCPenney Makes Shifts in Structure.
► First
step was to bring in outside help…Vanessa
Castagna
► She implemented change by centralizing all buying
functions… this allows store management to focus
on delivering a excellent shopping experience.
► Centralized buying process isn’t all that new, but if
a retailer wants to stay competitive it must adapt
or they will be gone.
► The new buying process is but one piece of their
overall strategy…example women’s magazines.
Implementing Change
► New
home office merchandise action
teams…responsible for assortment, planning, &
selling.
► Focus on reducing inventory levels, and will be
supported by new software based on sales history
data.
► The new game of retailing involves reaching the
customer through nontraditional ways… Internet,
catalogs and other marketing methods.
► FairMarket Inc. is an Auction network that features
merchandise overstock from JCPenney’s.
Key Benefits
► Reduces
inventory.
► Higher turnover…more adaptable to trends.
► Better customer service for better shopping
experience.
► Fashionable merchandise.
Thank You
Any Questions?