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Retail Merchandising Strategy for Fashion Merchandise

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Research provides a basic understanding of the merchandising concept to underline the relevance of merchandise planning in a retail organization. To provide information on merchandise grouping, defining the concept of merchandise hierarchy. It explains what is meant by merchandise buying and replenishment planning.

This research also covers the planning and carrying out of buying and selling activities including the responsibilities of buyers. It follows the flows of merchandise from arrival in the store to purchase by the customers. Today, stores use aggressive merchandising techniques for men’s and children clothing too. Fashion influence has also spread to all other areas of retailing from cosmetics and home furnishings to cookware.
Every area of merchandising responsibility needs planning and organization to make it function properly and to ensure successful buying and selling. Merchandising responsibilities are usually divided between two chains of command .The buying line has responsibility for merchandise content and assortment; the store line is the liaison between the merchandise organization and customers. The buying line works behind the scenes; the store line interface with customers on a daily basis. The goal is to sell merchandise.
The merchandise managers and buyers of the buying line must do all the planning and other activities necessary to bring the right merchandise in to the store at the right time to satisfy the store customers.

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Retail Merchandising Strategy for Fashion Merchandise

  1. 1. AMITY SCHOOL OF FASHION TECHNOLOGY AMITY UNIVERSITY Project Report On “Retail Merchandising Strategy for Fashion Merchandise” SUBMITTED TO: SUBMITTED BY: SHIKHA CHANTIYA VISHWA VARUN A7820413001 MA-FRM, 2nd SEM Amity School of Fashion Technology AMITY UNIVERSITY, UTTAR PRADESH
  2. 2. Content Chapter: 1-Introduction 1-27  Merchandising Organization  Responsibilities of the buying line  Responsibilities of buying line  Buying Preparations  Buying & Merchandise planning A-Procurement and Inventory Management 28-35 B-Information technology in retail business 29-38 C- Comparative Merchandise analysis of National Brands 39-53 Chapter: 2-Objective 54-54 Chapter: 3-Hypothesis 55-55 Chapter: 4-Reserch Methodology 56-60 Chapter: 5-Data Collection 61-61 Chapter: 6- Findings 62-62 Chapter: 7-Reccomendation 63-63 Chapter: 8-Bibliography 64-64 Chapter: 9-Conclusion 65-65 Chapter: 10-Glossary 66-68
  3. 3. DECLARATION I VISHWA VARUN hereby declares that the project entitled “RESEARCH ON RETAIL MERCHANDISING STRATEGY FOR FASHION MERCHANDISE” Carried out at Amity School of Fashion Technology, Lucknow, Uttar Pradesh has been submitted during the academic year 2013-14 under the valuable guidance of Ms.Pooja Verma, Director, Amity School of Fashion Technology, Lucknow, Amity University and keen supervision of Ms. Shikha Chaintia in partial fulfillment of the requirements of the MA- Fashion Retail Management (MA-FRM) degree of Amity University. Further I extend my declaration that this report is my original work and was previously not formed the basis for the award of any degree or diploma. VISHWA VARUN Enrollment No: A7820413001
  4. 4. ACKNOWLEDGEMENT I extend my sincere acknowledgements to Ms.Shikha Chantia my teacher Amity University, Lucknow, without her teaching, this research would have meant meaningless. I am greatly indebted to Ms.Pooja Verma, Director, Amity School of Fashion Technology ,Amity University Lucknow Uttar Pradesh, for his encouragement, guidance and assistance in availing this opportunity of practical training. It gives me immense pleasure to acknowledge and thank all those who have given consistent guidance like my family member Surabhi Singh, My Father, Shishram Shivrayan, Advice and encouragement in my endeavor. I would also like to thank all those persons who have spent their Valuable time to contribute the required information to me and gave me support while doing this project. I indebted to the reports published on RETAIL MERCHANDISING STRATEGY FOR FASHION MERCHANDISE. All data and graph belongs to the above reports, wherever used have been duly acknowledged. VISHWA VARUN
  5. 5. VISHWA VARUN Page 5 Executive Summary Research provides a basic understanding of the merchandising concept to underline the relevance of merchandise planning in a retail organization. To provide information on merchandise grouping, defining the concept of merchandise hierarchy. It explains what is meant by merchandise buying and replenishment planning. This research also covers the planning and carrying out of buying and selling activities including the responsibilities of buyers. It follows the flows of merchandise from arrival in the store to purchase by the customers. Today, stores use aggressive merchandising techniques for men’s and children clothing too. Fashion influence has also spread to all other areas of retailing from cosmetics and home furnishings to cookware. Every area of merchandising responsibility needs planning and organization to make it function properly and to ensure successful buying and selling. Merchandising responsibilities are usually divided between two chains of command .The buying line has responsibility for merchandise content and assortment; the store line is the liaison between the merchandise organization and customers. The buying line works behind the scenes; the store line interface with customers on a daily basis. The goal is to sell merchandise. The merchandise managers and buyers of the buying line must do all the planning and other activities necessary to bring the right merchandise in to the store at the right time to satisfy the store customers.
  6. 6. VISHWA VARUN Page 6 Chapter-1-Introduction Merchandising is the term used to signify articles for sale; it derives from the word merchant, the actual seller or retailer. Fashion merchandising includes all the planning and activities necessary to supply the fashion wants and needs of retail customers. In the past fashion merchandising was usually associated only with women’s apparels and accessories. Today, stores use aggressive merchandising techniques for men’s and children clothing too. Fashion influence has also spread to all other areas of retailing from cosmetics and home furnishings to cookware. This research covers the planning and carrying out of buying and selling activities including the responsibilities of buyers. It follows the flows of merchandise from arrival in the store to purchase by the customers Merchandising Organization: Every area of merchandising responsibility needs planning and organization to make it function properly and to ensure successful buying and selling. Merchandising responsibilities are usually divided between two chains of command .The buying line has responsibility for merchandise content and assortment; the store line is the liaison between the merchandise organization and customers. The buying line works behind the scenes; the store line interface with customers on a daily basis. The goal is to sell merchandise.
  7. 7. VISHWA VARUN Page 7 Responsibility of the store line: The main responsibility of the store line are operations, to coordinate receiving and the movement of goods and people within the store, to train sales associates, to provide customer services, to control expenses, to maintain the building, and to maintain the security. Above all store line executives must work together, with merchandise managers, buyers, sales associates to produce positive sales results. Everything and everyone involved in the operation of the store must be organized to achieve this goal. The director of store lines supervises individual store managers in multiple unit organizations. Store managers are responsible for merchandising, sales, employees, and the general success of the store. They in turn, usually delegate responsilities to group sales managers. Department managers and their assistants run the department, communicate and distribute information about merchandise to and from management and buyers, putout stock, mark sale merchandise and supervise sales associates. It is also very important for buyers to have the experience of working with customers in the store line. Responsibilities of buying line: The merchandise managers and buyers of the buying line must do all the planning and other activities necessary to bring the right merchandise in to the store at the right time to satisfy the store customers. General Merchandise Managers: The retail chief executive officer delegate merchandise responsibilities to several general merchandise managers or corporate merchandise managers. They set merchandising policies for the entire store and are responsible for sale volume. The general or corporate merchandising managers are in charge of several divisions. The divisions may be related such as general merchandise managers for women’s wear and accessories, or the divisions may be totally unrelated.
  8. 8. VISHWA VARUN Page 8 Divisional Merchandise Managers: Merchandising responsibility is further segmented into single divisions such as women’s sportswear or men’s furnishings, directed by divisional merchandising managers. In the women’s area divisional might be in charge of missy dresses, missy sportswear, junior dresses. A national retailer with decentralized buying would have regional merchandising managers instead. Buyers: Each division is composed of departments. These departments may be based on life style, styling categorizes, price ranges or vendors. According to life style, women’s dresses might be divided into social occasion and career. If categorized by price ranges the departments might be divided into designer, bridge better,contemporary,moderate,and budgeting a large chain, buying responsibilities may be further subdivided, Accessories are subdivided into handbags,hosiery,hats,jewellery and so on. Each department is further segmented into classifications, a related group of merchandiser. A buyer is responsible for the success of one or more classifications, one department or several departments. One buyer may buy just a few bridge or designer collections. Each retailer has its own unique breakdown of classifications and buyer responsibilities. Buying Preparations: Careful planning is done to help merchants buy merchandise efficiently and successfully The Merchandise Plan: Management determines a fashion merchandising policy, a long range standard for fashion buying, selling and related activities. Retailers make up a merchandise
  9. 9. VISHWA VARUN Page 9 plan within the framework of the policy, goals and fashion direction set my management. Actual sales figures and evaluations from the corresponding season of the previous year, recorded in computer based forecasting and planning systems, are used as a basis for the new plan. The merchandising plan is a financial plan for allocating specific amounts of money to each department or division for the purchase of an appropriate assortment of fashion merchandise that will meet consumer demand ad sales goals. Usually management determines financial plans for the company as a whole, divides the totals and assigns sale goals to general merchandise managers. These plans are then further subdivided to divisional managers and buyers who also work on developing their part of the plan. Merchandise plans are based on a fiscal calendar, are determined four months to a year before the selling season, and cover a six month or one year period, the spring season (February through July) and the fall season (August through January).The plans are developed on computer spreadsheets which show what needs to be purchased and sold per month to reach sales and profit goals. Merchandise Plan Components: Receipt Plans: Cost of goods that need to be received to sell in the store. Sales Plans Mark-up Plans: Adding on to prices to cover costs, see retail pricing. Mark-down-Plans: Reducing prices to move goods. Inventory shortages End of month stock levels: Goods that are in the store Weeks of supply: How long it will take to sell out merchandise. Gross Margin: Profits
  10. 10. VISHWA VARUN Page 10 Promotional Plans Stock Turn: Figured by sales /Average stock Planning Sales Goals The retailer’s goal is to exceed its own merchandise plan. To make a realistic estimate of prospective sales, a buyer must consider the following points: Economic Conditions: Anticipating a recession, buyers tend to buy conservatively, whereas in a good year, they may buy more in hopes of an increase in business. Market Trend Analysis Shifts in Population Local Retail Competition Variations in Consumer Demand Seasonal Consumer Demand: swimsuits for resort and summer and back to school, for example. Weather: Mild winters result in poor cost sales. Holidays: How holidays will affect buying patterns including the number of shopping days, especially weekends, between thanks giving and Christmas, weather Easter is early or late. Physical alteration or expansion of store. An individual department’s ability to house and display the merchandise effectively. Which marketing activities are needed to support the merchandise? Basic stock merchandise in consistent demand throughout the year or during the same season each year.
  11. 11. VISHWA VARUN Page 11 The effect of casual dress in the workplace, causal cloths are less expensive than dress cloths which mean average sales are lower. Units: In many cases, the plan also exactly specifies the units, number of garments and accessories, to be purchased to meet these sales goals. Accessory units are divided according to the number of handbags, belts, scarves and so on, that should meet demand. The scarf classification would be further broken down into the numbers of shapes, prints and solids and desired fabrications. The merchandise plans may be directed by management or buyers. Unit plans are recorded into merchandising information system that is used for ordering, allocation and unit control. Planning Stock: The next step in planning is to determine the amount of stock, in terms of rupees investment, necessary to meet consumer demand and thereby to support planned sales. Stock must be brought to a peak just before the expected time of peak selling and enough units must be available to fill the floors. Stock plans are part of the retailers computer organized financial systems. The Buying Plan: The buying plan is a description of the types, quantities, prices and sizes of merchandise that a buyer expects to purchase from vendors within a specific period of time. The totals state exactly how much may be spent on merchandise in each category in line with sales goals and the financial merchandise plan. The more detailed the buying plan, the less confusing buying decisions will be, allowing the buyer to concentrate on the fashion aspects of the merchandise during the seasonal market. The plan must be flexible enough, however, to allow for revision if conditions change, for example should buyers not find what they want in the market.
  12. 12. VISHWA VARUN Page 12 Assortment Planning: A merchandise assortment is a collection of various styles, quantities and prices of related merchandise, usually grouped under one classification within a department. The buyer plans to buy a balanced assortment of merchandise to meet consumer demand and appeal to a particular group of target customers. Open –To-Buy: Considering stock on hand at the beginning of any month, the buyer has to calculate the amount of purchases that can be made if stock and sales are to be kept in balance. The difference between actual stock and planned stock equals to Open-T-Buy, the value of planned purchases. Open -To- Buy=Actual Stock-Planned Stock The open-To-Buy budget is adjusted according to business. When business is good, stock is low and needs to be replenished. When business is slow, buying has to be reduced addition; open-To-buy often has to be based on the amount of space or real Estate that a buyer has available for specific categories and merchandiser or for particular vendors. Buying: The buyer purchases merchandising accordance with merchandising plan and sales and profit goals. Buyer’s role: A buyers knowledge of merchandise stems from both experience and education. The ability to evaluate merchandise and judge whether it is suitable for a customer develops over year of examining all type of merchandise for quality, styling and price. It is very important for buyers to have store line experience; they need to be on the sales floor to learn about customer’s wants and needs.
  13. 13. VISHWA VARUN Page 13 Research: Market and trend research becomes second nature to the buyer; buyers must constantly research the following influences.  Demographics and Psychographics.  The effect of economic conditions on demand for certain types and prices of merchandise.  Global influence on styling and sourcing.  Market and fashion trends.  Influence of the media and celebrities on fashion.  The competitors merchandise offerings. The buying process is analytical and creative part. The mechanics involve knowledge of sales histories and the development of merchandising plan. Buyer-Planner system: Some retailers separate buying functions into a buyer planner system. Under this system buyers are able to focus on shopping the market and merchandise selection as well as financial control, while planers concentrate on distribution. Planners shape the buy, monitor adherence to the plan, plan distribution to individual stores, and team up with buyers to maximize their business. Planners analyze regional differences, designating appropriate merchandise for particular stores based on sales histories of color preferences, life style needs, climate variations, and ethnic tastes and so on. They also relocate merchandise to stores where it is selling best and make sure basic merchandise is kept I stock. Most stores now have computer based forecasting and panning systems that include allocation.
  14. 14. VISHWA VARUN Page 14 Buyers as editor: Buyer can influence consumers buying to a large degree by their selection of merchandise, which narrow the choice for the consumer. By determining what parts of a collection will be sold in store and in what quantity. Buyers affect the consumer perception of a manufacturer’s line .However they have to show enough of a line or collection to represent them properly. The buyer’s role in Marketing: Ideas on how to market and sell the merchandise are thought out ahead. The buyer makes plans for advertising, including direct mail and e-commerce, visual merchandising, and special events. Advertising: Buyers request ads on the basis of their merchandise plans and negotiate with vendors for co-op money. They must provide complete information about merchandise –concerning fabric, colors, styling details, price, sizes, to the advertising copywriter. The garment or accessory itself must be given to the illustrator, layout artist, and photographer. The buyer helps determine the proportion and position of the ad and must carefully check ad copy for accuracy. He or she must then make sure that the merchandise has delivered and is on the selling floor with appropriate sign copy when ad runs. Visual Merchandising: Buyers may also request window and in store displays for particular merchandise. They must also make sure that a good selection of that merchandise is on the selling floor for possible customer purchase.
  15. 15. VISHWA VARUN Page 15 Special Events: Buyers may initiate special events and fashion shows. For example, the buyer of a designer collection might arrange with the fashion office for a designer to make a personal appearance to introduce a new collection. To evaluate marketing strategies, buyers compare sale statistics two weeks before ad, presentation, events, the day of, and two weeks after. They try to determine if these strategies were successful in promoting sales. Target customers: The buyer tries to select the right styles, color assortment and fabrics at acceptance prices for their target customer. Buyers need to keep in touch with their customers “Lifestyle” to buy merchandise to fit their needs. Micro versus Macro Merchandising: Because of the large number of market segments, based on age, ethnicity and lifestyle, there is increasing need for customizing merchandise. Micro merchandising, identifying and serving one market-niche, is in response to the recognition of diverse society with diverse tastes and needs. This means that national retailers must differentiate their tastes and needs. At retailers with centralized systems, planners use computer based allocation system to distribute merchandise appropriately .Micro merchandising is an opportunity for small retailers and manufacturers because a narrow focus is easier for them. Buying and Selling Cycle: The buying and selling cycle is related to the fashion cycle of consumer acceptance. Therefore a buyers responsibility involve a complete cycle, Planning what to buy, searching the market and selecting the right merchandise, working with advertising, display and special events to promote merchandise, training sales personnel and making down leftover merchandise.
  16. 16. VISHWA VARUN Page 16 Broad Assortment Buying: Ideally buyers would like to buy broad, but shallow assortment of merchandise at the beginning of a season to test consumer reaction and then as certain styles emerges as best sellers, increase stock in depth. By comparing current sale of a particular style with previous weeks or months figure, a buyer can determine either sales are rising or declining. Narrow and Deep Buying: If a category of a merchandise is very popular or if the buyer feels strongly about a style, he or she may buy narrow (Just a few style) and deep (Many merchandise in each size and color) Short - Cycle Buying: Buyers use short-cycle buying (Buying close to selling season) to judge market conditions and trends to respond quickly to the market. Particularly for junior and contemporary fashion and styles. Also refers to Just in Time Merchandising, short cycle buying helps in reducing inventory. This is completely dependent on the manufacturer’s production cycle and availability of merchandise. Panning Promotions: Buyers have to plan for ahead for promotions, special buys at low prices. When a particular item is popular, such as cashmere sweaters, for instance, a buyer might arrange for a volume purchase at a special price and then pass the savings on to customers. Many retailers would like to cut down on the practice of constant sales and promotions, but it is difficult because consumers now expect them. Planning Markdowns: Buyers hope to select merchandise with full sell through; they also have to plan ahead for inevitable markdowns .many stores mark down prices after the merchandise has been on the selling floor for appropriately eight weeks. Retailers are speeding inventory turn by marking down to clear the stock.
  17. 17. VISHWA VARUN Page 17 Retailers usually charge manufacturers for markdown allowances to help offset their losses. Some manufacturers may even suggest to the retailers when it is permissible to mark down merchandise to make room for new merchandise. Shopping the Market: After the buying plan established, fashion buyers shop the market to view the merchandise available for the coming season. For the retailer the manufacturer is the supplier, vendor or resource of fashion merchandise. Buying tips are timed to cover markets that are important for the buyer’s particular category of merchandise. Buyers visit different market centers for different needs. Many people imagine a buyer’s job to be a glamorous one involving many trips to abroad. However only designing department buyers and fashion directors of large stores attend the tours. Many French and Italian designers now have NY showrooms so that buyers do not necessarily have to go to Europe. Line Buying versus Trend Buying: The buyer shops for new fashion both key resources and new ones. Key resources or core vendors are those who have maintained a reputation for dependability and whose merchandise sells through because of appropriate styling, quality, price and nationality advertised brand name. The practice of buying from these major resources is called line buying. Matrix System: Some retailers are requiring that 80 to 90 % of all merchandise be purchased from core vendors. The most restrictive is the matrix system, strict centralized merchandising developed by the many companies. Buyers are limited to a list of this system cuts out small manufacturers who cannot supply all the store of large group of retailers.
  18. 18. VISHWA VARUN Page 18 Trend Buying: Buying merchandise for its innovative styling is referred to as trend buying. Trend buying is especially important for leading fashion stores. Because buyers do not always have limit to seek out new resources, some retailer is providing vendor days when manufacturers can come to the store to show their merchandise. Finding an exciting unique resource can mean an important merchandising statement for a fashion store. There is increased focus on fashion, newness and uniqueness so that all stores should do some trend buying. Corporate buying: In the case of major store making a large purchase, buying is often done management to management by a group of executives including the buyer. WALMART for example tries to do all of its buying in this manner. In this case, the buyer is part of buying team. Retailer –Vendor Alliances: Manufacturers and retailers try to work together toward mutual success. Vendor executives, designers, merchandisers and sales representatives suggest appropriate merchandise for each retailer’s particular customers. Buyers sand sales representatives continue to work together throughout the selling season regarding advertising, reorders, markdowns, and sell through .Buyers also provide vendors with weekly selling reports. Purchase Orders: Placing an order for merchandise is considered a contract between the store and the vendor. Therefore writing an order commits the store to taking the merchandise if it meets quality expectations and delivery requirements .Standard purchase orders specify the date of the order, the name and address of the resource, the term of sale, shipping instructions, the store address, the name of the department, the quantity ordered, descriptions, prices of styles ordered and
  19. 19. VISHWA VARUN Page 19 obligations between buyer and seller. Purchase orders are most efficiently done by internet vendor linked computer system, which can instantly supply information on what goods are available or are in work and what shipping dates are expected. The purchase order information becomes part of the retailers total merchandise information system, which keeps track of merchandise as it is ordered, received and finally sold. Deliveries are timed so that sufficient quantities or merchandise are in the store to meet various peaks in the customer demand cycle. The vendor is committed to meeting these delivery dates or the order may be cancelled or a discount required. Automatic Replenishment: In an effort to maintain stock of basic merchandise, retailers use automatic replenishment, made possible by electronic data interchange systems that link them to vendors. This system sends sales and inventory information directly to vendors so they can plan production. To implement automatic replenishment, retailers must be willing to adopt a continuous open-to-buy position for basic merchandise to let suppliers replenish without any retail management approval. The use of automatic replenishment is especially important for hosiery and shoes, to make sure that all sizes, colors and so forth are in stock. The use of automatic replenishment is also growing for other merchandise.
  20. 20. VISHWA VARUN Page 20 Merchandise Planning For a retailer the objective of merchandise planning is clear, achieving the following seven ‘RIGHTS’  The Right product  The right place  The Right quantity  The Right Quality  The Right Price  The Right Assortment  The Right Time In order to satisfy every customer needs the retail store must have the right product in the right place, in the right quantity with the right quality at right price with the right mix with the right sizes and at the right time. The function of merchandising is to achieve all the rights so that sales are high with an ideal level of inventory holding and thus more profits. Merchandise Hierarchy: While planning the merchandise mix, a retail organization has to start with a clear definition of its merchandise hirerarchy.The merchandise hierarchy is a disciplined way of grouping the merchandise mix at different levels, starting from a high level grouping to the lowest level of the stock keeping unit. The grouping may at times have even more than four –five levels as shown in the following example. The merchandise hierarchy forms the platform needed to create the store merchandise mix.
  21. 21. VISHWA VARUN Page 21 DIVISSION Apparel Supermarket Electronics -Ladies, Kids, Accessories DEPARTMENT Men’s -Trousers, Suits CATEGORY Shirt’s -Half sleeves SUB CATEGORY Full sleeve Formals -V.Heusan, Polo, Blackberry BRAND Arrow -Cut away collar STYLE Button Down collar SAIZE COLOR DESIGN PRICE HIRERARCHY EXAMPLES OPTIONS
  22. 22. VISHWA VARUN Page 22 Attributes in product: Attributes can be classified into two categories- Product Category: Different types of product categories are offered under each product group.  Men’s wear  Women’s wear A-Product Specific  Category  Sub Category  Color  Texture  Region  Theme  Design Description  Material Used B-Customer Specific  User  Occasion  Look  Design Style  Price
  23. 23. VISHWA VARUN Page 23 Men’s wear:  Formal wear  Casual wear  Suits and Coats  Track pants  Shorts  Denim shirts  Ethnic wear  Innerwear
  24. 24. VISHWA VARUN Page 24 Women’s wear:  Formal Shirts  T-shirts and Tops  Denim Skirts  Cargoes  Shorts  Denims  Belts  Slips and spaghettis Kid’s wear:
  25. 25. VISHWA VARUN Page 25 Category Management Category management in retailing is defined as the process of managing categories as strategic business units. This produces enhanced business results by achieving a robust bottom line for each category. A category is a merchandise group that addresses similar consumer needs and wants. Goods in a category are displayed and sold together in a retail environment so that consumer choices are easier, thus enhancing the shopping experience. It is felt category management in retailing is similar to brand management in manufacturing, as product group become the focal point in terms of development, merchandising and marketing. The category management process in retailing involves the following steps: Category Vision Category Definition Category Role Category Assessment Category Balance Category Strategies Category Tactics Category Implementation Category Review
  26. 26. VISHWA VARUN Page 26 Category Vision: This refers to the top management‘s view of what each category out to achieve in terms of customer satisfaction or value offering and the differentiation thus achieved for leadership. Category definition: This is made based on customer segmentation and the specific SKU’s that belong to the category. For example a broad category definition can be ‘soft drink’ a narrower can be ‘aerated soft drink’ and one of the SKU’s within the same can be ‘Pepsi 500ml’. Category Role: This defines the objective of the category in the entire merchandise mix and determines its relative importance. Some categories may play a ‘destination’ role in the product mix-as in the case of the grocery category in a supermarket-and some an ‘impulse’ role. Category Assessment: The category assessment is done to identify gaps if any between the category vision and the existing contributing SKU’s to the category. This assessment helps improve the category’s business by identifying opportunity gaps in sales, stock turns and profits. Category Balance score Card: This helps measure the performance of the retail business. It establishes specific business target for the category while reflecting on its performance. Category Strategies: This aim at achieving the customer off take from the shelves, ringing the maximum number of transactions, earning maximum margin other objectives.
  27. 27. VISHWA VARUN Page 27 Category Tactics: Category tactics refer to the tactical requirements to achieve the score card targets. These tactics are compared with those of the competition to attain the best advantage and edge and many centre on the areas of assortment, pricing, space planning, promotions etc. Category Implementation and Review: This refers to the store level execution of the category business plan and strategies and monitoring category performance against the plan to take action on an ongoing basis. Successful category management in retailing is a customer driven process. It enables the retailer to have the right category mix through the preparation and implementation of an efficient category plan. Markups and Markdowns in Merchandise Management Markup is the percentage amount (calculated on cost) added to cost in order to arrive at the maximum retail price (MRP) for a product. Hence Markup=Percentage of margin calculated on cost added to arrive at the MRP. Cost=MRP--Margin Margin=MRP—Cost MRP=Cost+ Markup MRP=Maximum Retail Price Markup is based on cost and is expressed in percentage terms.
  28. 28. VISHWA VARUN Page 28 Problem: What is the markup percentage for a dress that cost is 200 rupees and retails for 400 rupees? Markup %= MRP—Cost/Cost *100 =400—200 =200/200*100 =100% Sometime the retailer needs to look at the cost of an item and determine what the item should retail for. It is fixed if the target customer is willing to pay that price. Markdown is the amount reduced from the MRP to arrive at the new retail price. Markdown is calculated as a percentage of MRP. Problem: What is the markdown percentage for address whose original MRP is 400 and the new MRP after markdown is 200. Markdown % = Difference b/w old MRP—New after markdown/old MRP*100 =400-200/400*100 =50%
  29. 29. VISHWA VARUN Page 29 Understanding the Retail Value Chain of Merchandise To propose a competitive retail strategy it is imperative to first understand the various functions involved in the different channels of fashion merchandise. A brief outlook is provided below to understand the value chain. Each function has a range of processes for successful implementation which is described below-
  30. 30. VISHWA VARUN Page 30 Merchandise Budget Plan for Fashion Merchandise The merchandise budget plan aims to setup specific merchandise objectives and to plan financial aspects of the merchandise side of the business. It involves bellow steps. Planning Data: Assortment Plan: Historical precedence is the starting point for developing assortment plan for any season. Sale Forecast: It is a simple way to adjust past sales to make projections into the future. Sources of information for sales forecast could be  Previous sales volumes with real trends are identified.  Published sources  Customer information-Through observation, sales people and market research.  Observing competition.  Vendors, Distributors, Channel partners and expert judgments. Method of forecast is mainly A. Time series-Moving average-Average of several months’ sales, as each new period sale data is added the average the oldest period is removed from total. B .Time sales-exponential smoothing-often used for short range forecasting. New forecast =Old forecast+ f (Actual demand –Old forecast) where f is constant between 0 and 1 that determine influence actual demand on the new forecast. Reduction: To have enough merchandise levels apart from sales volume of inventory may go down due to markdowns, shrinkage and discounts.
  31. 31. VISHWA VARUN Page 31 GMROI: Goal for category is planned based on past performance of same merchandise. Inventory Turnover: when inventory turnover is planed gross margin is ignored as the budget plan is an inventory plan and not a pricing of margin control plan. Average stock to sale Ratio: To achieve planned inventory turnover purchase must be kept in line with sale forecast with the period. The average BOM stock to sale ratio helps to do this. Monthly Planned Purchase: Monthly sales Monthly reductions +EOM Stock+ BOM Stock. Evaluating the Merchandise Budget Plan GMROI, Inventory & sale forecast are used for both planning and control as it is based on top down planning process. After the selling process the buyer determines how well they actually performed compared to the plan. If actual GMROI, turnover and forecast are greater than planned then performance is better than expected. Question should be answered as to why the actual performance is above or below planned. Open to Buy Analysis (OTB): OTB analysis starts where merchandise budget plan ends. The merchandise budget provides a plan for purchasing merchandise to be delivered in a particular month. The OTB keeps track of how much is spent each month and how much left to spend such OTB acts as a buyer checkbook. The purpose of OTB is to keep actual spending in line with the planned level of purchase to avoid over investment and can maintain rate of inventory turnover at planned lebels.OTB is usually kept at retail price.
  32. 32. VISHWA VARUN Page 32 Steps in Buying Merchandise:  Gathering data from customers, suppliers, sales staff, competitors and internet.  Selecting and interacting with merchandise sources-agents, manufacturers.  Evaluating the merchandise-Inspection, sampling.  Negotiating the purchase terms.  Concluding purchase  Receiving and stocking merchandise-storing.GRN, Invoice, Monitoring.  Reordering merchandise-Inventory holding vs ordering costs, turnover, and cash outlay.  Re evaluating on regular basis.
  33. 33. VISHWA VARUN Page 33 A: Procurement and Inventory Management Sourcing can be defined as the process by which companies acquire raw materials, parts, components, different product and services from various suppliers in order to carry out their operations. Such process is called Procurement. The sourcing process comprises of the bellow mentioned stages.  Supplier selection  Supplier contracts designing  Product design collaborations  Procurement of material  Performance evaluation of suppliers. Supplier Scoring and Assessment: Supplier scoring and assessment means rating the supplier‘s performance.Tradionaly price was the primary characteristic ,however suppliers were ignored on other characteristic like lead time,quality,reliability and design capability and moreover the impact of total cost doing business with them. With the help of detail received by supplier scoring. Supplier selection is done to identify appropriate suppliers. Once suppliers are identified supplier contracts need to be formulated and negotiated with the suppliers and in turn product design collaboration takes place. While doing this it is necessary to ensure that these designs are communicated effectively to all parties involved in the production and operations. The next stage is procurement in which suppliers sends the products in response to the orders paced and delivered on schedule at the lowest opportunities where buyers are able to decrease overall cost of the product
  34. 34. VISHWA VARUN Page 34 Benefits of sourcing process are  Aggregation of orders resulting in economies of scale.  Reduction in overall cost s and distribution of risks with better co- ordination.  Better forecasting and planning due to better supplier relations.  Help to reduce inventories. Some of the scoring points while identifying the right supplier using supplier scoring and assessment are noted bellow.  Replenishment lead time  Scheduled performance  Supply flexibility  Delivery frequency  Supply quality  Transportation cost  Pricing  Coordination of information  Product design capability  Exchange rate and taxes  Supplier visibility Supplier Quality Feature Supplier A Supplier B Supplier C Product Quality 2 5 3 Service Quality 3 4 1 On time Delivery 4 1 3 Customer Focus 2 4 3 Customer service 2 4 4 Reputation 2 4 3 AVERAGE 2.5 3.6 2.8
  35. 35. VISHWA VARUN Page 35 Vendor Management The use of the following sourcing practices makes sourcing easier and managing vendors efficiently resulting in order costs and increasing the overall profitability of firm. Use of multifunctional teams: Multifunctional groups help develop better strategies for sourcing. It helps purchases to stress and focus on purchase price. Collaboration between the purchasing, manufacturing, engineering and planning departments is much more likely to identify correct costs. This collaboration must be continued up to the procurement stage to realize the benefits of a good sourcing strategy. Coordination across regions and business units: To maximize economics of scale in purchasing and reducing transaction cost, coordination of purchasing across all levels of firm and supplier is essential. Evaluation of total cost of ownership: An effective sourcing strategy should not make price reduction its main objective. Primarily the factors that influence total cost of ownership should be identified and use for supplier selection. The performance of the supplier should be evaluated and its impact on the total cost be quantified. Focusing on total cost of ownership also allows a buyer to identify opportunities in designing and planning in better way. Building long-term relationship with suppliers: Sourcing itself is essential to both supplier and buyer working together as this generates more opportunities for savings than two parties working independently. Trust should be established between the buyer and supplier in order to maintain long term relationship.
  36. 36. VISHWA VARUN Page 36 Inventory Management Inventory is very large and costly investment that every stage of the supply chain needs to incur. Every stage works independently to make supply chain profitable. Thus it is very important that every stage of supply chain co-ordinates and together forms the inventory policy. A large number of firms make use of following two approaches in combination when managing the inventory in order to meet profitable variability. Use of common components: This approach involves manufacturer to design common components that can be used in multiple products which have a predictably variable demand that result in overall constant for the components. Developing Inventory for highly demanded Products: Products that are highly demanded or that have a high predictable demand it is important to decide upon which of their products will have highest demand and therefore build inventory for that product in the off season in the off season because there are less chances of fluctuation in demand for these products closer to peak season. Need for Holding Inventory:  Achieve economies of scale.  Balance demand and supply.  Specialization.  Protection from uncertainty and order cycle.  Act as a buffer between the stages of the supply chain.
  37. 37. VISHWA VARUN Page 37 Types of Inventory: a) Cycle Inventory b) Safety stock c) Speculative Inventory d) Seasonal Inventory e) Dead Stock a) Cycle Inventory: Defined as average inventory that exists in the supply chain either due to production or purchase of products in lot sizes that are larger than those demanded by the customers. b) Safety Stock Safety inventory can be defined as inventory carried for the purpose of satisfying the demand that exceeds the amount forecasted for a given period of time. Due to the uncertainty in the demand a product shortage may result. The table bellow shows the summary of alternate service labels, safety stock levels and also the total average inventory to be maintained. Fill rate represents the magnitude of a stock out .It represents the percentage of units demanded that are on hand to fill the customer’s orders. Safety Level Of Std.devi requirement Safety Stock Requirement Average cycle Stock Total Average Inventory 84.20% 1.0 176 500 676 90.30% 1.3 230 500 730 94.50% 1.6 280 500 780 97.70% 2.0 350 500 880 98.90% 2.3 406 500 906 99.50% 2.6 450 500 950 99.90% 3.0 530 500 1030
  38. 38. VISHWA VARUN Page 38 C) Speculative Inventory: Stock held for reason other than satisfying current demand .Reasons can be bulk purchases larger than demand to get bulk discounts of a failure of a future price increase or future shortage expected. D) Seasonal Inventory: Form of speculative demand accumulation of inventory before a season begins. E) Dead Stock: Products which have no demand registered over a large period of time. Products are obsolete and block working capital. Symptoms of Poor Inventory Level:  Increase in number of back orders.  Increase in inventory investment with back orders remaining constant.  High customer turnover rate.  Lack of sufficient space.  Increase in number of orders being cancelled.  Deteriorating relationship with intermediaries in stage of supply chain. Inventory Holding Cost: Holding cost is estimated as the sum of the following mentioned costs .Usually the holding cost is a percentage of the cost of the product. Cost of Capital: Weighted average cost of capital on inventory is calculated before taxes are paid. Spoilage Costs: Rate at which value of product the firm stores drop following drop in market value due to quality deterioration usually high on perishable food items.
  39. 39. VISHWA VARUN Page 39 Handling cost: Include receiving and storage cost of products. Occupancy cost: Show an incremental charge in the space cost due t the change n the cycle inventory. If a firm is charged on of units stored we call it direct occupancy costs. Miscellaneous costs: Deal with large number of costs such as costs due to theft, damage, tax and insurance that may be incurred by the company. Ordering costs: Cost associated with placing or receiving an extra order independent of the size of the order. Transportation cost: A fixed transportation cost is often incurred by firms regardless of the size of the order. Objective of Inventory control:  Avoid shortage of material  Prevent excess material  Reduce cost.  Provide proper customer service.
  40. 40. VISHWA VARUN Page 40 Selective Inventory Control: Visual Control: Examine inventory visually to determine if additional inventory required. Tickler Control: Physically count small portion of inventory each day. Click sheet control: Record items as it is used on paper for reorder purposes. Stub Control: Retain a portion of price ticket when an item is sold. Point of sale Terminal: Relay information on each item used or sold. ABC Analysis: 20% of the items contribute to 80% of total sales. Decision based on 80-20 rule A-Important-Moderate Important-Less Important FSN Analysis: Based on speed of movement of inventory-Fast, S-Slow, and N-Non moving goods. Two Bin Systems: Principle of reorder level physically separates entire stock into two bins. Reorder quantity EOQ. Second bin quantity =Minimum STK+Lead time Consume First bin quantity=Order quantity-Lead time consumption. HML analysis’-High priced item-Medium priced item-Low priced items.
  41. 41. VISHWA VARUN Page 41 B: Information technology in retail business IT would help retail in providing the right product at the right place at the right time with a price tag acceptable to customers. It provides hardware and software capabilities to cover end to end retail business operations and also critical in efficiently and effectively carrying out all the core functions which would include global sourcing ,procurement, merchandising compliance,logstics,demand forecasting ,product innovation, point of sale data management, property management,marketing,CRM,Loyality Management.  It can leverage sales history and anticipated demand to create an accurate forecast of customer demand.  Simulate midterm and long term planning options allocate resources and make strategic sourcing decisions in a timely fashion to best meet operational goals.  Integrate sourcing, purchasing, production, distribution and transportation to create a demand plan.  Create a calculated, time phased replenishment plan based on customer demand forecast and using automated state of the art algorithms within the supply chain.  Institute real time inventory tracking across all channels enabling the retailers to manage and monitor stocks and values and minimize the inventory levels while avoiding out of stock situations.  Ensure an efficient warehouse management system, picking and packing, controlling logistics documents and in bound monitoring.  Move from a product push to a customer pull approach and reap the rewards of reduced operating costs and larger profit margins.
  42. 42. VISHWA VARUN Page 42 IT applications: The technology perspective Applications of IT in retail span a very wide spectrum from store front right up to business intelligence tools integrated with ERP/SCM and CRM applications and further to MPLS/VPN. The front end applications are mainly in the form of point of sale terminals and barcode readers for faster clearance. There are the SCM tools for constraints based supply chain planning and forecasting.CRM tools cater to trend analysis, customer usage pattern, purchase, promotion management and lifecycle analysis. E-Commerce covering inventory visibility, onsite merchandising, cross selling, price compression and multi channel congruity would be the next phase in retail. Point of Sale: POS system capture data about orders at the POS are frequently found in fast food chains and grocery stores. The POS provide immediate update to sale and inventory systems and allow firms to monitor sales trends as they happen. The information available from POS becomes input to the financial accounting systems which then supply data to marketing information systems. Bar code/ UPC: Bar code or Universal Product Code is used in point of sale systems in supermarket and retail stores. It is a product identifier and is made up of series of bars and spaces which represent alphanumeric information pertaining to product code, price. Barcode helps enhance accuracy in demand forecast, real time stock management, faster checkout at POS, product tracking and tracking and reduced labeling and administration costs.
  43. 43. VISHWA VARUN Page 43 RFID: Radio frequency identification is a wireless barcode which provides wireless communication between objects and readers. FID uses embedded microchips containing information about item, location. It has the ability to identify and track products and equipment in real time without contact or line of sight. Its offers reading, waiting, transmitting and storing and updating information. It can track inventory and tasks performed by employees in store, customer profiles, transaction history and levels of stock. VPN: Virtual private network is a secure connection between 2 points across internet, enables private communications to travel securely over public infrastructure. It saves long distance communication costs. EDI: Electronic data interchange is the in charge of business information through standard interfaces by using computers without requiring re-keying information. Main benefits are saves time and data transmission is immediate, reduced manual errors, no paper handling. Data warehousing and data mining: Retail organizations are data rich but information poor, hence data warehousing and data mining provides users with tools to store summarized information analysis tool involves automated discovery of patterns and relationship in data warehouse.
  44. 44. VISHWA VARUN Page 44 C: Comparative Merchandise analysis of national brands Determining the Competitors: SHOPERS STOP LIFESTYLE WESTSIDE POSITIONING Excellent shopping experience Trendy, Vibrant ,Youth Brand Style & affordability FORMAT TYPE Multi brand Multi brand Exclusive PITCH Shopping experience Latest Fashion Affordable Style TARGET CUSTOMER Affluent consumers Affluent consumers Affluent consumers Determining the key success factors: The competitor’s analysis is done with respect to the following key parameters of 5 P’s.  Positioning  Product  Price  Promotion  People
  45. 45. VISHWA VARUN Page 45 Positioning Parameters Shoppers Stop Lifestyle Westside How started The Raheja’s had a property which they wanted to make commercially viable. Lifestyle is part of the landmark group, a Dubai based retail chain which made its way in India through fashion retailing. Lakme took over Littlewoods of UK store.whch is now known as Westside owned by Trent. When Started 1991 in Mumbai 1999 in Chennai 1998 in Bangalore Taglines First campaign idea emerged‘Shperstop:The Ultimate shopping experience ‘Second idea ‘Feel the experience while you shop ‘New idea ‘Start something new’ Your store. Your Style Started with ‘Surprisingly affordable price’ New idea ‘Keep your style alive’ What they did Started its loyalty program in 1994: First citizen card. First citizen member base is 1100000. Contribution to sales 66% Started its loyalty program in Jan 2001: The inner circle. The inner circle has a customer base of 750000. Contribution to sales 40%. Started its loyalty program in may 2001: Club west. Club west has a customer base of 50000 in Hyderabad. Contribution to sales 60%. Present positioning Currently operating more than 24 store Currently operating more than 13 store Currentl operating morethan 29 store.
  46. 46. VISHWA VARUN Page 46 Comparison of various Parameters Shopper stop: Trial room:  More in no.  Mirrors on 2 sides. Size of mirrors smaller.  Mirrors not aligned from edge to edge due to which the size seems smaller although it is bigger than that of lifestyle. Store ambience:  Well designed, beautiful and air conditioned ambience  Gives a classy royal feeling, round decorative staircase in the centre of the store. Aisle Space: Maximum aisle space for convenient movement of both customer and CSA (during stock replenishment) Wall and ceiling textures and colors:  Light base color walls and moderate height ceilings.  Wallpapers as per the merchandise segment. Signage:  Sale signage’s in green color.  Other signage’s in black white  Signage’s depicting styles and size not properly arranged.
  47. 47. VISHWA VARUN Page 47 Lifestyle: Trial room:  More than that of Westside but lesser than that of shopper stop.  Mirrors on three sides aligned from edge to edge which makes it look spacious. Store ambience:  Well designed beautiful ambience  AC not sufficient as per the footfalls in the store. Aisle space:  Sufficient aisle space for convenient movement of both customers and CSA (during stock replenishment). Wall and ceilings and colors:  Cream color walls with high ceilings. Signage:  Less use of signage’s  Only signage’s denoting different sections present Westside: Trail room:  Least in no, only 4 in each floor.  Biggest in size but mirror on one side only. Store ambience:  Well designed interiors, sprawling space and air-conditioned ambience.
  48. 48. VISHWA VARUN Page 48  Gives an energetic, youthful effect.  Use of electronic media to intensify the effect.  Sofas provided for the comfort of the customer. Aisle space:  Cluttered arrangement of merchandise and less aisle space.  Arrangement of merchandise in a circular format to give an attractive display. Wall and ceiling textures and colors:  Cream color walls and low ceilings with extensive use of wood works. Signage:  Proper and effective use of signage denoting sizes, segment etc.  Special offers like BEST BUY highlighted.  For kids swear distinction made clearly by mention of the relevant age group.
  49. 49. VISHWA VARUN Page 49 Product It is noted that in most of the categories the no. of style option available in lifestyle is 20-25% lesser than that of shoppers stop: except footwear category – Lifestyle shoe mart collection far exceeds that of shopper stop. In most of the categories the no of style options available in Westside is almost half of Lifestyle. 4-5 colors are available for most of the styles like for T-shirts, Tops, and Kurtis. Assortment plan for Men’s Wear: Private label in shoppers stop and lifestyle does not exist for categories like  Suits and Coats  Jackets  Track Pants  Shorts  Denim Shirts  Ethnic wear (lifestyle had both but price point was not distinct)  Innerwear like vests, underwear, belts etc. Style option available in formal trousers in shoppers stop, lifestyle and Westside and almost equal. Value pack of 3 T-shirts in a set in different colors was being promoted in both shoppers stop and lifestyle whereas it was not present in Westside. Innerwear was mostly available in sets. More of singles counts are used for sport /casual wear shirts across all the brands. Fast moving sizes 40 & 42 in shirts. 32 &34 in Trousers Least moving 44 & 46 in shirts and 38& 40 in Trouser.
  50. 50. VISHWA VARUN Page 50 Assortment plan for women’s wear: Presence of only private label in lifestyle and shoppers top.  Formal skirts  Casual skirts Presence of only national brands in shoppers stop and lifestyle in categories  Cargoes  Track pants  Shorts  Denim Skirts Category SKD in lifestyle and Westside had almost similar style option. IKAT, Khadi, mangalgiri are popular among kurtis and SKDs. Style options available in lifestyle and shoppers stop are almost same in categories.  Formal shirts  T-shirts and Tops  Denim Skirts  Cargoes  Shorts  Denims  Belts  Slips and spaghettis Style options available in lifestyle are more than that of shoppers stop for categories.  Scarf’s  Kurtas
  51. 51. VISHWA VARUN Page 51 Assortment plan for kids wear: There is a dominance of the blue and pink colors. Party wear frocks present wear constructed by material poly cotton, poly viscose and other synthetic blends. Wider options are available for smaller sizes. Assortment plan Footwear: Lifestyle has got a very strong merchandise mix as compared to its competitors. Hawai chappals and kolhapuri shoes are only present in lifestyle. Lifestyle has got more than double collection of women’s slippers than that of shoppers stop. Lifestyle has got more than the four times the collection of women’s casual shoe’s than that of shoppers stop.. Westside has very limited style options especially for men’s category.
  52. 52. VISHWA VARUN Page 52 Price Price points of lifestyle and shoppers stop are almost head on head: except  Men’s Jacket  Women’s slippers  Women’s sports shoe The price point of Westside is prominently low as it comprises only of private labels. Men’s wear observation: Maximum options were present in the price point 1199 for both shoppers stop and lifestyle in formal shirts while it was in price point 699. Highest price point for suits and jackets present at shoppers stop at 16499 Women’s wear observation: No distinct price points for private label and national brands in shoppers stop as well as lifestyle for  Formal shirts  Jackets  Ethnic wear  Scarf It was observed that there was a vast difference in price points of private labels and those national brands in shoppers stop and life style for  Suits and coats Kurtas with yolks (priced at 549) were present in lifestyle and not in shoppers sop and Westside. Kurtas with bet at 399 were present in Westside while not in shoppers and Lifestyle
  53. 53. VISHWA VARUN Page 53 Kids wear observation: Maximum options were present in the price point 399 for both shoppers stop and lifestyle in tops while Westside it was in price point 299. Maximum options were present in the price point for both 699 for both shoppers top and lifestyle in bottoms while in Westside it was in price point 299. Basic products of lifestyle and shoppers top start at higher price points than those of Westside. Footwear wears observation: Lifestyle has got maximum options available at price point 799 for women’s slippers. Lifestyle has got maximum option available at price point 1399 for women’s casual shoes. Gap exists in price point of kid’s footwear in lifestyle-like girls shoes are available for 1500 and 1000 and there is no price point between them
  54. 54. VISHWA VARUN Page 54 Promotion Generally sales promotions used in red color but Shoppers stop is doing in normal black at white colors, because Black and white became the identity of shoppers stop.
  55. 55. VISHWA VARUN Page 55
  56. 56. VISHWA VARUN Page 56 Comparison of promotion elements 60.75 62.5 84.5 0 10 20 30 40 50 60 70 80 90 Shpper Stop Lifestyle Westside Series1
  57. 57. VISHWA VARUN Page 57 People Shoppers stop: CSA Intensity: Per 2 brand 3 CSA CSA capability: Strong knowledge base. Proper training for 3 months at the time of joining. Good PR and communication. Well groomed and emphasis on customer satisfaction. No direct recruitment for senior CSA .Juniors are promoted as seniors based on their performance. Remuneration structure and incentive scheme: 12th pass 4000 and graduates 6000-8000. Incentives on sale. Lifestyle: CSA intensity: Per brand 1 CSA. CSA capability: Strong knowledge base Proper training for 6 months at the time of joining. Good PR and communication skill.
  58. 58. VISHWA VARUN Page 58 Recruitment as per their qualification and experience. Qualification graduate as seniors CSA and 10+2 as junior CSA. Remuneration structure and Incentive scheme: Senior CSA 6000-8000 Junior CSA 4000-6000 Incentives on the basis of sale Westside: CSA intensity: Per segment 3-4 CSA’s CSA capability: Basic knowledge of the particular segment. Proper training for 6 months at the time of joining. Good PR and communication skills. Remuneration structure and incentive scheme: Gross salary 6200 in hand 5664 incentives on the basis of sale.
  59. 59. VISHWA VARUN Page 59 Chapter: 2-Objective The objectives of the project work are:  To provide a basic understanding of the merchandising concept.  To underline the relevance of merchandise planning in a retail organization.  To provide information on merchandise grouping, defining the concept of merchandise hierarchy.  To explain what is meant by merchandise buying and replenishment planning.  To define category management and focus on its advantages.
  60. 60. VISHWA VARUN Page 60 Chapter-3: Hypothesis During my research I found that Merchandising is a significant function of retailing. It deals with merchandise planning, presentation and management in a retail store with the objective of having the right product in the right place, in the right mix, in the right price at the right time. The merchandise range and mix in a store has to be planned meticulously and grouped in a merchandise hierarchy for a better understanding and analysis of sales and stock. Merchandise presentation too is important for a retail store. Hence a planogram depicting the placement of merchandise in the right places and right quantities requires to be worked out. Category management with a strategic business unit approach helps manage merchandise profitably besides enabling a speedy response to customer’s requirements. Carefully planning of markdowns and prevention of shrinkage will yield better margins for a store. Today market is full of competition, same product offered by various brand, so need to understand the trends and taste of consumer, for that proper merchandise and assortment plan is needed. All the finding and recommendations may be or may not be true; this research is based on data available as today.
  61. 61. VISHWA VARUN Page 61 Chapter-4: Research Methodology Que 1: Which one is your favorite brand? a. Shoppers stop b. Lifestyle c. Westside Remark: sample size of 100 people of my research. Que 2: which store has more convenient layout planning? 50 30 20 0 10 20 30 40 50 60 Shoppers stop Lifestyle Westside Series1 30 50 20 0 10 20 30 40 50 60 Shoppers Stop Lfestyle Westside Series1
  62. 62. VISHWA VARUN Page 62 Que 3: Which store has easy availability of sizes? Que 4: Which brand exchange and return policies are easy? 23 50 27 0 10 20 30 40 50 60 Shopper Stop Lifestyle Westside Series1 20 30 50 0 10 20 30 40 50 60 Shopper Stop Lifestyle Westside Series1
  63. 63. VISHWA VARUN Page 63 Que 5: Which one is the most sophisticated outlet? Que 6: Which brand have latest trend in terms of fashion? 20 30 50 0 10 20 30 40 50 60 Shopper Stop Lifestyle Westside Series1 50 35 15 0 10 20 30 40 50 60 Shopper Stop Lifestyle Westside Series1
  64. 64. VISHWA VARUN Page 64 Que 7: Which brand’s employee give prompt services? Que 8: Which brand give great shopping experience? 26 24 50 0 10 20 30 40 50 60 Shopper Stop Lifestyle Westside Series1 35 25 40 0 5 10 15 20 25 30 35 40 45 Shopper Stop Lifestyle Westside Series1
  65. 65. VISHWA VARUN Page 65 Que: Factor which determine the purchase of customer. 10 5 8 12 45 20 0 5 10 15 20 25 30 35 40 45 50 Color Fabric Price Quality Style Brand Series1
  66. 66. VISHWA VARUN Page 66 Chapter-5: Data Collection  Data available on apparel brands website  Data analysis of various brands.  Direct interview of company executives.  Visiting various store and category analysis  I visited to stores of Shoppers stop, Lifestyle, Westside.
  67. 67. VISHWA VARUN Page 67 Chapter-6: Findings  Why Merchandising is important for retail business.  Crisis of unorganized retail in Inventory control.  The lead time between the order and the delivery of different SKUs was not too high (about 1-2 days). However, in the case of beverages, the lead time needs to be brought down.  The outlets used the option of buying on credit and sometimes they bought the merchandise on cash also. As regards the credit period available for the retailers, the period varied and mostly one month credit period was common.  Premium brands do not have much growth. It is the higher priced merchandise which is contributing to the overall Gross Margin.  Despite being a bottoms centric brand, the Tops market shows some potential.  Frequent replenishments lead to less cycle inventory.
  68. 68. VISHWA VARUN Page 68 Chapter-7: Recommendations  The new retail store should be positioned in between lifestyle and shopper stop with emphasis on quality and fashion and latest trends that provides value for money to the customer giving them a wonderful shopping experience.  The upcoming store should have loyalty program.  Te outlet should emphasis on brand building as people buy product not as a brand but as a store product.  Same color story should be used both for nesting table as well as for wall display.  The nesting table should be stacked low or else it creates an effect of a hypermarket.  Fast moving sizes should be determined and provisions should be made for stock replenishment.  There should be sufficient style options across all segments and categories.  Merchandise should cover a wide range in terms of price points so that it caters to different customer segments having different disposable income.  Since in different parts of India festivals are important, the store should promote its merchandise according its demography to Ancash on the festive mood of the customers.  New offerings should be clubbed and displayed in reasonably size and place.  An increase in forecast error accuracy decreases both overstocked and under stocked quantity and increases firm profit.  There are a number of cases of bar code mistakes due to wrong printing or tagging. Ruggers are the performing brand of the store and Bay Island is a non performing brand for the store.  The store is facing problem of stock out in certain brands and excess stock in other which needs to be balanced.
  69. 69. VISHWA VARUN Page 69 Chapter-8: Bibliography  Marketing Management By-Philip Kotler.  Retail Management By-Gibson G.Vegamani  Data available on website of Apparel Export Promotion Council of India.  Annual reports of India Brand Equity Foundation.  Google  Direct Interview
  70. 70. VISHWA VARUN Page 70 Chapter-9: Conclusion Merchandising is the term used to signify articles for sale; it derives from the word merchant, the actual seller or retailer. Fashion merchandising includes all the planning and activities necessary to supply the fashion wants and needs of retail customers. In the past fashion merchandising was usually associated only with women’s apparels and accessories. Today, stores use aggressive merchandising techniques for men’s and children clothing too. Fashion influence has also spread to all other areas of retailing from cosmetics and home furnishings to cookware. Implementation of Retail Intelligence software to address the lacunas identified in the current buying process. Proposed and implemented Retail Performs to increase operational efficiency in the Retail Environment. Monitoring of Key performance Indicators. Tracking planned vis-à-vis Actual store wise sales data. Comprehensive Rating methodology for front end sales staff.
  71. 71. VISHWA VARUN Page 71 Chapter-10: Glossary Action Alley: The sales area of a store located immediately after entering. Ad Slick: Ad slicks refer to the final, camera-ready advertisement. It gets its name from the glossy paper on which it is printed. Anchor Store: A major retail store used to drive business to smaller retailers that physically surround it. These larger department stores or grocery stores are generally part of a retail chain and are the prominent business in a shopping mall. ANSI: American National Standard Institute Average Inventory Cost: Average inventory cost is found by adding the beginning cost of inventory for each month plus the ending cost inventory of the last month in the period. If calculating for a season, divide by seven. If calculating for a year, divide by thirteen. Big Box Stores: Large stand-alone store with varying market niches. Bill of Lading: A bill of lading is a document used as evidence that a transport company or carrier received goods from a shipper. Black Friday: Black Friday is the day after Thanksgiving- it's the biggest shopping day of the year. Brand: A brand is a name, symbol, or other identifying mark for a vendor's goods or services. It is distinct from other vendors. Break pack: A carton received in the warehouse with two or more inner selling units that can be broken down and shipped to the stores. Break-even Point: The point in business where the sales equal the expenses. There is no profit and no loss. Brick and Mortar: Brick-and-mortar store are retail shops with permanent physical locations.
  72. 72. VISHWA VARUN Page 72 Business Plan: A detailed document describing the past, present, and future financial and operational objectives of a company. Case Pack: Merchandise shipped in full cases. Cartons cannot be broken into smaller cases. Cash Discount: A percentage reduction in price for payment within a specified period of time. Cash Flow: The movement of money in and out of a business and the resulting availability of cash. Category Killer: A large retail chain store that is dominant in its product category. This type of store generally offers an extensive selection of merchandise at prices so low that smaller stores cannot compete. Chain Store: One of a number of retail stores under the same ownership and dealing in the same merchandise. Comp Sales: Comparable-store sales are a measurement of productivity in revenue used to compare sales of retail stores that have been open for a year or more. Historical sales data allows retailers to compare this year's sales in their store to the same period last year. Contribution Margin: Contribution margin is the difference between total sales revenue and total variable costs. The term is applied to a product line and is generally expressed as a percentage. CO-OP: An advertising allowance offered by a vendor, payable upon proof of an ad having been run. Cost of Goods Sold: The price paid for the product, plus any additional costs necessary to get the merchandise into inventory and ready for sale, including shipping and handling. Coupon: A promotional tool in the form of a document that can be redeemed for a discount when purchasing goods or services. Coupons feature specific savings amount or other special offer to persuade consumers to purchase specific goods or services or to purchase from specific retailers.
  73. 73. VISHWA VARUN Page 73 CRM - Customer Relationship Management: Customer relationship management (CRM) is a business strategy designed to reduce costs and increase profitability by strengthening customer loyalty. Cyber Monday: Cyber Monday is the Monday after Thanksgiving and one of the busiest shopping days of the year for online retailers. Retailers notice a spike in sales on this day as many consumers who were too busy to shop over the Thanksgiving weekend, or who did not find what they were looking for, head to the web on Monday from work or home to find bargains. “People are fretful about lifestyle retailing because the idea that anyone's immortal soul and deepest longings can be quite so readily anticipated and consolidated with several hundred thousand other like-minded types is worrying.”
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