Chapter 14 Retail Fashion Merchandising Copyright 2005 by

Merchandising Organization • Merchandising is broken up into two areas: – Buying line – Store line • Store line responsibilities are operational: – Coordinate receiving and movement of goods and people in store – Train associates – Provide customer service – Control expenses – Maintain building and security Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Merchandising Organization • Buying line responsibilities are the planning and activities necessary to bring the right merchandise into he store at the right time to meet sales and profitability plans and satisfy consumer needs. • Hierarchy in the buying line: – – Retail Chief Executive Officer (CEO) General Merchandise Manager (GMM) Divisional Merchandise Manager (DMM) Buyer Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Buying Preparations • The merchandise plan is a financial plan allocating specific amounts of money to each department for the purchase of fashion merchandise to meet consumer demand, sales and profit goals. • Sales are forecast with a variety of points taken into consideration: – Economy – Market analysis – Population shifts – Competition – Season Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Buying Preparations • Sales are forecast with a variety of points taken into consideration (continued): – Weather – Holidays – Physical expansion/alterations needed in store – Stores ability to house and display merchandise – Basic stock – Effects of casual dress – Retail price Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Buying Preparations • General merchandise plan components: – – – – – Receipts Sales Markups/markdowns Promotional calendar BOM/EOM stock Weeks supply and turn Shortage Gross margin Discount Units Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Buying Preparations • Planning stock involves determining the amount of stock needed to support sales. • The buying plan describes types, quantities, prices and sizes of merchandise to be purchased. • Open to Buy (OTB) is equal to actual stock less planned stock. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

The Buying Process • Buyers need both experience as well as effective research capacity. • They function as both creative and analytical managers. • Buyers also function as editors for the consumer by their own selection process eliminating styles that do not match their customer. • Planners may be used to help shape size and distribution of a buy. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

The Buying Process • Buyers must align the purchase based on corporate merchandising goals which can be: – micro merchandising, individualized to particular markets – macro merchandising, the same across all markets • Buyers are involved in the marketing of the merchandise via: – Advertising – Visual merchandising – Special events Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

The Buying Process • The buying and selling cycle reflects various schemes: – Broad assortment – Narrow and deep assortments – Short cycle – Promotions – Markdowns Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

The Buying Process • Buyers may be required to use a matrix buying system, or have the flexibility to search for new styles via trend buying. • As more manufacturers and retailers work together, automatic replenishment play a bigger role in ordering. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

National Brands versus Private Labels • Retailers developed house brands, or private labels, to differentiate themselves from competition. • Besides exclusivity, private label is profitable. • Manufacturing can be done in various ways: – Copy a “hot” item – Have a line created by a design service – Set up their own design and merchandising department – Work with a manufacturer who specializes in private label Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Buying Offices • Buying offices fill a variety of functions although the two main types are: – Independent resident buying offices – Store owned, which, in turn has two types: • Associated buying offices • Corporate buying offices Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Retail Pricing • Markup = retail price – cost divided by retail price • Markup must cover: – Markdowns – Shortages – Operating expenses • In addition to covering the above mentioned there must be profits afterwards • Many price points are of. fered in each department or category. • Price range refers to the span between highest and lowest price points. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Receiving and Record Keeping • Centralized distribution centers receive merchandise and: – Check for quality control – Ticket – Reconcile – Send to stores • Record keeping involves both unit control on number of pieces and inventory control on the dollar value. • Physical inventories are taken one to three times annually and discrepancies are noted as either shortages or overages. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Customer Service • American retailers, pioneers in customer service, remain committed to it with various service standards: – In stock – Incentive programs – Customer appreciation days and newsletters – In store events and videos – Gift wrap, registry and alterations – In store services, phones, and music – Personal shopping and knowledgeable sales associates – Easy returns and credit terms – Extended store hours, seating, delivery and parking Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Retail Sales • Sales training is crucial to the service issue and sales goals. • Department managers have the day to day responsibility of staffing, sales and visual merchandising. • Selling, the key to retail success, involves a number of factors: – – Personal selling Sales incentives Merchandise representatives Cooperative salesperson programs Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Merchandising Evaluation • Evaluating merchandise sold allows merchants to better plan the future and begin the next cycle of buying and selling. • Buyers use many tools to evaluate performance: – Vendor analysis – Comparisons – Sales related ratios, some of which are: • • Average gross sales Sales per square foot Stock, or inventory turn Gross margin Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458

Merchandising Evaluation • A major drawback of these measures is the inability of the buyer to know what styles consumers wanted to buy but could not find. • One benefit of branching to the stores is the informal contact with the consumer indicating what they want but could not find. Fashion From Concept to Consumer, 8/e Gini Frings © 2005 Pearson Education, Inc. Upper Saddle River, New Jersey 07458