Cantabil Group 3

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Merchandise planningpearl academy of fashion

MERCHANDISE PLANNING

PLANNING, BUYING AND SOURCING

Submitted By

Tarini Chawla, Nikita Jain, Gunjan Dewan,

Apoorva Behal Saakshi Khera, and Hena Sahni, in Partial

Fulfilment of the Requirements for the Degree

Of B.A (H) in Fashion Retail & Merchandising.

21st April 2009

Mrs Ritu Jain

Date of Submission- 23ed April 2009

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Table of contents

2

S.NO NAME PG NO

1.

Acknowledgement 3

2.

Company profile 4

3. introduction

5-8

4. graphs 9-16

5. Six month plan 17-42

6.

7.


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ACKNOWLEDGEMENT

We wish to express our deep gratitude to our merchandise planning teacher Mrs Ritu

Jain for her guidance and valuable suggestions during the completion of the project. We

would also like to thank store manager and staff of the CANTABIL store in pritam pura

main market for their valuable time and assistance.

Thank you for your support and encouragement.

Yours Sincerely,

Tarini Chawla

Nikita Jain

Gunjan Dewan

Apoorva Behal

Saakshi Khera

Hena Sahini

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COMPANY PROFILE

CANTABIL

Cantabil International (P) Ltd commenced their journey in the year 2000, with a

collection of men's shirts and trouser. Subsequently, with in a short span of just 8years, they have successfully managed to carve a niche in the Indian Fashion

Industry. Today, they are recognized as "CANTABIL" - an Italian brand known

for its unique, distinctive & ultra comfy clothing. In short, range starts from the

sophisticated formalwear, party-wear and ends at casuals & the ultracasual

clothing.

The voyage started in the year 2000 when the first Cantabil store was inaugurated

in Delhi. Since then, with the persistent efforts of the young and dynamic

professionals, Cantabil has reached to 180 exclusive stores across India. Many

more openings have already been planned for 2009 and 2010. All of them have

been designed to create a special atmosphere that will allow the client to feel the

pleasure of buying fashion.

Today, backed up with continual efforts and an unstoppable creativity of the

inspired design team, Cantabil greets the opportunity to introduce the hottest trends

in Indian fashion industry in each season. And with the blessings of the almighty

and with the motivation of team, they have launched the women's wear in 2006.

There ladies collection starts from formal shirts and is extended to cargos.

With its stores, located in the prime commercial areas of cities across India,

Cantabil offers latest trends & lifestyle of today's men & women.

At Cantabil, design is conceived as a process, which is very-closely linked to the

consumers. It starts from stores from where they, constantly, review the demands

of their clients and ensure that they are being conveyed to their creative teams in

the most effective manner enabling them to come up with the clothing that their

clients require accurately.

They have set the industry standard for quality, design & style by using the finest

fabrics, craftsmen & mills. More importantly, Cantabil has renewed its passion for

style and exceptional service as it moves toward an exciting future.

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Introduction

Merchandise Planning"The great

wars of theworld werewon in the

planning tents,not on thebattleground.

In the large retail store, we find a dizzying array of goods to clothe our bodies,

decorate our homes and entertain our families. All of this merchandise comes in avariety of sizes, colours, makes and models. Bringing it all together requires the

successful coordination of numerous individuals and divisions, including buyers,

warehouse employees, financial staff, store operations,etc. Yet, merchandising

takes top priority. It doesnt matter how efficiently the other departments are

operating. If merchandising is not firing on all cylinders, the company cannot

succeed. The merchandise planning process allows the retail buyer to forecast with

some degree of accuracy what to purchase and when to have it delivered. This will

greatly assist the company in attaining its sales and gross margin goals. Buyers

must rely heavily on historical sales data, coupled with personal experience andtheir own intuition about market trends.

The foundation of this planning process is the six month merchandise plan, which

will be analysed in this project.

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There are two approaches to planning merchandise:

The top down approach

The bottom up approach

THE TOP DOWN APPROACH: In this process the budget trickles down. The

higher management takes decision on the amount, sourcing, pricing, stock etc.

DIVISIONAL MERCHANDISE MANAGEMENT

THE BOTTOM UP APPROACH: since the sales executives

interact closely with the customer they provide information on what to buy, how

much to buy, sales, point of purchase, traffic etc.

6

GENERAL MERCHENDISE MANAGEMENT

DEPARTMENT MANAGER

LOWE LEVEL SALES

STAFF


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A six-month merchandise plan is the tool that translates profit objectives into a

framework for merchandise planning and control. Key components include

sales forecasts and stock planning. The plan is established for two distinct

selling seasons.

o Spring-Summer(Feb-July)

o Fall-Winter(Aug-Jan)

It is important to develop a merchandise plan as it helps us to provide an estimate

of the amount of capital required to be invested in inventory for specific period and

provides an estimate of planned sales for the period.

Some of the benefits of making a merchandise plan are as following

1. Increased Turnover.

2. Reduced amount of markdowns.

3. Improved maintained markup.

4. Maximized Profits.5. Minimum investment in inventory.

The six month merchandise plan comprises of an initial markup for the period.

The Planned net Sales, the planned BOM inventory which is also called the

Opening Stock, the planned EOM stock, called the closing stock, planned

reductions the planned Purchases at Retail and the planned Purchases at Cost.

TipTop down planning is the best approach for most small retailers. Start with total companyfigures, and then move to the departmental level

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This project was way comprehensive way to reinforced all we studied in this

semester about planning buying and sourcing. Through this project we answerd

two broad questions. Firstly, planning how much to buy and secondly whom to buy

from.

The project is divided into two chapters. Chapter one includes planning stock. In

this chapter we were expected to prepare a six month merchandise plan for which

we also prepared one questionnaire to be filled by cantabil customers. This was

made to know the customers and the sales pattern of the store for a week. The store

we selected was the one in pitampura. After this we were suppose to prepare a

range plan. The second chapter of this project involves compiling a vendors file.

For this purpose we chose the Cantabil store. We visited the store for five days and

conducted a survey through questionnaires and monitored the walk-in and traffic.On the bases of the questionnaire we could calculate the average bill size. The next

step was to create the six month merchandise. After which we formatted the range

plan.

The next chapter involved vendor identification. Since Cantabil manufactures its

own garments we sourced fabric from Krishna clothe market in chandani chowk.

The table and profile of each vendor is included in the project.

Detailed stepwise working of the range plan and the sixmonth merchandise plan isalso included in this report.

We as a group enjoyed working on this project since it reinforced all concepts

studied in this semester and previously regarding merchandising. The only

drawback was that it was extremely detailed to be done is a short span. And since

the store was not very cooperative in answering our questions, we found it quite a

task to compile the six month merchandise plan.

Tip Become an information junky when it comes toindustry trendsand fashion.

Graphs and analysis

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Q.1 How often do you visit CANTABIL?

Weekly 3

Monthly 17Quarterly 10

only during sales 20


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Q.2 Are you a regular loyal

customer?

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YES 15

NO 35

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Q.3 What sort of a purchase was

this?

Planned 12

impulsive 38

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Q.4 No. of items

bought were?

1 to 2 29

2 to 4 15

4 & above 6

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Q.6 What did you purchase from the store

today?

mens wear 24

woman's wear 15

kids wear 11

others 0

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Q.7 How much was the average price you spent on the

following?

men's wear 1299

woman's wear 799kids wear 499

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Q.8 How much are you willing to spend on the following

categories?

mens wear 1000womans wear 700

kids wear 500

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INFERENCE

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Six Months Merchandise Plan:

It is the tool that translates profit objectives into a framework for merchandise

planning and control. Key components include sales forecasts and stock planning.

The plan is established for two distinct selling seasons.

o Spring-Summer(Feb-July)

Fall-Winter(Aug-Jan)

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Components of the Six-Month Merchandise Plan:

1. Initial Markup for the Period.

2. Planned net Sales

3. Planned BOM inventory / Opening Stock

4. Planned EOM stock / Closing Stock.

5. Planned Reductions.

6. Planned Purchases at Retail

7. Planned Purchases at Cost.

Planning Sales:

After conducting a survey at Catabil, Pitam Pura with the help of questionnaires

we have analysed the following data which would help us construct the six months

merchandise plan.

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Day Footfall Conversion Avg bill size Sales

Sunday 86 39 1360 53000

Monday 35 11 1273 14000

Tuesday 50 17 1353 23000

Wednesday 42 15 1000 15000

Thursday 45 12 1500 18000

Friday 40 15 1000 15000

Saturday 75 16 1375 22000

Total 160000

WinningFact

There are only 2 ways to increase stock turns: Increase sales. Decrease inventory.

Working Note:

Sales = Average Bill Size* Conversions

Sunday: Average Bill Size / Conversions = 1360* 39= 53000

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Monday: Average Bill Size / Conversions = 1273*11= 14000

Tuesday: Average Bill Size / Conversions =1353* 17= 23000

Wednesday: Average Bill Size / Conversions =1000* 15= 15000

Thursday: Average Bill Size / Conversions =1500*12= 18000

Friday: Average Bill Size / Conversions =1000*15= 15000

Saturday: Average Bill Size / Conversions =1375*16= 22000

Now the total weekly sales is Rs 1,60,000

Therfore, the annual sales = 160000* 52= Rs 8320000

And the seasonal sales= 160000*26= Rs416000

Planning BOM Inventory:

This involves determining the amount of stock required to meet the planned sales.

Inventory Turnover= Net Sales/ Average Stock

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Now net sales for the season is 4160000

The stock is worth Rs 4992000

Thus Average Stock = Total Stock/ No. of months= 4992000 / 6= 832000

Therefore Inventory Turnover= 4160000/ 832000= 5 times

Since we had already got an estimated total stock and average stock from our

stock, now we would calculate the planned sales.

We will use the Basic Stock Method to calculate the Planned Sales for Each

Month.

BOM Inventory = Planned Sales for Period + Basic Stock

Basic stock = Average Inventory Average Monthly Sales

Average Stock= Net sales for season/ Stock Turnover

= 4160000/5 = 832000

Average monthly sales = Net sales/ No. of months

= 4160000 / 6 = 693333

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Basic Stock = Average stock Average monthly sales

832000- 693333= 138667

BOM Inventory = Planned Sales For Period + Basic Stock

February: 900000 = x + 138667

x = 900000-13866

= 761333

March: 1054000 = x + 138667

x = 1054000 138667

= 915333

April: 930000 = x + 138667

x = 930000 - 138667

= 791333May: 610000 = x + 138667

x = 610000- 138667

= 4713

June: 734000 = x + 138667

x = 734000 138667

= 595333

July: 764000 = x + 138667

x = 764000 138667

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= 625333

Planning EOM Inventory:

The EOM stock for any month is simply the planned BOM stock for the

following month.

February: 1054000

March : 930000

April : 610000

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May : 734000

June : 764000

July: -

Planned Reductions:

The next component to be planned is reductions which could be markdowns,

employee discounts and consumer discounts, and inventory shortages from

shoplifting or employee theft. Estimates for these reductions are based on pastexperience and are presented as a percent of planned sales on the six-month

merchandising plan e.g.

Planned Sales% = 6.8%

Planned Shortage% = 2.1%

Planned Employee Discount = 1.1%

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Therefore, total reductions are planned to be 10% of sales.

Total reductions (planned) = Total Planned sales * x%(10%)

As per our store the reductions are in terms of Employee Discounts, Markdowns

and Shortages. The reductions are as follows:

Employee discount: 1%

Markdowns : 3%

Shortage : 1%

Total : 5%

Total Reductions for the season = 5 % of 4160000

= 208000

The monthly reductions are as follows;

Month % reductions Value

February 15% 31200

March 25% 52000

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April 20% 41600

May 10% 20800

June 10% 20800

July

Total

20% 41600

208000

Winning Fact

It takes approximately $10 in extra sales to recover $1 lost due to theft.

PLANNED PURCHASES AT RETAIL:

Planned purchases each month should be adequate to implement the six-month

merchandise plan. On the merchandise plan, purchases must be planned at retail

first since all the other figures were based on retail. The following formula is used

to calculate planned purchases at retail:

Planned = Planned Sales + Planned EOM + Planned Reductions BOM

Purchases

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Using the above formula we have calculated the purchases at retail for each month:

February: 761333+ 1054000+ 31200 900000 = 946533

March : 915333 + 930000 + 52000 1054000 = 843333

April : 791333+ 610000+ 41600 930000 = 512933

May : 471333 + 734000 + 20800 610000= 616133

June : 595333 + 764000 + 20800 734000 = 646133

July : 625333 + 0 + 41600 764000 = - 97067

PLANNED PURCHASES AT COST:

From the seasonal data, initial markup for the period is planned as x%.

Using the following formula, calculate planned purchases at cost.

Planned Purchases = (100% - Initial Markup%) * Planned Purchases atretail

at Cost

The planned purchases at cost lets buyers know how much money they will have to

spend on merchandise for the season as well as individual months.

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As asked from the store we were intimated that their markup comes upto 50%.

Therefore planned purchase at cost for each month is as follows:

February: ( 100% - 50%) * Planned purchase at retail

50/100 * 946533 = 473267

Purchases at cost= 946533 473267 = 899207

March : (100% - 50%) * Planned purchase at retail

50/100 * 843333 = 421667


April : (100% - 50%) * Planned purchase at retail

50/100 * 512933 = 256467


May : (100% - 50%) * Planned purchase at retail

50/100 * 616133 = 308067


June - (100% - 50%) * Planned purchase at retail

50/100 * 646133 = 323067


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July : 100% - 50%) * Planned purchase at retail

50/100 * - 97067 = - 48534

Purchases at cost= - 97067 48534 = -48533

OPEN -TO BUY

Open-to-Buy is the amount the buyer has left to spend for a period and is

reduced each time a purchase is made.

Calculating OTB

OTB = Planned Purchases Merchandise on Order

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July : Purchases at Retail - - 97067

- Merchandise on order - 30000

OTB - - 67067

Planning how much to buy?

Total purchases at cost for the season = Rs 21,59,935

% contribution towards sales by each department to the store

Men department : 60% of 2159935 = Rs 1295961

Women department : 30% of 2159935 = Rs 647981

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Kids department : 10% of 215994 = 215994

We have taken the shirts section from the mens department to show how much we

need to buy and along with it we have taken the maximum selling styles, sizes and

colors.

Calculation of units for each of the assortment

Shirts- Basic collar ( 30% 0f 388788 = 116636)

Styles Sizes - % -

value

Colors

Black grey blue

white

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Basic Collar

32 20 23327 6998 2332 6998

6998

36 15 17495 5249 1750 52495249

38 25 29159 8748 2916 8748

8748

40 30 34991

10497 3499 10497

10497

42 10 11664 3499 1166 3499

3499

Working Note:

Size 32

( Average price according to range plan for basic collar shirts is Rs 1299)

Black = 30% of 23327 = 6998

Units = Value / Average Price = 6998/ 1299 = 5 units

Grey = 10% of 23327 = 2332

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Units = 2332/ 1299 = 2 units

Blue = 30% of 23327 = 6998

Units = 6998 / 1299 = 5 units

White = 30% of 23327 = 6998

Units = 6998 / 1299 = 5 units

Size 36:

Black = 30% of 17495 = 5249


Grey = 10% of 17495 = 1750Units = 1750 / 1299 = 1units

Blue = 30% of 17495 = 5249

Units = 5249 / 1299 = 4 units

White = 30% of 17495 = 5249

Units = 5249 / 1299 = 4units

Size 38 :

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Black = 30% of 29159 = 8748


Grey = 10% of 29159 = 2916

Units = 2916 / 1299 = 2 units

Blue = 30% of 29159 = 8748

Units = 8748 / 1299 = 7units

White = 30% of 29159 = 8748

Units = 8748 / 1299 = 7 units

Size 40 :

Black = 30% of 34991 = 10497


Grey = 10% of 34991 = 3499

Units = 3499 / 1299 = 3 units

Blue = 30% of 34991 = 10497

Units = 10497 / 1299 = 8 units

White = 30% of 34991 = 10497

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Units = 10497 / 1299 = 8 units

Shirts- Half Sleeves ( 30% 0f 388788 = 116636)

Styles Sizes % value Colors

Black grey blue

white

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Half Sleeves

32 15 17495 5249 1748 3499

6998

36 25 29159 8748 2916 58319

11664

38 30 34991 10497 3499 6998

13996

40 30 34991 10497 3499 6998

13996

Working Note:

Size 32 ( Average price according to range plan for half sleeve shirts is Rs 949)

Black = 30% of 174951 = 5249


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Grey = 10% of 174951 = 1748

Units = 1748 / 949 = 2 units

Blue = 20% of 174951 = 3499

Units = 3499 / 949 = 4 units

White = 40% of 174951 = 6998

Units = 6998 / 949 = 7 units

Size 36:

Black = 30% of 29159 = 8748


Grey = 10% of 29159 = 2916Units = 2916 / 949 = 3 units

Blue = 20% of 29159 = 5831

Units = 5831 / 949 = 6 units

White = 40% of 29159 = 11664

Units = 11664 / 949 = 12 units

Size 38:

Black = 30% of 34991 = 10497

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Grey = 10% of 34991 = 3499

Units = 3499 / 949 = 4 units

Blue = 20% of 34991 = 6998

Units = 6998 / 949 = 7 units

White = 40% of 34991 = 13996

Units = 13996 / 949 = 14 units

Size 40:

Black = 30% of 34991 = 10497


Grey = 10% of 34991 = 3499

Units = 3499 / 949 = 4 units

Blue = 20% of 34991 = 6998

Units = 6998 / 949 = 7 units

White = 40% of 34991 = 13996

Units = 13996 / 949 = 14 units

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Shirts- Full Sleeves (40% 0f 388788 = 155515)

Styles Sizes % value Colors

Black grey blue

white

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Full Sleeves

32 10 15552

6221 1555 3110

4666

36 20 31103 12441 3110 6221

9331

38 40 62206 24882 6220 12441

18662

40 30 46655 18662 4665 9331

13997

Working Note:

Size 32 (Average price according to range plan for full sleeve shirts is Rs 1349)

Black = 40% of 15552 = 6221


Grey = 10% of 15552 = 1555

Units = 1555 / 1349 = 1 units

Blue = 20% of 15552 = 3110

Units = 3110 / 1349 = 2 units

White = 40% of 34991 = 4666

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Units = 4666 / 1349 = 3 units

Size 36 :

Black = 40% of 31103 = 12441


Grey = 10% of 31103 = 3110

Units = 3110 / 1349 = 2 units

Blue = 20% of 31103 = 6221

Units = 6221 / 1349 = 5 units

White = 40% of 31103 = 9331

Units = 9331 / 1349 = 7 units

Size 38 :

Black = 40% of 62206= 24882


Grey = 10% of 62206 = 6220

Units = 6220 / 1349 = 5 units

Blue = 20% of 62206 = 12441

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Units = 12441 / 1349 = 9 units

White = 40% of 62206 = 18662

Units = 18662 / 1349 = 13units

Size 40:

Black = 40% of 46655= 18662


Grey = 10% of 46655 = 4665

Units = 4665 / 1349 = 3 units

Blue = 20% of 46655 = 9331

Units = 93311 / 1349 = 7 units

White = 40% of 46655= 13997

Units = 13997 / 1349 = 10 units

Range plan

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product fabrics sizes design styles colors Retailprice(Rs.)

Averageprice(Rs.)

Costprice

Shirts Cotton 30,32,34, Checks Basiccollar

White,gray,

999/-1599/-

1299/- 999/-

Linen 36,38,40, Plains Chinesecolar

Black,reds,

1599/-1999/-

1799/- 1499/-

Denim 42,44,46 Stripes Half sleeves

Shadesof yellow,

799/-1099/-

949/- 599/-

polyester Printed Fullsleeves

Greenetc.

1099/-1599/-

1349/- 1099/-


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Vendor plan

46

Est. in

1979 10th

march

Wholesale at

retail

Raymond

J.

HampsteaD

Reid and

Taylor

suiting fabric

shirt fabrics

trouser

fabrics

Mr Nakul

Kedia

10% on

wholesale

None Cheaque 30 days

for new

clients &

60-90 days

for old

clients

No other

charges

(delivery

charges payed

by them)

Line

120/m

Cotto

125/m

150/m

Est in 1989

14th Jan

Wholesale

and retail

Shirting

fabric and

suiting

fabrics

harry

collection,

Vimals, siya

ram and

Raymond

Mr Anil

Dhawan

7-10% on

wholesale

Deliver

with 10-15

days

Advance

payment in

cash

Payment

on

delivery

Transportation

charges

Cotto

whol

Rs 11

retail

185/m

whol

Rs11

Est in 1967 Retail and

wholesale

Dress

material and

allreadymade

fabrics

Mr.

Paramjit

singh

5-10% on

wholesale

Delivery as

per

availability

POD 60 days

for old

clients

No other

charges

Cotto

20/m

linenRs85

150/m

Wholesale

cloth

merchants

Wholesale

and retail

Mayor vimal

Gwalior and

other

dressing

material and

suiting

fabrics

Mr. Arun

Anand

10-12% on

wholesale

Time

period

depends on

delivery

location

Payment

by

cash/DD/

cheque

40- days

for buyers

and POD

for new

clients

Deliver charges

included

Cotto

Rs15

linen

160/m

Wholesale

fabric

merchants

Wholesale

and retail

Woolen,

cotton, linen,

mixed

fabrics,

polyester

Mr. Goldy

singh

10% on

wholesale

20 days

booking

Advance

payment in

cash and

POD in

cheaque

As per

availability

of stock

Delivery

charges payed

by client

Line

120/

Cott

Rs 1

150/


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Visiting card Sample swatches

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After visiting several vendors and finalizing 5 we have decided to choose HP

vendors. The reason we chose them is because they provide cheapest fabrics and

no extra charges are included also their mark up is lowest. Besides than theyprovide fabrics to other brand as well who manufacture shirts. Thus we believe it is

the best option.

Cantabil Group 3

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