Merchandise Store Positioning

Week 2

Ch 2: Merchandise/Store Positioning

Ch 4: Merchandise Planning, Buying, Control, and Profitability

FM10211 – Retail Operations

FM10211 - Retail Operations 2

Recap: Why are we here?

• Exercise: Why is a musician successful?– Answer – there are many combinations of style, ability,

values that work!

• What makes a successful retailer?– Any combination of

• Merchandise• Sales Promotion• Service Level• Etc.

• Retail Operations– Choosing and implementing a successful strategy


Concept: Operating Costs

• What costs are incurred in retail?– Cost of Goods Sold

(COGS)

– Rent & Utilities

– Sales Promotion

– Personnel

– Management

– Merchandising

– Etc.

• Which of these are operating costs?– Everything except COGS!

• COGS includes– Cost of merchandise

– Transportation

– Discounts

– Alterations

– Anything that doesn’t change if you sell 1 item or 10,000

Chapter 2

Merchandise/Store Positioning


Retail Image

• The public’s perception

• A company’s fashion image is based on– Merchandise– Promotion– Environment


Mission Statement• Includes the nature, purpose, and direction of a

company• Helps everyone share a vision• Decisions can be evaluated vs. the Mission

Statement• Example: St. Clair Apparel

“Our mission is to be the Premier Supplier of Imprinted Apparel. To achieve this we will greet every customer with warmth and

enthusiasm. We will assess the customer’s needs and expectations. We will utilize all of our capabilities to meet those needs and exceed their expectations. We will provide them with the highest level of service

possible, regardless of the size or scope of their needs.”

http://www.stclairapparel.com/statement.html


Fashion Cycle (Product Life Cycle)


Fashion Cycle II

• Retailers target one or more sets of consumers– Innovators– Early Conformist– Mass Market Consumers– Late fashion followers– Laggards


Changing an Image• Implies change in shoppers• Can be accidental or planned

– Danger of losing old market before gaining new one– Performance must be consistent with the image

• Reasons for change– Demographics– Economy– Competition– New ownership

• No change may be the biggest risk!


Differentiation/Positioning

• Image must differentiate companies• Retailers cannot be all things to all people• Different from competition:

– Quality

– Physical environment

– Customer service

– Price

– Employee attitude

– Fashion

– Level of merchandise

– Uniqueness

– Location

• Image Positions a company in the marketplace


Competition

• Companies competing for the same consumers

• Can be a good thing!

• At market saturation, only the company(ies) that does the best job will survive!


Niche Marketing

• Marketing to a narrowly-defined customer segment

• One way to differentiate

• Offer deep assortments of one particular type of merchandise

• Example: www.uniformsandscrubs.com

http://www.uniformsandscrubs.com/


Market Research• Collect and analyze data relating to:

– Store location

– Target-market profiling

– Consumers’ needs and wants

– Company image

– Promotion

– etc.

• Provides data on which to base decisions – Reduces some risk


Target Marketing• Seeking to serve a specific group of customers • Demographics

– Age– Gender– Income– Education– Marital Status

• Psychographics– Activities– Interests– Opinions


Market Trends

• Market changes– Demographics– Psychographics

• Existing or new retailers can benefit– Add or change to serve changing market

• Merchandise

• Services

• Promotions


Demographic Trends• Slowing population growth• Aging population• An increase in teens and young adults• More working women who have children in

daycare• Increased education• Migration to the sunbelt• Increased cultural pluralism• Increased but unequal income growth


Psychographic Trends

• Blurring of male and female roles

• Importance of time management

• Life simplification, return to traditional values

• Generational differences in the marketplace

• Interest in the environment


Branded Merchandise• Brands

– Known entity– Style and image– Quality– Established fit– Price– Leads to loyal customer base

• Younger consumers • Affluent

• Should set the product apart from its competition • Names and logos are registered as trademarks


What is a billion?• Imagine:

– $1,000 interest-free checking account daily• Not bad!

– After 1 year: $365,000– After 3 years, about $1 million

• $1,095,000 to be exact

– 1 billion = 1,000 million– So, to get $1,000,000,000: 3,000 years!

Bill Gates’ current net worth: over $45 billion!!


Top Brands2005

Rank Brand Name Brand Value$billions

1 Coca-Cola 67.52 Microsoft 59.93 IBM 53.44 GE 47.05 Intel 35.66 Nokia 26.57 Disney 26.48 McDonald's 26.09 Toyota 24.8

10 Marlboro 21.2


Some Top Apparel Brands2005

Rank Brand Name Brand Value$billions

18 Louis Vuitton 16.130 Nike 10.140 Gap 8.249 Gucci 6.665 Chanel 4.871 adidas 4.077 Zara 3.782 Hermes 3.593 Prada 2.895 Armani 2.796 Levi's 2.7

http://bwnt.businessweek.com/brand/2005/


Chapter 4: Merchandising

“Buying and selling goods and/or services in order to make a profit.”

• Primarily about understanding what the customer wants

• Requires planning and preparation– Unless you are Country Junction

http://www.countryjunction.com/lehighton.htm


Profit• Summarized in Profit/Loss Statement (P&L)

– Also called an income statement– Summarizes finances during a time period

Gross Sales- (Returns, discounts, etc.)

= Net Sales (Revenue)- (Cost of Goods Sold (COGS))= Gross Margin (Gross Profit)

- (Operating Expenses (Overhead))= Profit


Stock Keeping Units

• SKU

• Smallest unit level of merchandise

• Includes– Style– Color– Size– Etc.


Buying

• Done by the buyer• Can be a division (larger companies)

– Or part of operations (smaller companies)

• An art – Aesthetic and visual principles

• And a science– Budgeting– Forecasting


Purchasing

• Buying materials for manufacture

• Also called sourcing

• In some cases, buying from manufacturers and vendors is done by same people– E.g. The Limited


Planning• Provides essential information

• Leads to meeting Mazur’s 5 “rights”– Right merchandise– Right time– Right place– Right quantities– Right price


Forecasting

• Predicting what customers want

• Quantities

• Uses as much input as possible– External environmental factors– Internal environmental factors


External environmental factors

• Economy

• Society and culture

• Technology

• Political and legal issues

• Analysis available from a variety of sources

• Trend books, etc.

http://www.promostyl.com/anglais/trendoffice.php


Internal environmental factors

• Store records– Sales– Profits

• Store culture

• Vendors


Merchandise Budget

• Dollar planning– How much money will be spent

• Unit planning– How many of each type of item will be purchased and kept in

inventory

– Includes the mix

– Considers assortment and qualitative aspects

• Both usually include dollar amounts and % of net sales


Inventory Flow

• Start: beginning of month (BOM)

• Stock comes in

• Stock is sold

• Shrinkage

• Returns

• End: end of month (EOM)

Merchandise Store Positioning

Business

Transcript of Merchandise Store Positioning